AbstractThis paper identifies and analyses six relevant approaches for the analysis of Sustainable Human Resource Management and Organizational Performance: Resource-Based View, Dynamic Capabilities View, Knowledge-Based View, Behavioral Theory, Human Relations Theory, and Cooperative Systems and Ambidextrous Organizations. They are complementarity approaches. They can all be applied to the analysis of a specific resource or capability for sustainable human resource management (HRM) and, consequently, organisational performance. However, the contributions made by the Resource-Based View and the new approach of Ambidextrous Organizations seem to be the most comprehensive approaches for studying sustainable HRM from an internal perspective of firms that allows the long-term development of their organizational and society performance. Keywords: sustainable human resource management; organizational performance; society performance; resource-based view; knowledge-based view; dynamic capabilities view; behavioral theory; human relations theory or cooperative systems theory; ambidextrous organizations JEL Classification: M11; M12; O15; Q01
Sustainable Human Resource Management (HRM) has become one of the key strategic issues for organisational performance. Despite the importance of sustainable HRM, empirical application moves ahead of theoretical research, and an integrative conceptual framework is required for identifying sustainable HRM (De Prins et al., 2014; Kramar, 2014; Ehnert, 2014). Hence, the majority of research on HRM focuses on specific practices without taking into account the orientation, context, or human capabilities. Along these lines, this paper identifies and analyses the main theoretical contributions involving sustainable HRM and their implications for organisational and society performance. Therefore, the main research questions are:
- Can there be an integrating theoretical and conceptual framework that helps to contextualize the main studies on Sustainable HRM?;
- Can the orientation of HR practices influence the sustainable management of HRM for social and organisational performance?;
- Can the context of HR practices influence the sustainable management of HRM for social and organisational performance?;
- Can human capacities influence the sustainable management of HRM for social and organisational performance?.
Management literature identifies six different approaches (Resource-Based View, Knowledge-Based View, Dynamic Capabilities View, Behavioral Theory, Human Relations Theory or Cooperative Systems Theory and Ambidextrous Organizations) to the main human resources (knowledge, motivation and relationships) and capabilities (learning capability, emotional intelligence and social capability) for developing sustainable human resources and, consequently, organisational and society performance (Renwick et al., 2013). All the approaches are complementary and can be applied for analysing a specific resource or capability for sustainable HRM. The main theoretical approach is the Resource-Based View (RBV) (Grant, 1991; Barney, 1991). This approach explains the influence of sustainable and valuable resources (knowledge, motivation and relationships) and capabilities (learning capability, emotional intelligence and social capability) on organisational and society performance. In this line, Gratton and Ghoshal (2003) single out the three dimensions of human resources: intellectual capital, emotional capital, and social capital. This integrative paper examines these three dimensions and their ambidextrous resources (Raisch & Birkinshaw, 2008; Eisenhardt & Martin, 2000).
Additionally, this study is based on another five management approaches. First, the Dynamic Capabilities View (DCV) is useful for analysing human capabilities such as learning, emotional intelligence and social interaction (Eisenhardt & Martin, 2000; Song et al., 2005). These capabilities allow addressing the sustainability and development of HRM for organisational and society performance. Second, the Knowledge-Based View (KBV) (Martín de Castro & García Muiña, 2003; Grant & Baden-Fuller, 2004) allows explaining how knowledge can improve organisational performance (new information, new ideas, new practices...), as well as create free and sustainable societies. Third, Behavioral Theory (March & Simon, 1958) allows explaining how motivation can improve organisational performance (behaviour and value guide, positive attitudes, new goals and achievements, new successes...) as well as creating an ethical society. Fourth, Human Relations Theory and Cooperative Systems (Herzberg et al., 2010) allows explaining how social relationships can improve organisational performance (teamwork, cooperation, meetings…), as well as create a sustainable society through strong relationships based on trust and respect. Finally, the Ambidextrous Organizations Approach supports HRM according to its orientation (exploitation or exploration) for the development of organisational and society performance (Gibson & Birkinshaw, 2004; Halevi et al., 2015; Kauppila & Tempelaar, 2016). Human resources can therefore be oriented according to the main productive activities based on their short-term exploitation. For example, resources such as explicit knowledge, extrinsic motivation or formal relationships are easily accumulated and manageable in the short term. However, other explorative human resources, such as tacit knowledge, intrinsic motivation or informal relationships, are more difficult to manage, although they can lead the organization and society to record an extraordinary and sustainable long-term performance.
All the approaches are complementary. However, the RBV and Ambidextrous Organizations are the most comprehensive approaches for studying sustainable HRM from the internal perspective of firms (Banks & Kepes, 2015). From the Ambidextrous Organizational approach, two important orientations for sustainable HRM are identified: exploration and exploitation. An organization's HRM orientation is very important for designing sustainable HRM practices by providing guidelines on how an organization's sustainable HRM can be shaped according to its resource orientation for internal performance (organizational) and external performance (society) in the long term (Renwick et al., 2013).
