High-performance human resource practices

and firm performance: the mediating role of

employees’ competencies and the moderating role
of climate for creativity

Emmy van Esch, Li Qun Wei & Flora F. T. Chiang

 ABSTRACT

Drawing on the resource- and competency-based view, this paper examines the
relationship between high-performance human resource (HR) practices and
firm performance. Using a sample of 189 firms in mainland China, a positive
relationship between high-performance HR practices and firm performance was
found that was partially mediated by employees’ competencies. We also found
the organizational climate for creativity to strengthen such relationship. The
implications and future directions of these findings are discussed.
Significance
• This study extends previous studies by (1) focusing on a mediating
factor (i.e. employee competencies) which links high-performance HR
practices to firm performance and (2) by exploring the contextual
factor (i.e. organizational climate for creativity) which may affect the
impacts of high-performance HR practices on firm performance.
• The study propose that employees’ competencies acquired, selected,
trained and developed from high-performance HR practices are the
proximal antecedent to firm performance.
Contribution
• First, given much of the current evidence on employee competencies
stems from consultancy work (De Vos, de Hauw, & Willemse, 2015),
we fill this gap by empirically demonstrating evidence that high-
performance HR practices contribute to firm performance by
leveraging employees’ various competencies.
• Second, prior studies using competency view have mainly focused on
single HR practice, such as training (Lai & Kapstad, 2009; Nybø, 2004).
However, according to the RBV, it is the use of HR bundles rather than
single HR practice that contributes to organisational performance
(Barney, 1986).
Conceptual model
Theory and hypotheses development
Employees’ competencies and firm performance
• Firms that are able to generate firm-specific, valuable and unique
expertise, and competencies are thought to be in a superior position
that enables them to outperform their rivals and succeed in a
dynamic business environment (Grant, 1996; Janssen, van de Vliert, &
West, 2004).
 High-performance HR practices, employees’
competencies and firm performance

• High-performance HR practices are the primary means by which firms

influence and shape the skills, knowledge and behaviour of their employees
to achieve organisational goals.
• Employees’ competencies developed from high-performance HR practices
enable organisations to achieve and enhance their performance.
• In this study configurational perspective has been adopted that suggests that
it is the overall configuration of a set of internally aligned HR practices that
impact organisational outcomes and therefore HR practices should not be
studied in isolation (Colakoglu, Hong, & Lepak, 2010).
• In this study high-performance HR practices are examined as a set of
internally consistent human resource management (HRM) practices
related to the acquisition and development of competencies,
including selective staffing, training and development, rewards,
performance appraisal, and self-managing teams (Neal et al., 2005;
Wright & Nishii, 2006).
• To sustain high-performance, firms also need to improve and upgrade
the level of employee competencies through training and
development practices (Singh, 2003).
• Employee development helps to shape and direct employees’
behaviours and attitudes to be in line with organisational goals.
• An effective reward system is another important vehicle to attract, motivate,
retain and develop employees’ competencies (Singh, 2003).
• When employees are rewarded, intrinsically and extrinsically motivated, and
reinforced to learn and continuously improve, they are more likely to actively
acquire relevant and specific knowledge, and to leverage their knowledge
and competencies to support firm performance.
• The use of self-managing teams is another important vehicle to develop
employees’ competencies.
• When team members are empowered and given the autonomy and
flexibility, they are likely to be more motivated and take full responsibility to
find new ways and develop new skills to respond to challenges.
• Other factors, such as employee attitudes (Fulmer, Gerhart, & Scott,
2003; Gong et al., 2009; Takeuchi, Chen, & Lepak, 2009) and
employee behaviour (Kehoe & Wright, 2013; Sun et al., 2007) also
mediate this relationship so a partial mediation is proposed in this
study.
• H1: The positive effect of high-performance HR practices on firm
performance is partially mediated by employees’ competencies.
Moderating role of the climate for creativity
• As the competency-based perspective suggests that creating a favourable
climate is important to support employee development (Hall, 1992;
Rodriguez, Patel, Bright, Gregory, & Gowing, 2002), we posit that a climate
for creativity acts as a situational enhancer and further strengthens the
positive influence of high-performance HR practices on competency
development.
• In this study, we focus on climate for creativity, defined as work
environment that supports and facilitates innovative activities and
continuous learning (Amabile, Conti, Coon, Lazenby, & Herron, 1996;
Schumpeter, 1934). We propose that the climate for creativity has a
moderating effect on the relationship between high-performance HR
practices and employees′ competencies.
• when organisations promote a climate for creativity, employees are
more willing to try out unfamiliar situations that foster greater access
to new experiences and perspectives, are more open to new
knowledge and ideas and are more motivated to absorb and combine
new information and to seek innovative, alternative ways to enhance
their performance
• H2: The positive relationship between high-performance HR practices
and employees’ competencies is stronger in firms with a positive
climate for creativity.
Discussion
• Drawing on the RBV, this study examines how employees’ competencies
mediate
• the relationship between high-performance HR practices and firm
performance.
• As predicted, a partial mediating effect of employees’ competencies on the
relationship
• between high-performance HR practices and performance was found.
• Our results also show that the climate for creativity serves as a moderator
in the
• relationship between high-performance HR practices and employees’
competencies.