Summary of PhD thesis in Business Administration: The relationship between the high performance human resource management system, innovation and firm performance of enterprises in Vietnam

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The thesis examines the impact of highly effective human resource management system on innovation and business performance; propose management implications to enhance business performance through improving the highly efficient human resource management system as well as enhancing innovation in the enterprise.

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Nội dung Text: Summary of PhD thesis in Business Administration: The relationship between the high performance human resource management system, innovation and firm performance of enterprises in Vietnam

1 2 PRODUCTION In addition, in the context of the Vietnamese economy, “most workers still want to work in large firms (Webster, 1999) and in the state sector (Marlow and Patton, 1. The urgency of the thesis 2002) for entrepreneurs. Private or small enterprises do not have job guarantees” (cited Oke (2015) argued that human resource management continues to play a central by Nguyen and Bryant, 2004). Research by Le and Truong (2005) in Vietnam also role in enterprises. “Human resource management is being proposed to solve corporate showed that job security is an important factor because if employees receive a long- problems such as quality management, lean production, technology improvement and term commitment to work, they will try to make efforts as well as make full use of the business process change” (Lu et al., 2015). ability to advance in the enterprise, contribute to improving the operational In practice, according to the General Statistics Office (2018), as of December 31, performance. Besides securing jobs for employees (Le and Truong, 2005), research by 2018, the total number of operating enterprises in the country was 714,755, of which Zhu (2002) in Vietnam also concluded that enterprises also need to focus on securing the number of service enterprises had business results. sales of 390,765 enterprises, jobs for good managers. employees have the skills to keep them in the business for the accounting for 54.7% (Ministry of Planning and Investment, 2019). However, long term. In addition to having a positive impact on performance (Nguyen and according to the General Statistics Office (2017a), the service sector had the largest Bryant, 2004; Le and Truong, 2005), by ensuring jobs for their workers, enterprises in proportion of enterprises but attracted only 4.9 million employees, accounting for Vietnam can maintain and enhance their performance. the amount of human resources 33.8%. Meanwhile, the manufacturing and manufacturing sector has only 164,189 towards important innovation results, contributing to improving competitiveness in enterprises, accounting for 23.9% but attracts the most number of employees with 9.3 domestic and foreign markets (Ngo et al., 2017). At the same time, securing work also million employees, accounting for 64.4%. Therefore, it is very necessary to study the helps strengthen the relationship between administrators and employees, thereby human resource management system in both manufacturing and service sectors in enhancing innovation and performance in Vietnamese enterprises (Nguyen, 2020). Vietnam because these two fields account for 97.2% of the total number of employees. Besides, according to the high uncertainty avoidance aspect of Hofstede (1980), the more than 14.2 million people. study of Nguyen and Le (2007) showed that Vietnamese people like to be guaranteed In theory, Fu et al. (2015) concluded that a high performance human resource at work. Therefore, it can be concluded that job security is a key element of a high management system is the key determinant of innovation. And innovation is an performance human resource management system that positively affects innovation important factor affecting firm performance (Atalay et al., 2013; Nguyen, 2020). and firm performance. Therefore, in this study, the author has added and developed a However, practices in the high performance human resource management system are scale for the factor "job security" to suit the research context in Vietnam. still inconsistent (Delety and Dorty, 1996; Armstrong, 2008; Zhang and Moris, 2014). Besides, at present, in Vietnam and around the world, there are very few studies Many studies in developed countries such as Armstrong (2008) in USA, Chen and on the impact of the high performance human resource management system on Huang (2009) in Taiwan, Chow et al (2012) in Singapore, Fu et al (2015) in Ireland, innovation, especially innovative behavior in enterprises. Therefore, stemming from Lu et al. (2015) in China showed that a high performance human resource the above theoretical and practical needs, the author has chosen the topic: “The management system lacked job security. But unlike developed countries, currently, relationship between the high performance human resource management system, most Vietnamese enterprises often sign indefinite contracts (36.1%) (Ministry of innovation and firm performance of enterprises in Vietnam” to carry out research topic Labor, Invalids and Social Affairs, 2017) with employees, who have good skills and Doctoral thesis. expertise to help them feel secure to work in the enterprises. An indefinite term 2. Research objective contract allows employees to work as long as they want at the company. At the same 2.1. Overall objective time, when signing an indefinite term contract, the employee will not be fired without The thesis is carried out with the aim of building and testing the model on the a serious violation of discipline. relationship between high-performing human resource management system, innovation and firm performance.