This paper makes three main contributions:
- Providing an integrative theoretical framework for understanding sustainable HRM and its impact on organisational performance;
- Exploring the sustainable orientations and context of resources for the development of organisational performance;
- Examining the main role of human capabilities that helps to identify the individual characteristics of sustainable HR and their development. In this sense, it is argued that sustainable HR practices are likely to be different between firms, mainly due to the distinct resources orientation, human capabilities, or other institutional, structural and context factors.
The paper is structured as follows. First, the theoretical background is reviewed. The Resource-based View and Dynamic Capabilities View are analysed as relevant approaches for understanding the internal effect between HRM, human capabilities and organizational performance. In the following sub-sections, the Knowledge-Based View, Behavioral Theory and Human Relations/Cooperative Systems are analysed for the study of the keys to sustainable HRM (knowledge, motivation and relationships). Specifically, a novel and integrative theoretical framework is proposed for analysing sustainable HRM and organisational performance, namely, the Ambidextrous Organizational Approach. It integrates the different perspectives from a twin view of HRM (exploitation and exploration) for the development of long-term organisational performance. This reveals the moderating role of human capabilities for enhancing the effects between the development of sustainable HRM and organizational performance. The next section contains a review of organizational performance and society performance. Finally, the main discussion and its conclusions are presented with the theoretical development, guides for future research, and practical implications.
2. Integrative model and theoretical propositions
Figure 1 presents an integrative theoretical model for the study of sustainable HRM and organisational and society performance.
In summary, through this model we propose that: a) Sustainable HRM is positively related to organisational performance; and b) Human capabilities moderate the relationships between sustainable HRM and organisational performance. We develop in the following lines these theoretical relationships.
2.1. Sustainable Human Resource Management
Organisations are increasingly taking responsibility for individual and organisational behavioural outcomes for the creation of a sustainable eco-system (DeNisi et al., 2014). Sustainable HRM has been conceptualised primarily based on the extent to which a particular outcome (internal or external) has been emphasised (Kramar, 2014). Broadly speaking, three schools of thought can be identified. The first approach emphasises the capacity for reproduction, and its focus is creating HR systems that can withstand social, environmental and demographic pressures to last longer and achieve organisational goals (Ehnert, 2009). The second approach emphasises economic, environmental and social consequences. Scholars argue that HR practices oriented toward this triple bottom line (3BL) are sustainable, mainly because of their ability to create a social, ecological and economically friendly image in the minds of stakeholders (Branco & Rodrigues, 2006). The third approach emphasises the earlier two approaches together, and it considers that HR systems and external economic, ecological and social factors are interrelated (Renwick et al., 2013).
The concept of Sustainable Human Resource Management (HRM) is becoming increasingly popular among academics, practitioners and researchers. This is due to its positive consequences not only for organisations but also for society, the economy and the environment. It makes internal HR systems last longer and effectively links them to external outcomes, the 3BL.
This paper contends that employee engagement, employee wellness, work-life balance, autonomy and empowerment, self-leadership, strategic staffing, performance and reward systems, knowledge, motivation, and greening the firm are important for advancing a sustainable HRM (Cohen et al., 2012; Jackson & Seo, 2010). There is now a need, nevertheless, to accept that at a macro level the organisation has a relationship with its economic and social environments and is linked to social and ecological sustainability.
The Sustainable HRM system itself therefore becomes a ‘survival strategy’ for organisations dependent on employees of the highest calibre (Ehnert, 2009): individuals with high levels of knowledge, motivation and networks.
2.2. Resource-Based and Dynamic Capabilities Theories
The Resource-Based View (RBV) is one of the most suitable approaches for analysing the impact of sustainable HRM on organisational and society performance. This approach is very useful for understanding the joint effect internal and valuable factors have on sustainable HRM. RBV underscores the great importance of intangible resources within the firm in terms of recording extraordinary results, as a source of competitive advantage. Intangible resources and certain aspects of HRM are therefore specific unobservable assets that do not appear on corporate balance sheets or financial statements (R. M. Grant, 1991). These types of resources can help to explain the differences in innovation and organisational performance. HRM is based on knowledge, experience, motivation, relationships and ideas susceptible to multiple uses without loss of value (Itami, 1987).
Therefore, these characteristics of HRM, along with their scarcity and their unique and exclusive nature, are a source of differentiation and competitive advantage. This differentiation must be maintained over time in pursuit of a sustainable competitive advantage (Wernerfelt, 1984). In fact, HRM is based on cumulative processes, that is, it generates stock and flow at the same time. Organisational performance is therefore a relevant indicator of the achievement of a sustainable competitive advantage (Montgomery & Hariharan, 1991).
Dynamic Capabilities View (DCV), can be considered an extension of RBV in which the skills and competences of the employees and the firm (dynamic capabilities) are important for obtaining a competitive advantage. According to the DCV, knowledge is the main resource for the development of competitive advantage. Employees can develop two types of knowledge, whereby it is not only a source of stock, buy also a source of flow. It is knowledge in continuous dynamism that can lead to the creation of extraordinary capabilities, such as learning capability. The DCV therefore acquires special importance as a complementary view of the RBV (Carpenter et al., 2001; Newbert, 2005; Teece et al., 1997).
