The mediating role of organisational culture and human capital in the effects of HR systems on service performance, OCB and turnover intentions: a multilevel study

Abstract

Relying on the Ability-Motivation-Opportunity (AMO) model, resource-based view (RBV), and human capital perspectives, this study examines the influence of HR systems (skill-enhancing practices, motivation-enhancing practices, and empowerment-enhancing practices) on organisational and individual outcomes. Seeking an explanation for the underlying mechanism, this study investigates the mediating effect of organisational culture and human capital on the association between HR systems with organisational-level outcomes (service performance and organisation-citizenship behaviour) and the individual-level outcome (turnover intentions). This study considers the important role of employees’ perceptions of HR practices by combining the perceptions of HR managers with those of employees in a multilevel analysis. The empirical research is based on a sample of 1,207 usable questionnaires from 129 HR managers and 1,078 employees in 98 companies in knowledge-based services in Saudi Arabia. The multilevel structural equation modelling (MSEM) with Mplus, version 8, is used to analyse the data.

This study shows that not all HR systems affect organisational outcomes in similar ways. While motivation-enhancing practices are the only HR system to have a direct effect on service performance, all three HR systems have direct effects on OCB and turnover intentions. The skill-enhancing practice have the largest effect on OCB while the empowerment-enhancing practice have the largest effect on turnover intentions. The analysis reveals that different HR systems may contribute to shaping various organisational cultures in order to attain the
desired outcomes. While the relationships between skill and empowerment practices, and service performance are positively mediated by competitive and innovative cultures, such relationships are negatively mediated by bureaucratic cultures. In contrast, these culture types have opposite effects on the relationship between motivation-enhancing HR practices and performance.

This study finds that while bureaucratic and community cultures negatively mediate the effects of skill- and empowerment-enhancing HR practices on OCB, both culture types positively mediate the effects of motivation-enhancement practices on OCB. This study does not support the mediating effect of organisation culture on the association between HR systems and turnover intentions. This study shows that human capital only mediates the relationship between motivation-enhancing HR practices and both service performance and OCB.

The present research provides several noteworthy contributions to our understanding of the mechanism by which HRM influences performance in the service sector. Although the present study describes some of its limitations, it highlights a number of important implications for researchers, as well as for practitioners. A number of possible directions for future studies have been provided.

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