3 4 2.2. Detail objective also analyzes and evaluates the firm performance according to the characteristics of (1) Consider the impact of a high performance human resource management the enterprise such as size (calculated by the number of employees), number of years system on innovation and corporate performance. of operation and business sector. (2) Consider the mediating role of innovation in the relationship between a high 4.3. Research methodology performance human resource management system and performance. The thesis has used a combination of qualitative research methods and (3) Proposing management implications to enhance operational results through quantitative research. Qualitative research methods are used to supplement and improving a high performance human resource management system as well as develop a scale for the "job security" factor of the high performance human resource enhancing innovation in the enterprise. management system. As for the quantitative research method, the thesis uses popular 3. Research questions data processing tools: Descriptive statistical analysis, scale reliability analysis Question 1: How does a high performance human resource management system (Cronbach's Alpha), exploring factor analysis (EFA), linear regression analysis by affect on firm performance? ordinary least squares method (OLS) to test research hypotheses. Question 2: How does a high performance human resource management system 5. New contributions of the research affect on innovation? In theory, the thesis has added a job guarantee factor in the highly effective human Question 3: How does innovation affect on firm performance? resource management system. The thesis’s result shows that innovation plays an Question 4: Consider the difference in the relationship between a high performance intermediate role in the relationship between high performance human resource human resource management system and the firm performance according to the management system and firm performance. company's characteristics? In practice, through the testing of the research model between the high 4.Object and scope of the research performance human resource management system, innovation and firm performance, 4.1. Research object the thesis has proposed solutions to help manufacturing and services enterprises in The thesis's research object is the impact of the high performance human Vietnam focus on improving a high performance human resource management system resource management system on innovation and operational performance in as well as elements of innovation to increase firm performance. manufacturing and service enterprises in Vietnam. Accordingly, high performance 6. Structure of doctoral thesis human resource management suystem, innovation and firm peroformance will be In addition of introduction and conclusion, the thesis has 4 chapters: studied on the organizational level and not focused on the individual level. At the same Chapter 1: Literature review and background theories time, for innovation in enterprises, the thesis focuses on research on the process of Chapter 2: Research methodology innovative behavior in enterprises. And innovation will be judged by managers. Chapter 3: Research results 4.2. Research scope of the subject Chapter 4: Conclusion and recommendations In term of subject space, the thesis focuses on manufacturing and service enterprises in the North, Central and South of Vietnam. In term of subject duration, the thesis used primary data base on the survey of senior and middle-level executives in manufacturing and service enterprises in Vietnam from 2017 to present in order to test the hypotheses on the sample size of 312 enterprises in 22 provinces/cities of Vietnam. In term of research content, the main content of the thesis focuses on building and testing, estimating models of the relationship between high-performance human resource management system, innovation and firm performance. Besides, the thesis
5 6 CHAPTER 1. BACKGROUND THEORIES, LITERATURE REVIEW AND Wang (2012), firm performance includes: operationnal perfomance and market RESEARCH MODEL performance. 1.2. Relationships 1.1. Definitions 1.2.1. High performance human resource management system and firm 1.1.1. High performance human resource management system performance High-performance human resource management system is a collection of human At present, many studies in Vietnam and the world have shown that human resource management practices, by improving the skills of workers, creating resource management systems have a positive impact on business performance opportunities for them to participate in the decision-making process, and promoting (Nguyen and Bryant, 2004; Datta et al, 2005; Le and Truong, 2005; Tsai, 2006; Chand workers' discretionary efforts to provide a firm competitive advantage reflected in and Katou, 2007; Sun et al., 2007; Armstrong et al., 2008; Bonias et al., 2010; Chow et better financial results (Huselid, 1995; Way, 2000; Appelbaum et al., 2002). Research al, 2012; Zhang and Morris, 2014; Riaz, 2015). by Delety and Dory (1996) suggest that high-quality human resource management 1.2.2. High performance human resource management system and innovation systems include activities: training, development, employee participation, performance Many studies have shown that high-quality human resource management systems evaluation, profit sharing and job analysis. positively impact business innovation in different contexts (Fu et al. , 2014). Most of 1.1.2. Innovation the studies on the impact of high-quality human resource management systems on Carlino (2001) argued that innovation depends on changing the ideas of corporate performance have shown that innovation has a positive impact on the employees in enterprises. At the same time, research by Kanter (1986) confirms that performance of businesses (Beugelsdijk, 2008; Chen and Huang, 2009, Tan and the process of awareness and creation of new ideas is the beginning stage of Nasurdin, 2011, Wei and et al, 2011; Prieto and Pérez-Santana, 2014; Fu et al, 2014; innovation. Therefore, many studies have suggested that all innovation activities in Dhar, 2015; Do and Shipton, 2019). enterprises