Teece et al. (1997) define dynamic capability as "the capability of the firm and the employees to develop, integrate, build and reconfigure internal and external competencies in environments with a high rate of change". This means the exploitation and exploration of competencies to adapt to changing environments is very important. The proper management of resources and their adaptation to the firm and dynamic environment can therefore improve organisational performance (Martín de Castro & García Muiña, 2003). Consequently, any capability that renovates, develops and adapts skills and abilities to a new scenario can be described as dynamic (Teece et al., 1997). In short, learning capability, emotional intelligence, and social capability can be considered dynamic capabilities, that are useful for understanding the effect of human capabilities on the development of sustainable HRM.
2.3. Knowledge-Based View
The main components of the RBV are the firm’s internal resources, and specifically its intangible ones (Itami, 1987). This paper analyses employees' knowledge as one of three keys to sustainable HRM that firms can manage for the development of organisational and society performance. In this vein, until the study by Spender and Grant (1996), very few authors had referred to terms related to knowledge within the firm, such as tacit knowledge, skills, or learning capabilities. However, Spender and Grant (1996) began to study the implications of knowledge within the firm.
KBV adopts a perspective on the firm and competitive advantage based on the study of knowledge. Knowledge is the most important resource within the firm, and it can be created, stored and applied, becoming the main source of competitive advantage (R. M. Grant & Baden-Fuller, 2004). Consequently, KBV is considered a fundamental part of RBV. KBV thus can be understood as an extension of RBV in which knowledge is the most relevant strategic resource for the development of long-term organisational and society performance. This approach is very important for analysing knowledge inside the firm.
Nonaka (1994) has argued that it is very important for the firm to implement employee knowledge management practices, whereby this resource can play a key role within the sustainable firm. Nonaka (1994) has also pointed out that employees possess two types of knowledge: tacit knowledge (difficult to communicate and formalise) and explicit knowledge (easy to store and transmit). The interconnection between them can result in a very valuable type of knowledge for organisational and society performance.
Tacit knowledge allows employees to directly apply knowledge from various sources, such as their experience or personal life. These sources cannot be contained in books, courses or databases. This is the main reason for their validity for the firm. Explicit knowledge allows employees to accumulate knowledge through sundry other sources, such as courses, databases or degrees. Knowledge arises when individuals interpret and use information related to experiences. Consequently, knowledge is not only documents or databases, but also processes and practices found in relationships, communication, experiences or shared information (González-Álvarez & Nieto-Antolín, 2007; Oyemomi et al., 2016; Osabutey & Jin, 2016; Groza et al., 2016; Cheng et al., 2016). There are several types of knowledge: tacit and explicit, individual and collective, external and internal, and know-how and know-why (Leiponen, 2006; Garud, 1997).
This paper focuses on the classification established by Leiponen (2006), which distinguishes between tacit knowledge and explicit knowledge; on the one hand, as those practices that seek to promote decoded and informal knowledge, that is, tacit knowledge, and on the other, as those practices or training actions that seek to accumulate and manage technical or coded knowledge, that is, explicit knowledge. Both types of knowledge can help to improve organisational and society performance. Some authors, such as Hayton (2005) and Paton (2012), find a positive relationship between certain factors of knowledge and organisational performance. For example, diversity can help employees to acquire new knowledge and new cognitive approaches that promote organisational performance. Taggar (2002) indicates that employees with knowledge have a positive influence on organisational performance. Dyer and Shafer (1998) report that employees with a high level of tacit knowledge generate creative ideas and drive organisational performance.
Specifically, tacit knowledge is the knowledge employees accumulate based on experiences, culture, childhood, relationships or communication. It is not collected or stored in databases, training courses or information systems. Tacit knowledge generates efficient productive processes and greater self-learning, consequently helping to improve organisational performance. Tacit knowledge therefore helps to drive organisational performance (Leiponen, 2006). On the other hand, explicit knowledge is the knowledge that employees accumulate through training, specialised courses and databases. It seems easier to manage than tacit knowledge. The accumulation and management of both types of knowledge have an impact on organisational and society performance. Knowledge gleaned from courses or training practices can generate new learning capacities, and therefore increase the probability of driving organisational performance. Employees need technical skills to create solutions in the workplace. Although explicit knowledge is easily transferable, it can also help to drive organisational performance (Leiponen, 2006):
Proposition 1a. Tacit knowledge is positively related to organisational performance.
Proposition 1b. Explicit knowledge is positively related to organisational performance.
2.4. Behavioral Theory
Behavioral Theory provides complementary theoretical support for the study of motivation management and organisational performance. March and Simon (1958) have argued that proper personnel management requires all the members to be committed. Good motivational management can be achieved through the decision-making process, obtaining satisfaction, participation and involvement. The authors argue that employees will direct their behaviour towards the decisions that are most satisfactory to them. Managers should therefore propose decision-making alternatives that may be satisfactory to their employees and align their behaviour with the firm.
Based on the concept of limited rationality, March and Simon analyse the notion of maximising behaviour. The number of alternatives that can be presented to employees to direct their behaviour is unlimited. For this reason, their tastes and preferences need to be analysed to offer them the most satisfactory options. Employees do not maximise objective functions, but actually care about satisfying their own interests; the firm's job is to offer alternatives that align their behaviour with the firm's objectives. Therefore, the firm should not only pursue the maximisation of its short-term performance, but should also constitute the sum of individual objectives over the long term. Employees’ objectives differ from those of the firm, so managers play an important role in guiding employees’ behaviour. For example, economic or internal incentives can help to guide the employee and organisational behaviour.
Thus, Behavioral Theory can be applied to the analysis of decision-making and how the repercussions of the attitudes and behavior are important motivational mechanisms, considering motivation as a variety of reasons that encourage the individual to activate and direct their behaviour. There are two types of motivation: extrinsic and intrinsic (Osterloh & Frey, 2000). Extrinsic motivation occurs when individuals satisfy their needs externally, mainly through monetary compensations. Intrinsic motivation provides internal satisfaction in two ways, social and self-realisation (Schein, 2015; Gerhart & Fang, 2015).
Specifically, intrinsic motivation (do Paço & Cláudia Nave, 2013; Schlechter et al., 2015; Steele et al., 2016) refers to the internal forces employees possess, such as trust or self-realisation. It is not promoted by any external force (Vancouver, 2008). A recent line of authors (Wine et al., 2012; Meisler, 2014) suggest that intrinsic motivation is a key resource for the development of organisational and society performance. Miguel-Dávila et al. (2012) contend that the application of techniques to stimulate active participation can generate greater employee involvement and improve organisational performance. Organisational performance can therefore be easier to achieve with a high level of intrinsic motivation.
On the other hand, extrinsic motivation (Vidal-Salazar et al., 2016) refers to everything instigated and fostered by external agents, such as economic incentives and promotion. Vidal-Salazar et al. (2016) consider extrinsic motivation to be a source for the generation of new ideas and organisational performance. Therefore, when employees achieve a high level of extrinsic motivation, it will be easier for them to improve their performance. When employees have met their basic needs, they can devote their efforts to improving their performance.
Most studies have analysed employee motivation jointly or by giving special importance to extrinsic incentives (Vidal-Salazar et al., 2016; Sung et al., 2017). It is important to study both constructs separately, albeit from an integrative approach to the development of organisational performance. Amabile (1998) and Schlechter et al. (2015) consider that both types of motivation are important because there may be synergies between them that help drive organisational performance. Amabile (1998) argues that money or recognition increase self-esteem, and therefore increase intrinsic motivation and organisational performance.
Proposition 2a. Intrinsic motivation is positively related to organisational performance.
Proposition 2b. Extrinsic motivation is positively related to organisational performance.
2.5. Human Relations and Cooperative Systems Approaches
Human Relations and the Cooperative Systems Approach support the study of employee relations and organisational performance. After the experiments carried out by Elton Mayo in the Western Electric company in 1920, the author discovered that informal groups in work environments could be an important source of organisational performance and competitive advantage. Mayo concluded that the emotional aspects within human relationships at work are much more powerful elements for obtaining organisational performance than other elements or physical assets. Social participation is a key component of organisational performance. Follett (1924) stresses the importance of coordinating relationships in an efficient performance. In addition, Follett (1924) describes the positive effect motivation and social groups have on business results and organisational performance. Maslow (1954), McGregor (1957), and Herzberg et al. (2010) argue that firms must manage and integrate relationships and motivation to obtain an excellent performance.
Another important approach for studying relations and organisational performance is the Cooperative Systems Approach. Barnard (1938) presented a new management approach in which firms should be managed as cooperative systems and not as mechanical, structured or independent processes. According to Barnard, employees do not act alone when it comes to reaching their objectives, but they relate to each other, giving rise to a series of networks. Barnard pointed out that relationships are easier to manage when firms are small because the firm’s objectives coincide with those of its employees, and there is cooperation. In larger firms, however, there is a greater need to manage relations because there may be conflict.
The networks and contacts established by employees can help to drive organisational performance. They can be of two types: formal and informal. Informal relations refer to the contacts employees generate in informal meetings or group sessions. They are not included in formal documents such as a labour contract. Most firms manage professional employees’ formal relations (Adams et al., 2006; Blumentritt & Danis, 2006). These can be important sources of organisational performance, but there is a need to manage informal relations that help to strengthen links and complementary knowledge of relevance to organisational performance (Tödtling et al., 2009). Phene et al. (2006) find that informal relations are important for innovation and organisational performance. Relaxed environments where there is a good atmosphere and trust have a greater probability of improving organisational performance.
Formal relations refer to all those that occur within the firm's work environment, where the main reason for the relation is the exchange of work information. Gallego and Casanueva (2007) argue that both types of relations can help to obtain important cooperation processes and organisational performance. In addition, Adams et al. (2006) and Blumentritt and Danis (2006) incorporate as formal relations those that occur between other agents (suppliers or customers). These relations are marked by professional competences (formal relations). This can generate sources of knowledge, ideas and organisational performance.