originate from behavioral innovation in enterprises (Janssen, 2000; 1.2.3. Innovation and firm performance Lumpkin and Dess, 1996; Lu et al., 2015). For example, Janssen (2000) gave the Many studies have used linear regression analysis using the ordinary least square definition of innovation work behavior as “creating, introducing and intentionally method (OLS) (Amores-Salvadó et al., 2014; Nham et al., 2016; Nguyen et al., 2019) applying new ideas in work at businesses. businesses to benefit businesses ”(cited by or a structural equation model (SEM) (Wang and Wang, 2012; Lin, 2013; Omri, 2015; Fu et al., 2014; Omri, 2015). Lu et al. (2015) based on research by Scott and Bruce Lu et al., 2015; Soto - Acosta et al., 2015) to assess the impact of innovation on (1994) suggest that innovation consists of three manifestations: forming new ideas, results. operation of businesses. Although these studies use different research methods, promoting new ideas and applying new ideas. they have come to the conclusion that innovation activities have a positive impact on 1.1.3. Firm performance business performance. Medella (2005) defines firm performance that reflects the ability and efficiency 1.2.4 . The mediating role of innovation of an enterprise to use resources such as people, finance and facilities to achieve goals Based on an overview of the works in the world as well as the research of Baron of the business. Lee (2008) defines performance as the outcome of a business as and Kenny (1986) on intermediary variables, it can be seen that innovation plays an measured by financial or non-financial indicators. Murphy et al. (1996) think that the intermediary role in the relationship between the human resource management system. performance of firms is a multidimensional concept. high business results and operational performance. Because a highly effective human Dawes's (1999) study on the relationship of market orientation to subjective resource management system with training and motivational activities will enhance performance and objective performance suggests that subjective scales results are enterprise innovation activities by helping workers form new ideas, like promoting and consistent with objective scales. At the same time, Tan and Litschert (1994) also applying new ideas at work. At the same time, when businesses get new ideas and conclude that in many studies, the use of subjective scales gives good results. Based on apply these ideas in their work to improve products, services and processes, they will the research of Danaley and Huselid (1996), Zhang and Li (2009) and Wang and increase operational performance.
7 8 1.3. Research gaps Human resource management systems are the most sensible competencies to Firstly, there are very few previous studies in Vietnam and the world that utilize the development of corporate human resources and use them to create core mention the mediating role of behavioral innovation in the relationship between high- competencies (Wright et al., 2001). In addition, if a business can improve its human performance human resource management systems and performance. capital, it will help create a sustainable competitive advantage that competitors can Secondly, previous studies still have many debates about the practices of a high hardly copy or copy (Rothenberg et al., 2015). ; Özçelik et al., 2016). In addition, performance human resource management system. Therefore, based on the research based on resource theory (RBV), a high performance human resource management review and interviews with enterprises in Vietnam, the author has added a job system is a set of human resource activities that, by enhancing employee skills, create guarantee factor to the highly effective human resource management system. participation in decision-making, and promoting employee self-efforts through forms Thirdly, previous studies on the relationship between high performance human of motivation, can deliver a solid competitive advantage reflected in good financial resource management systems, innovation and firm performance have left the impact performance. (Huselid, 1995; Appelbaum et al., 2000; Way, 2002), thereby helping of control variables such as size (in terms of number of employees), the number of businesses succeed (Richard et al, 2013). years of operation and the business sector to the enterprise's performance. Therefore, 1.4.2. Theory of economy development in the thesis, author has used the characteristics of the enterprise such as size Atalay et al. (2013), Lu et al. (2015), Nham et al. (2016) used the theory of (calculated by the number of employees), the number of years of operation and the economic development of economists and scientists. German politics Schumpeter business sector as control variables in the research model. (1934) to illustrate the relationship between innovation and firm performance. 1.4. Background theories Schumpeter (1934) argues that innovation is innovation. Innovation is the 1.4.1. Resource-based view physical or mental outcome of cognitive or behavioral activity through the use of all Most of the studies on the relationship between high-performance human resources and conditions by individuals to create new, intentional products, services resource management systems and firm performance have been rooted in RBV by and technologies. meaning and value according to a certain purpose or task. At the Wernerfelt (1984) and Barney (1991) (Datta et al, 2005; Comb et al., 2006; Chand and same time, the process of awareness and creating new ideas for employees is the katou, 2007; Katou, 2008; Chadwick, 2010; Kroon et al, 2012; Jeong and Choi, 2015; beginning stage of innovation in enterprises (Kanter, 1986). It can be said that Rothenberg et al, 2015; Özçelik et al., 2016). The theory based on the resources of innovative forms of organization, new ideas and management methods to create new Wernerfelt (1984) and Barney (1991) suggests that enterprises can only create a products and services, new working methods and new technologies belong to competitive advantage when their resources ensure 4 factors: (1) Valuable, (2) rare, (3) innovation. in-imitable and (4) non-substituable. Thereby, we can see that the formation and application of new ideas will help businesses create new products and services. Schumpeter (1934) argues that product - Value innovation first introduced to the market will face direct but limited competition and Compettitive therefore businesses can receive relatively high profits. However, over time, this profit Resources - Rare Advantage may be reduced by imitation and competition in the market. But if businesses continue - Imperfect Imitability to innovate and introduce new products to the market, they can achieve high profits in a sustainable time (Sharma and Lacey, 2004). Like many other scholars, Varis and - Non-substitutability Littunen (2010) also argue that the ultimate reason for businesses to engage in innovation activities is to improve the performance of businesses and to succeed. Source: Barney (1991) Figure 1.1. Theoretical framework for resource-based governance