Proposition 3a. Informal relations are positively related to organisational performance.
Proposition 3b. Formal relations are positively related to organisational performance.
2.6. Ambidextrous Organizations Approach for sustainable firms.
This paper analyses how the ambidextrous management of three aspects of sustainable HRM (knowledge, motivation, and relations) positively influence organisational performance. The Ambidextrous Organizations Approach was introduced by Gibson and Birkinshaw (2004). These authors show that managers and employees can direct resources toward exploration and/or exploitation activities. Jarzabkowski et al. (2013) argue that firms should create the context for employees’ ambition to flourish. Although the ambidextrous literature recognises the important role employees play in guiding their resources towards exploration and/or exploitation activities, most have focused their studies on the organisational context or climate as generators of ambidextrous behaviours (Jarzabkowski et al., 2013). It is therefore important to study the Ambidextrous Organizations Approach for sustainable HRM on an individual level.
Rogan and Mors (2014), Mom et al. (2009) and Lavie and Rosenkopf (2006) have highlighted the important role played by sustainable HRM within the Ambidextrous Organizations Approach. It is important to take into account the type of knowledge that flows within the firm to observe whether it is oriented in an ambidextrous way. Kao and Chen (2016) show that employee motivation can influence ambidextrous behaviour. Employees must be managed to obtain ambidextrous behaviour in the firm. Brusoni and Rosenkranz (2014) argue that it is essential in changing environments for employees to have a high level of ambidextrous behaviour.
Ambidextrous sustainable HRM should be a priority for managing managers (Halevi et al., 2015; Carmeli & Halevi, 2009; Birkinshaw et al., 2016; Turner et al., 2016). Managers must be responsible for coordinating sustainable HRM towards exploration and/or exploitation activities. Halevi et al. (2015), Jansen et al. (2016) and Kauppila and Tempelaar (2016) have reported that ambidextrous sustainable HRM helps to generate greater group cohesion and more proactive attitude towards organisational performance.
In sum, firms with ambidextrous sustainable HRM will be prepared to face new challenges and, consequently, improve organisational performance. Therefore, the Ambidextrous Organizations Approach is key to understanding the way in which HRM is oriented. Further, this approach allows to analyse productive activities that lead to long-term organisational and society performance.
|Resource-Based View||Sustainable HRM as a source of competitive advantage||Importance of HRM and human capabilities for the development of organisational performance||Knowledge Motivation Relationships Learning Capability Emotional Intelligence Social Capability||W. M. Cohen and Levinthal (1990) Gopalakrishnan and Bierly (2001)|
|Knowledge-Based View||Knowledge as a source of competitive advantage||Importance of knowledge for the development of organisational performance||Knowledge||Martín de Castro and García Muiña (2003) Grant and Baden-Fuller (2004)|
|Behaviour Theory||Decision-making of employees as a motivating tool||Importance of decision-making for the development of motivation and organisational performance||Motivation||March and Simon (1958)|
|Human Relations Theory and Cooperative Systems||Relationships and cooperation as sources of competitive advantage||Importance of relationships for the development of organisational performance||Relationships||Maslow (1954) Herzberg et al. (2010)|
|Dynamic Capabilities View||Dynamic Human Capabilities as a source of competitive advantage||Importance of human capabilities for the development of sustainable HRM and organisational performance||Learning Capability Emotional Intelligence Social Capability||Teece et al. (1997) Eisenhardt and Martin (2000) Song et al. (2005)|
|Ambidextrous Organizations||Ambidextrous HRM as a source of differentiation and organisational performance||Importance of ambidextrous HRM for the development of organisational performance||Knowledge Tacit/Explicit Motivation Intrinsic/Extrinsic Relationship Informal/Formal||Gibson and Birkinshaw (2004) Rogan and Mors (2014) Kao and Chen (2016)|
Table 1 summarises the six approaches, their main authors, their main objective, their main characteristics, and their specific application to sustainable HRM.
2.7. The Moderating Role of Human Capabilities
Human Capabilities, as moderating variables, suggest that sustainable HRM and organisational performance can be enhanced according to employees’ capabilities (learning, emotional intelligence, and social). Human capabilities can improve the effects between sustainable HRM and organisational performance (Ferris et al., 2008). Employees not only accumulate resources within firms (stock) and develop capabilities (flows) to enhance sustainable HRM (Maatman et al., 2010). Firms that are concerned about sustainable HRM will seek to establish a culture for developing skills and capabilities.
The existence of human capabilities as moderating variables can be explained because they are complementary assets. Employees that achieve a certain degree of learning capability, emotional intelligence and social capability will help the firm to obtain a competitive advantage and organisational performance. Human capabilities can be considered a mechanism of imperfect imitability (Alegre & Chiva, 2008). Firms therefore need employees that have developed or have a certain potential for developing their capabilities. Thus the relationship between sustainable HRM and organisational performance can be considered a contingency relationship, with learning capabilities and emotional intelligence and social capabilities as the main moderating variables.
Learning capability. Knowledge management is one of the most important aspects for the development of competitive advantage and organisational performance. Every business process is, in itself, a knowledge process, and variables such as the learning capability can further develop the generation of new ideas, innovations and organisational performance. An employee with a high learning capability can obtain new knowledge (Alegre & Chiva, 2008).
Van de Ven (1986) has argued that the facilitators of performance include context, culture and human capabilities. Salman and Saives (2005), Aiman-Smith et al. (2005) and Hegde and Shapira (2007) indicate that human capabilities, such as learning, strengthen innovation results for the development of organisational performance. Akgün et al. (2007) define learning as the ability to transfer and integrate new knowledge. Other authors, such as Subramaniam and Youndt (2005) and Cabello-Medina et al. (2006), contend that employees with easier access to information and knowledge will develop a greater learning capability, and this will be reflected in organisational performance. Employees with the capability to quickly assimilate information and knowledge will be able to adapt more easily to a changing environment. Therefore, highly trained employees absorbing new knowledge will help to develop organizational performance:
Proposition 4. Learning capability positively moderates the relationships between tacit and explicit knowledge and organisational performance.
Emotional intelligence. Firms need employees trained to understand and manage feelings, emotions and motivations. It will help them to discern which motivational incentives are appealing (Riggio & Lee, 2007), so high emotional intelligence will enhance the impact motivational management has on organisational performance (Goleman, 1996; Meisler, 2013, 2014).
This paper posits that emotional intelligence can strengthen the effects between motivational management and organizational performance (Levine, 2010). Salman and Saives (2005) indicate that human capabilities, such as the ability to recognize and feel one’s own and other people’s emotions, can help drive organisational performance. High emotional intelligence allows clarifying tastes and preferences. Emotional intelligence is a relevant guide towards organisational performance (Ferris et al., 2008; Gabriel et al., 2016). Employees with the ability to quickly assimilate emotions or feelings will be able to recognise and adapt their tastes to organisational performance more easily (Jordan et al., 2002):
Proposition 5. Emotional intelligence positively moderates the relationships between intrinsic and extrinsic motivation and organisational performance.
Social capability. The implementation of practices that enhance relations inside the firm will have an important impact on organisational performance (Ferris et al., 2008). Employees with high social capability will have a higher predisposition toward relationships. Social capability implies having or acquiring certain capabilities destined to overcome economic and social changes. Social capability is thus a personal competence for developing social relations (Paula-Pérez, 2000; Viitala & Kantola, 2016).
Paula-Pérez (2000) and Moran (2005) argue that the facility with which employees are able to provide support, participating in teamwork or dialogue, can enhance existing relations between employees and, consequently, drive organisational performance. Group cohesion helps achieve the firm’s goals and, consequently, organisational performance. Tsai and Ghoshal (1998) have added that communication, social events and meetings can help establish relationships and drive organisational performance (Jiang & Liu, 2015):
Proposition 6. Social capability positively moderates the relationships between informal and formal relations and organisational performance.
2.8. Organisational performance and society performance
The ultimate goal of managers is to increase organisational performance (Tseng & Lee, 2014). Performance is a key issue in management research, which has no simple and unanimous definition or metrics (Maltz et al., 2003). Performance involves the effectiveness of the actions specified and required in the employee function descriptor for the achievement of organisational objectives (Janssen & Van Yperen, 2004; Menges et al., 2017). In relation to individual performance, adaptive performance involves the skills for adapting to dynamic situations (Hesketh & Neal, 1999; Saridakis et al., 2017). Regarding this concept, Charbonnier-Voirin and Roussel (2012) propose several dimensions based on the work of Pulakos et al. (2000). Two dimensions are closely related to the reaction to uncertainty and ambiguity: ‘solving problems creatively’ (dealing with complex or ill-defined situations) and ‘handling emergencies and crises’ (finding solutions to avoid threats and risks). There is a growing recognition that traditional models of performance are static and need to include “responsiveness to changing job requirements”, the so-called adaptive performance (Jundt et al., 2015). These two dimensions reflect the features of the adaptability to dynamic situations, uncertain environments, and ambiguity contexts.
Knowledge management is an important source of organisational performance (McIver et al., 2012). Technical information, courses or a high level of knowledge (explicit knowledge) can help to improve organisational performance in competitive markets (Kaufman, 2015). However, other aspects such as experience, personal life or relationships, can be relevant sources of competitive advantage over the long term (Marchington, 2015). The relationship between motivation and organisational performance has greater prominence among researchers (Diestel et al., 2014; Dineen et al., 2007; Harrison et al., 2006; Springer, 2011). Happy employees that feel fulfilled in their jobs record higher performance levels, suggesting motivation is a predictor of organisational performance (Uslu, 2016). A motivated employee focuses on the quality of the tasks, shows commitment to the organisation, values clients, and is more productive (Ferreira et al., 2009). The results reported by Ouedraogo and Leclerc (2013) show a clearly positive influence of motivation on employee performance, consistent with other studies positing that motivation has a positive impact on organisational performance (Judge et al., 2001; Vermeeren et al., 2014; Wu, 2017).