9 10 1.5. Research model and hypotheses Table 1.1. Research hypotheses 1.5.1. Research model High performance human resource management positively impacts on firm H1 Based on literature review and background theories, the model is: performance High performance human resource management positively impacts on H2 HRM innovation Training H3 Innovation positively impacts on firm performance Innovation plays an intermediary role in the relationship between high H4 Innovation Firm performance performance human resource management system and firm performance Employee participation Production of innovation Operational Job analysis performance Promotion of innovation Performance Market evaluation Implementation performance Employee of innovation development Profit sharing Control variables Job security Figure 1.2. Research models Source: According to the survey and analysis of the author - Independent variables: High performance human resource management system includes: Training, employee participation, job analysis, performance evaluation, employee development, profit sharing. - Dependent variables: Firm performance: Market and operational performance. - Mediate variables: Innovation: Production of innovation, promotion of innovation, và implementation of innovation. - Control variables: Size (in terms of employee), years of operation, business sectors.
11 12 CHƯƠNG 2. RESEARCH METHODOLOGY Step 2: Researching background theories: Through the general research and the theoretical basis, the author has formulated research hypotheses for independent 2.1. Research design variables, intermediate variables, dependent variables and control variables. as well as To assess the impact of the relationship between the highly effective, innovative a preliminary scale of the variables in the research model between the highly efficient, human resource management system, and the performance of enterprises, the author innovative human resource management system, and business performance. used quantitative research. At the same time, the dissertation's data was collected by Step 3: Preliminary qualitative research: The preliminary qualitative research the author from primary data through a survey of manufacturing and service will help the author assess the importance as well as the impact of job security on manufacturing enterprises in 20 provinces / cities across the North, Central and South innovation and business performance. For the preliminary qualitative research, the of Vietnam. author directly interviewed 4 administrators from 3 service enterprises and 1 manufacturing and manufacturing enterprise. All managers evaluate that the factor of Literature review Research gaps job security is the most important factor in Vietnamese enterprises, especially in the current volatile economic context. In addition, based on the suggestions of administrators, the author added an additional criterion for the factor "job security", which is "The enterprise is committed to maintaining the job to ensure a stable income Background theories Define measurement variables and for the employee”. scales for variables Step 4: Develop and standardize Vietnamese scale: The preliminary scale is built based on the overview research and the theoretical basis of the relationship between the highly efficient and innovative human resource management system. and business Preliminary qualitative Add and develop factors appropriate to research the Vietnamese context performance to find independent variables, dependent variables and intermediate variables. First, the author has translated the questionnaire in English into Vietnamese. Develop and standardize Draft scale After that, the author made the correction of terms in the preliminary survey with 2 Vietnamese scale experts in the field of human resource management trained in English-speaking countries. Each meeting with experts in the field of human resource management usually lasts from 90 minutes to 120 minutes at the offices of two experts at Official quantitative research Collect, analyze data, discuss and universities. After translating and modifying the term, the author sent a preliminary propose recommendations survey questionnaire along with the original questionnaire in English to a Vietnamese Figure 2.1. Research process flowchart English expert who worked in the United States, fluent in both languages.. The English Source: Author proposed expert has compared the Vietnamese questionnaire and the English questionnaire then Step 1: Literature review: The research overview is applied to systematize and revised some terms in the Vietnamese questionnaire to help the respondents find out the theoretical gaps related to the relationship between the highly effective, understand the content of the question best. Finally, after completing the editing of the innovative and innovative human resource management system. performance of the questionnaire with human resource management experts and English experts, the business. author sent a preliminary survey questionnaire to 3 senior executives in 3 real estate enterprises. manufacturing and services in Hanoi to assess the comprehensiveness of the question to respondents. The questions are rated by senior executives as understandable and appropriate for businesses.