Among the various influences affecting organisational performance, previous studies support a positive relationship between motivation and organisational performance (A. M. Grant, 2008; Ryan & Deci, 2000; Springer, 2011). For example, high intrinsic motivation has been linked to higher achievement, while extrinsic motivation has long been associated with lower organisational performance (Deci & Ryan, 2000; Gagné et al., 2015). Der-Karabetian and Gebharbp (1986) conclude that employees participating in a business programme had greater knowledge and motivation, better relations and fewer absences, resulting in increased organisational performance.
In addition to the organisational performance, nowadays societies are expected to base their growth strategies on three main sustainable development goals: the economy, social inclusion, and environmental protection, which reflect the three pillars of the 3BL approach characterizing a sustainable business development (B. Cohen et al., 2008; Glavas & Mish, 2015). One of the key topics tackled by the sustainable development discourse in recent years concerns the relationship between firms and society performance. Indeed, sustainable development is deemed to be a necessary condition for following the 3BL approach, thus favouring social and environmental responsiveness, while boosting organisational performance and economic growth (Dibrell et al., 2015).
However, the 3BL approach is far from being the dominant HRM model for companies (Hall & Wagner, 2012; Schaltegger et al., 2016). The role of social issues in this discussion has been undervalued. Furthermore, sustainable development requires a ‘society pool’ approach in that different stakeholders (employees, customers, suppliers, and governments) are involved (Gasbarro et al., 2017; Vollenbroek, 2002; Wu, 2017). On the one hand, stakeholders’ involvement helps to clarify the criteria for sustainable outcomes and operationalise new strategic practices for HRM accordingly (Cleveland et al., 2015).
Finally, an in-depth analysis of the tensions between short-term versus long-term performance should be more carefully addressed (Slawinski & Bansal, 2015). In addition, sustainable development is a society-level matter (society performance). Thus, it is also important to differentiate the effects that sustainable HRM exerts on organisations from those exerted on stakeholders and society as a whole, thus shifting attention from the organisational level to the societal level (B. Cohen et al., 2008; Longoni & Cagliano, 2018; Renkema et al., 2017). This includes, for instance, an in-depth consideration of the distribution of the economic, social, and financial merits, knowledge, mistakes, gains, and losses among all the players that may have contributed to the design of sustainable HRM and organisational performance (Buller & McEvoy, 2012). There is still considerable uncertainty over whether organisational performance actually leads to a more sustainable society (Hall & Wagner, 2012):
Proposition 7. Sustainable Human Resource Management and organisational performance are positively related to society performance.
3. Concluding remarks and guides for future research
This paper offers several complementary approaches to analyze the importance of a specific form of sustainable HRM for organizational performance. The Resourced Based View deals with HRM from an aggregate point of view, analyzing the valuable aspects of sustainable HRM (unique, heterogeneous, difficult to imitate...). However, it does not consider the orientation of HRM (exploitation/exploration) for the development of productive activities and, consequently, for organisational and social performance. Complementary approaches emphasises a certain sustainable HRM and its orientation.
In this study, the importance of human capabilities is analysed: (1) the Resource-Based View is useful for understanding the joint effect internal and valuable factors have on sustainable HRM; (2) the Dynamic Capabilities View is useful for understanding the effect of human capabilities on the development of sustainable HRM; (3) the Knowledge-Based View is very important for analysing knowledge inside the firm; (4) the Behaviour Theory can be applied to the analysis of decision-making and how the repercussions of the attitudes and behaviour are important motivational mechanisms; (5) the Human Relations Theory and Cooperative Systems can be applied to the analysis of relationships between employees and the sustainability of their performance; and (6) the Ambidextrous Organizations Approach is key to understanding the way in which HRM is oriented and to approaching the analysis of productive activities that lead to long-term organisational and society performance.
In spite of this complementarity, the two main approaches that have been more concerned with analysing sustainable HRM and its effects on organisational and society performance are the Resource-Based View and the Ambidextrous Organizations Approach. Many studies on HRM are firmly based on the Resource-Based View and its derived approaches. In these studies, HRM is considered to be an accumulative activity, characterised by its complex and systemic nature and its diversity, being composed of a combination of factors. It is therefore essential to define the specific orientation of HRM and how it should be analysed. The Ambidextrous Organizations Approach, together with the specific contributions of all the other approaches, provides a suitable theoretical support for empirical research on sustainable HRM for the long-term development of organisational and society performance.
In this line, the proposed model seeks to address the following: a) providing an integrative theoretical framework for understanding sustainable HRM and its impact on organisational performance; b) exploring the sustainable orientations of resources for the development of organisational performance; c) examining the main role of human capabilities that helps to identify the individual characteristics of sustainable HR and their development (De Prins et al., 2014; Kramar, 2014; Ehnert, 2014). The study is critical of the best practices approach, and it is argued that sustainable HR practices are likely to be different between firms, mainly due to the distinct resources orientation, human capabilities, or other institutional and structural factors.
The model makes several theoretical contributions to the literature. First, it extends the literature on Sustainable Human Resource Management through internal management approaches for the development of organisational and society performance. It summarises and integrates the literature and provides directions for future research. This study's model also presents a clear conceptual distinction between three ambidextrous sustainable human resources. It distinguishes between tacit and explicit knowledge, intrinsic and extrinsic motivation, and informal and formal relations. Although both concepts are very important, the literature on Sustainable Human Resource Management should pay more attention to the tacit part of knowledge, intrinsic motivation, and informal relations. If managers direct the most internal human behaviour in companies, then both firms and society will reach a commitment to obtain sustainable long-term organisational performance. The basis of sustainable economic and social performance therefore lies in ambidextrous HRM.
Our literature review indicates that, overall, more empirical research has been conducted on explicit knowledge, extrinsic motivation, and formal relations than on tacit knowledge, intrinsic motivation, and informal relations. Furthermore, this study analyses three important human capabilities as moderating variables between the effects of HRM and organisational performance, considering that sustainable HRM can be successful if managers focus on ambidextrous HRM and human capabilities such as learning, emotional intelligence, and social skills. In addition, traditional literature has studied the effects of knowledge, motivation, and relations as separate factors. Significantly fewer studies have examined the effects of ambidextrous sustainable HRM and the effects of human capabilities on organisational performance within an integrative model.
As another theoretical contribution, it is suggested that a mixed measure of ambidextrous HRM is more suitable to capture its multidimensional and multilevel nature. It is argued that an ambidextrous approach to HRM better captures the different characteristics and behaviours that distinguish employees in firms. Ambidextrous is defined as having two dimensions: A) HRM oriented toward exploration: the most internal part and difficult management (tacit knowledge, intrinsic motivation, and informal relations). B) HRM oriented toward exploitation: the most external part and the one more easily managed (explicit knowledge, extrinsic motivation, and formal relations). Finally, the moderating effects of human capabilities are analysed. Overall, it seems reasonable that the relationships between each human resource and its dimensions and organisational performance would be strengthened, due to the capability to learn, manage emotions, and socialise.
Guides for future research and practical implications
Therefore, following the model, future research can focus on the study of a part and empirically test in national and international firms. For example: a) Three independent models with each resource (knowledge, motivation and relationships); b) A comparative study between the resources to see what type of orientation (exploration / exploitation) has a greater impact on the organization; c) It would be appropriate to analyse the mediating role of other variables in the model such as creativity or innovation; d) Finally, future researchers can study the effect of the proposed moderating variables or other influencing ones such as absorption capability.
There are several practical implications for management practice and society. First, the obvious implication is that managers should consider an ambidextrous HRM. The development of sustainable human resources requires combining their external and internal parts. For example, explicit knowledge is a significant resource in firms for technical development, but tacit knowledge is vital for obtaining unique and valuable information forthcoming from experience. Extrinsic motivation is relevant for employees, but intrinsic motivation is a direct driver of human behaviour in long-term organisational performance. Intrinsic motivation is based on internal forces such as satisfaction, self-realisation, happiness... Finally, contractual relations (formal) are relevant for regulating tasks and competencies, but informal relations are a powerful nexus of networks. Thus, firms with ambidextrous HRM systems can positively influence organisational and society performance from a sustainable perspective.
In addition, an HRM system based solely on external human resources is a weak predictor of long-term organisational performance. This means firms with socially-related information exchange, employee motivation, experiences, and creating commitment, trust and cohesion among employees, record a major long-term organisational performance. Much of this is enabled through social interaction among employees, including informal conversations, socialising outside work, and meetings. Informal interaction is less common, and interaction is more frequently characterised as formal in the context of scheduled meetings, arranged for purposes such as defining and assigning particular task contributions. Thus, firms need to endeavour to directly encourage and facilitate ambidextrous HRM systems through training and human capabilities. These efforts would be enhanced by selecting team members whose personality profiles (such as high levels of empathy, motivation, knowledge and socialisation) are positively associated with organisational and society performance.
The authors are grateful for the support provided by the Spanish Ministry of Science and Innovation (Funder Identifier: http://dx.doi.org/10.13039/501100004837). Project PID2019-107546GA-I00 –AEI/FEDER, UE.
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- Volume: 4; Issue: 2; elocation-id: e281 DOI: 10.26784/sbir.v4i2.281
Ministerio de Ciencia e Innovación
Grant numbers: PID2019-107546GA-I00 –AEI/FEDER, UE
- Copyright 2020 Lucía Muñoz-Pascual, Jesús Galende
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Muñoz-Pascual, L., & Galende, J. (2020). Sustainable Human Resource Management and Organisational Performance: An Integrating Theoretical Framework for Future Research. Small Business International Review, 4(2), e281. https://doi.org/10.26784/sbir.v4i2.281
- Submitted: 2020-06-11 Accepted: 2020-09-01 Published: 2020-09-15