13 14 Step 5: Official quantitative research: After building and standardizing CHAPTER 3. RESEARCH RESULTS Vietnamese scales, the author has conducted official quantitative research on a national scale. 3.1. Descriptive statistics research sample The survey questionnaire was designed in two ways. Firstly, the author designs questionnaires on A4 paper and sends them directly to businesses. The second way, the author designed on Google Form then emailed 2,500 manufacturing and manufacturing enterprises and services in 22 provinces / cities of Vietnam from September 1, 2019 to January 31, 2020. Out of 439 questionnaires collected (17.56%), 312 qualified survey questionnaires were analyzed (71.71%). For the job position in the enterprise, the majority of respondents were senior managers such as directors/deputy directors with 126 people (42.0%). Besides, middle-level managers such as head/deputy human resources department had 103 people (34.3%) and chief accountant had 71 people (23.7%). As for enterprise size, 86 businesses have size from 50-100 employees (27.6%); 130 businesses with sizes from 100-200 employees (41.7%) and 96 businesses with more than 200 employees (30.8%). The number of years of operation of the enterprise has little difference, from 5 to 10 years, there are 111 enterprises (35.6%), from 10 to 20 years, there are 106 enterprises (34%) and over 20 years there are 95 enterprises (30.4%). In the field of business, businesses operating in the service sector with 203 businesses (65.1%); there are 109 manufacturing and manufacturing enterprises (34.9%). 3.2. Results of testing scales 3.2.1. Results of testing the reliability of the scale with Cronbach's Alpha coefficients The thesis evaluates the reliability of the scale by Cronbach's Alpha coefficients for each group of observed variables with the criterion of removing observations with the total variable correlation coefficient < 0.3 and Cronbach's Alpha coefficient < 0.6 (Hair et al., 1998). After testing Cronbach's Alpha, all groups of factors showed good results. 3.2.2. Exploring factor analysis (EFA) Because the scale is based on previous studies, the highly effective human resource management system has been identified as independent variables in the model with 6 groups of factors. Therefore, when analyzing the discovery factor (EFA), the author has determined a priori deteminant, so the number of factors has been fixed
15 16 (Hoang Trong and Chu Nguyen Mong Ngoc, 2008). At the same time, the thesis also The results of regression analysis in table 3.1 show that the highly effective tested KMO and Bartlett to measure the compatibility of the survey samples. human resource management system has sig value. is 0.000, so the hypothesis H2 is According to Hoang Trong and Chu Nguyen Mong Ngoc (2008), factor load factor > accepted, meaning that high human resource management system positively affects 0.5 to ensure practical significance level of exploratory factor analysis (EFA). The 1st enterprise innovation. EFA analysis shows that the factor load factor of TG4 is loaded on both factors, while Table 3.2. The mediating role of innovation VH4 has < 0.5 factor load factor, so it has been removed. The results of the second Firm performance Variables EFA analysis show that the factor load factor of observations> 0.5 and focus on 11 Model 5 Model 6 Model 7 Model 8 groups of factors with 36 observations. 1. 50-100 employees -0,211** -0,165** -0,184** -0,168** 3.3. Correlation analysis 2. 100-200 employees -0,178** -0,149** -0,132* -0,136* Correlation analysis results show that the independent variables, the intermediate 3. 5-10 years -0,071 -0,026 -0,069 -0,040 variable and the dependent variable are correlated with each other at the significance 4. 10-20 years -0,102 -0,028 -0,046 -0,027 level of 5%. At the same time, there is no Pearson correlation coefficients among 5. Service sector -0,040 -0,024 -0,059 -0,039 variables greater than 0.8, so there is no serious multicollinearity phenomenon (Hoang 6. HP HRM 0,562*** 0,364*** Trong and Chu Nguyen Mong Ngoc, 2008). 7. Inovation 0,536*** 0,262*** 3.4. Linear regression analysis R2 adjusted 0,035 0,347 0,320 0,375 To evaluate the mediating role of innovation in the relationship between high Durbin - Watson 1,641 1,752 1,760 1,773 performance human resource management system and business performance, the F 3,272** 28,603*** 25,413*** 27,648*** author used representative variables (aggregate variables), the signal is: QTNNL, DM Source: According to the survey and analysis of the author and KQHD respectively. The results of linear regression analysis (model 6) show that the highly effective Table 3.1. Impact of HP HRM on innovation human resource management system has sig value. It is 0.000 so the hypothesis H1 Innovation should be accepted, meaning that the high performance human resource management Variables system has a positive impact on firm performance. At the same time, the standardized β β chuẩn hóa Sig. VIF coefficient β of the high performance human resource management system is 0.562. 1. 50-100 employees 0,016 0,012 0,786 1,444 - The results of linear regression analysis (model 8) show that innovation has sig 1. 100-200 employees -0,056 -0,047 0,302 1,502 value. is 0.000, so the hypothesis H3 is accepted, meaning that innovation has a 2. 5-10 years 0,070 0,057 0,222 1,576 positive impact on the business performance of the business. In addition, the standardized β coefficient of innovation is 0.262. 3. 10-20 years -0,007 -0,006 0,894 1,448 - It can be seen that when adding innovation to the research model, the 4. Service sector 0,070 0,057 0,137 1,067 standardized β coefficient of the high performance human resource management 6. HP HRM 0,858 0,757 0,000 1,020 system has decreased from 0.562 to 0.362. Therefore, based on the study of Baron and Kenny (1986), it can be concluded that innovation plays an intermediate role in the 2 R adjusted 0,569 relationship between high performance human resource management system and Durbin - Watson 1,798 business performance. F 69,535*** Source: According to the survey and analysis of the author
17 18 H1: 0,562*** - The results of linear regression analysis showed sig. value of employee HP-HRM FP participation, performance evaluation, employee development and profit sharing < 0.05, meaning that they have a positive impact on the promotion of innovation. The HP-HRM H4: 0,362*** FP standardized β coefficient of employee participation, performance evaluation, employee development and profit sharing, respectively, was 0.222; 0.168; 0.243 and 0.116. So employee participation has the greatest impact on promotion of innovation. H2: 0,757*** H3: 0,536*** - Results of linear regression analysis showed sig. value of employee participation, Innovation performance evaluation, employee development and job security < 0.05, meaning they have a positive impact on the implementation of innovation. The standardized β Source: According to the survey and analysis of the author coefficient employee participation, performance evaluation, employee development In addition, in order to consider which human resource management activities are and job security is 0.254; 0.158; 0.182; 0.127 respectively. So employee participation the most important influencing business performance and innovation, the author also has the greatest impact on the implementation of innovation. used the first-order construct. In terms of size (in terms of number of employees), enterprises with over 200 For performance results include market and operational performance employees will have better market results and better performance than businesses with - The results of linear regression analysis (model 2a) showed that sig. value of 50-100 and 100-200 employee (model 1a, 1b). training, performance evaluation and job security < 0.05, meaning that they have a In addition, this study has also shown that the difference in the number of years positive impact on market performance. The standardized β coefficients of training in operation does not affect the difference in firm performance. and performance evaluation and job security are 0.193, 0.223 and 0.254 respectively. Estimation results show that there is no difference in market and operational So job security has the greatest impact on market performance. performance between manufacturing and service sectors in Vietnam. - Results of linear regression analysis (model 2b) showed that sig. value of training, performance evaluation and job security < 0.05, meaning they have a positive impact on operational performance. The standardized β of training, employee evaluation and job security are 0.214, 0.167, 0.275 respectively, meaning job security has the greatest impact on operational performance. - In addition, employee participation, profit sharing, employee development and job analysis have sig. values > 0.05, meaning they have not affect on market and operational performance. Innovation includes: Production of innovation, promotion of innovation and implementation of innovation - The results of linear regression analysis showed that sig. value of employee participation, performance evaluation, job security < 0.05, meaning they have positively impact on the production of innovation. The standardized β coefficient of employee participation, performance evaluation, job security and profit sharing are 0.264; 0.192; 0.168 and 0.096 respectvely. So employee participation has the greatest impact on new idea formation.
19 Table 3.3. Summary table for linear regression analysis of firm performance Market perfomance Operational performance Biến Model 1a Model 2a Model 3a Model 4a Model 1b Model 2b Model 3b Model 4b Characteristics 1. 50-100 employee -0,212** -0,149** -0,185** -0,144** -0,186** -0,121* -0,160** -0,118* 2. 100-200 employee -0,184** -0,163** -0,140* -0,152** -0,151* -0,134* -0,108 -0,118* 3. 5-10 years -0,073 -0,019 -0,070 -0,027 -0,061 -0,006 -0,057 -0,019 4. 10-20 years -0,093 -0,027 -0,042 -0,029 -0,100 -0,032 -0,043 -0,026 5. Service sector -0,062 -0,012 -0,075 -0,009 -0,013 0,039 -0,034 0,026 HPHRM 6. Training 0,193** 0,199** 0,214** 0,212** 7. Employee participation -0,015 -0,066 -0,013 -0,097 8. Job analysis 0,005 -0,017 0,110 0,084 9. Performance evaluation 0,223** 0,188** 0,167* 0,111 10. Employee development 0,048 -0,005 -0,061 -0,121 11. Job security 0,254*** 0,232*** 0,275*** 0,231*** 12. Profit sharing 0,033 0,199** -0,019 -0,049 Innovation 13. Production of innovation 0,118 -0,050 ,202** 0,078 14. Promotion of innovation ,219** 0,139 ,110 0,076 15. Implementation of innovation ,221** 0,134 ,246** 0,184* R2 adjusted 0,037 0,370 0,288 0,389 0,023 0,316 0,273 0,351 Durbin - Watson 1,768 1,924 1,892 1,956 1,587 1,717 1,709 1,764 F 3,408** 16,213*** 16,697*** 14,188*** 2,482* 12,964*** 15,586*** 12,221*** ***, **, * Significant at level of 0,1%, 1% và 5% Source: According to the survey and analysis of the author 20 Table 3.4. Summary table for linear regression analysis of innovation Production of Promotion of Implementation of Variables innovation innovation innovation Characteristics 1. 50-100 employee 0,029 -0,003 -0,023 2. 100-200 employee -0,043 -0,054 -0,043 3. 5-10 years 0,058 0,060 0,020 4. 10-20 years -0,041 0,024 -0,026 5. Service sector 0,105 -0,006 0,026 HPHRM 6. Training 0,048 -0,038 0,006 7. Employee participation 0,264*** 0,222*** 0,254*** 8. Job analysis 0,047 0,096 0,081 9. Performance evaluation 0,192** 0,168** 0,158** 10. Employee development 0,116 0,243*** 0,182** 11. Job security 0,168** 0,097 0,127* 12. Profit sharing 0,096* 0,116* 0,074 R2 adjusted 0,503 0,467 0,455 Durbin - Watson 1,961 1,789 1,857 F 27,185*** 23,749*** 22,655*** ***, **, * Significant at level of 0,1%, 1% và 5%. Source: According to the survey and analysis of the author
21 22 CHAPTER 4 Employee participation has a positive impact on production of innovation, DISCUSSION AND CONCLUSION promotion of innovation and implementation of innovation in businesses. Because when employees are involved in the decision-making process, employees will feel 4.1. Discussion of research results their voice and position in the business are valued. So they will enthusiastically come The mediating role of innovation (the proxy variable) up with creative ideas to solve and performe the work in the most effective way Innovation plays a role of partial mediation in the relationship between a high employee participation also positively affects the application of new ideas in the perofrmance human resource management system and firm performance. This result is business. similar to research by Lu et al. (2015) in China. Because when the high performance Impact of high performance human resource management on innovation (first human resource management system of the enterprise is deployed effectively, it will order construct) contribute to perfecting job analysis, profit sharing, training, performance evaluation, Performance evaluation has also positively affect on the production of and employee development, as well as allowing employees to participate in the innovation, promotion of innovation and implemenation of innovation. Because when decision-making process. This will motivate employees to actively form new ideas as the performance of employee are assessed objectively and honestly, employees will well as promote and apply new ideas to work to achieve higher labor productivity as see that their labor results are recognized and appreciated by the business, they always well as business. reward, even career advancement. And when constantly giving new tend to create new ideas to expect to receive the appreciation from business leaders, ideas to complete work, businesses will improve operating results as well as market thereby helping their productivity improve. results. Employee development has a positive impact on innovation including the Impact of high performance human resource management system on firm promotion and implementation of innovation. When employees realize that they can be performance (first order construct) promoted at work if they come up with new ideas, they will always be motivated to Among high performance human resource management practices, training has an come up with creative ideas. If the business has a clear promotion roadmap for impact on operational performance in manufacturing and service firms in Vietnam. employees including the creation and application of new ideas, employees will always This result is similar to Harel and Tzafir (1999) in Israel, Nguyen and Bryant (2004) in strive to come up with innovative and creative ideas as well as apply. These ideas go Vietnam, Nguyen and Truong (2011) in Vietnam, Lu et al (2015) in China, Nguyen et to work. al ( 2015) in Vietnam. Job security positively affects on the production of innovation and Performance evaluation also impacts on operational and market performance. implementation of innovation in businesses. Because if businesses create a working This result is similar to the study of Delety and Dory (1996) in the United States. environment that helps employees believe that they will not be fired easily, they will Because when businesses honestly and objectively evaluate the employee's always feel safe at work. This will help the employees of the business to have a sense performance, it will help employees to be motivated to work as well as to believe in and motivation to come up with innovative ideas to improve and improve their work as the undertakings and policies of the business. When employees receive work results, well as the whole business. they often compare their own results with the results of other employees. Profit sharing positively affects on the production of innovation and promotion of Job security has the greatest impact on market and operational performance. This innovation. Because when employees know that if they will receive financial rewards result is similar to the study of Delety and Dory (1996) in the United States. Because from the profits of the business, they will always try to form and promote innovative when the business ensures a stable job for its employees, not laying off employees will ideas in the business to help the business achieve higher performance, thereby make employees feel safe, thereby giving their wholehearted dedication to the improving the profitability of the business. business. Impact of innovation on firm performance The production of innovation positively affects on the operational performance of manufacturing and service enterprises in Vietnam. This result is similar to the study
23 24 of Fu et al. (2014). Because in the process of forming new ideas, employees can create Morris (2014) in China but different from the study of Combs et al in the US (2006). new ideas to improve their work as well as come up with new working methods to Because the studies of Le and Truong (2005), Zhang and Morris (2014) show that the improve work efficiency and efficiency thereby increasing work efficiency and firm difference in business field does not affect the business performance. Meanwhile, performance. research by Combs et al. (2006) concluded that manufacturing firms in the US The promotion of innovation also influences market performance in businesses. performed better than service firms. Because 98.1% of enterprises in Vietnam are Because in the process of promoting new ideas, important employees are encouraged SMEs (with less than 100 employees) (General Statistics Office, 2018), performance by businesses to come up with innovative ideas to solve work. Therefore, the work between manufacturing and translation enterprises The difference is usually not too will be handled effectively, thereby increasing sales as well as market results for large. businesses. 4.2. Recommendations Implementation of innovation has positively affect on market and operational Leaders and business administrators need to define human resource management perfomrance in businesses. Because when businesses apply innovative ideas of as a key and indispensable part of businesses. Enterprises need to develop and plan a employees to their work, they help to improve labor productivity, thereby increasing human resource strategy suitable to the characteristics of the business field as well as sales, leading to increased market results and operating results. the conditions of the business. The human resources department in the enterprise needs Impact of characteristics of enterprise on firm performance highly trained people to take charge of as well as advise on human resources issues for Research results show that there are differences in market operation performance the executives and leaders in the business. At the same time, the leaders and senior by scale (in term of number of employees). This result is similar to previous studies by management in the business also need to have incentives and support policies for the Sun et al (2007) in China as well as Chow et al (2012) in Singapore when concluding human resources department to perform well. that size (in number of employees) positively affects business performance. The results Among the seven high performance human resource management system of the study show that enterprises with over 200 employees have better operational practices, training, performance evaluation and job security are the most important performance and market performance than businesses with 50-100 employees and practices on innovation as well as market and operational performance. Therefore, in 100-200 employees. For in the context of the Vietnamese economy, the larger the order to improve operational performance and expand the market, businesses need to scale (in term of the number of employees) manufacturing and service firms, the more pay special attention to these practices. In addition, other practices such as employee products they will have. This has contributed to help this business increase operational participation, job security, employee development, performance evaluation and profit performance as well as market performance. sharing also positively impact on innovation. Therefore, manufacturing and service The estimation results show that the difference in the number of years of enterprises also need to perfect the high performance human resource management operation does not lead to differences in the performance of manufacturing and service system to enhance innovation, thereby increasing market results as well as operating enterprises in Vietnam. This result is similar to the study of Zhang and Morris (2014) results. in China but different from the results of Sun et al. (2007) in China. Since firm In addition to completing and developing a highly effective human resource performance is largely dependent on the level of human resources, corporate culture as management system, businesses also need to create an atmosphere of innovation for well as the innovation of the firm. In addition, this sample size shows that the number each employee to realize the importance of innovation for business development. of years in operation between enterprises does not differ too much. This may be the Karma. This innovative atmosphere will help employees create innovative ideas, main reason for the fact that the operational performance and the market performance thereby spreading these ideas throughout the enterprise, helping businesses achieve have no difference between the years of operation of the business. better operating results. The estimation results of the thesis also show that there is no difference in the operational performance between the manufacturing and service sector in Vietnam. This result is similar to the results of Le and Truong (2005) in Vietnam, Zhang and
25 CONCLUSIONS By analyzing linear regression using the least squares method (OLS) for a sample size including 312 manufacturing and service enterprises in 22 provinces/cities of Vietnam, the research results of the thesis has shown high performance human resource management system that positively impacts on firm performance through a partial intermediary role of innovation. Besides, the results of the study also show that there are differences in firm performance by scale (in term of number of employees). However, the thesis's results also show that there is no difference in operational performance between the number of years of operation and the business sector of the enterprise. Based on the research results of the thesis, the author has given a number of recommendations and suggestions related to improving the quality of the high performance human resource management system as well as enhancing innovative behavior to help businesses inhance their operatioanal performance, while at the same time create a sustainable competitive advantage that competitors can hardly copy or imitability. In addition, the author also pointed out some limitations in the thesis and gave the next research directions for this field in the coming time. Therefore, the author and researchers who are interested in the relationship between high performance human resource management system, innovation and firm performance can continue to improve as well as develop new models. This will contribute to adding valuable scientific research, giving managers in enterprises more grounds to make decisions.