A multilevel examination of high-performance worksystems and
unit-level organisationalambidexterityYi-YingChang,
DepartmentofBusiness Administration,
NationalTaiwanUniversityofScienceandTechnologyHumanResourceManagementJournal,
Vol25, no1, 2015,
pages79101Thispaperexaminestheprocesslinkinghigh-performanceworksystems(HPWS)
andorganisationalambidexterity both at the unit and rm level of
analyses by integrating strategic HRM, human capitaland social
capital perspectives. Multisource and multilevel data from 2,887
employees and 536 managersof 58bankswascollected.
Resultsrevealedthatrm-level
HPWSwerepositivelyrelatedtounit-levelemployee human capital.
Unit-level employee human capital partially mediated the
relationship betweenrm-level HPWS and unit organisational
ambidexterity. Furthermore, rm-level social climatemoderated the
effect of rm-level HPWS on unit organisational ambidexterity
through unit-levelemployee human capital. This paper contributes to
HPWS and ambidexterity research by revealing theimpacts of rm-level
HPWS and mediating mechanisms, as well as identifying boundary
conditions
forpursuingunit-levelorganisationalambidexterity.Contact: Dr
Yi-Ying Chang, Department of Business Administration, National
TaiwanUniversity of Science and Technology, 43, Keelung Road,
Section 4, Taipei 106, Taiwan.
Email:[email protected]: rm-level high-performance
work systems; organisational ambidexterity; rm-levelsocialclimate;
humancapitalINTRODUCTIONResearchonambidexterityindicates that the
use of high-performance
worksystems(HPWS)isanimportantantecedenttofacilitateambidexterity,
whichresultsinbetterrm performance (Patel et al., 2013). Extant
research focused on HRM and ambidexteritytends to treat both HPWS
and ambidexterity as overarching organisational-level
phenomenon(Junni et al., 2013). Inline withthis, Patel et al.
(2013) investigatedthe direct
relationshipbetweenHPWSandorganisational ambidexterity.
Organisational ambidexterityreferstothecapacity of an organisation
to simultaneously utilise existing market opportunities
efficiently, andtoinitiatecreativeandinnovativesolutionstomeet
futuremarket demands(Lubatkinet al.,2006). Moreover,
theliteratureonHPWStendstostudyoutcomesattheorganisationallevel,suchasorganisational
performance. Morerecently,
studiesonHPWShaveinvestigatedthemechanisms through which HPWS
affects individual-level employee attitudes and behaviours(e.g.
Takeuchi et al., 2009). Fewattempts have beenmade toexplore the
mechanisms andboundaryconditions, suchasHRpractices, bothat
thehigherorganisational level andthelower organisational level
tosupport theoccurrenceof organisational ambidexterity(Junniet al.,
2013; Turneret al.,
2013).Thereareseveralimportantreasonstouncoverthemechanismsandboundaryconditionsthrough
which HPWS affects unit organisational ambidexterity. First,
HRMstudies haveinvestigated the role of HRM practices, such as
HPWS, in the creation of a context
conducivetoambidexterity(KangandSnell, 2009; Patel et al., 2013).
HPWSliteraturehasconsistentlybs_bs_bannerdoi:
10.1111/1748-8583.12061HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO
1, 2015 79 2014 John Wiley & Sons Ltd.Please cite this article
in press as: Chang, Y.-Y. (2015) A multilevel examination of
high-performance work systems and unit-level
organisationalambidexterity. Human Resource Management Journal 25:
1, 79101.argued that the practices themselves do not generate a
competitive advantage; rather,performance stems from the human
resources that are developed by the system (Huselid, 1995;Wright et
al., 2001). Accordingly, behavioural
ambidexterityislikelytocomefromthermsdistinctiveHRbase(Barney,
1991). Thatis, organisationscanachieveambidexteritybybeingexible
with time allocation and focusing the attention of human resources
towards explorationand exploitation (Lepak et al., 2003; Gibson and
Birkinshaw, 2004; Patel et al., 2013). Byunderstanding the
differences among people of the same organisation in terms
ofambidexterity, rather than viewing the workforce as one entity, a
rm may realise that it needstoemployadifferent set of
HPWSinordertofosterunit organisational ambidexterity. Forinstance,
differentpositions(verticallyandhorizontally)withinarmmaydemanddifferentlevelsof
ambidexterityinorder tobeat betweenthespecicdemandsof
ajobandthebehaviouroftheperson.Second, it is important to
understand why HPWS may be more or less effective in
fosteringambidexterity.
PreviousstudiesofHPWShaveemphasisedaneedtodiscoverthemediatingandboundarymechanismsthat
explaintheperformanceimplicationsofHPWS(BeckerandHuselid, 2006).
More recently, scholars have called for more research to
investigate how HPWSaffects ambidexterity through various mediators
such as human capital (Kang and Snell, 2009;TurnerandLee-Kelly,
2013; Turneret al., 2013)andacrossmultiplelevels(Jansenet al.,
2009;BirkinshawandGupta, 2013; Junniet al., 2013).
Whileorganisationalambidexterityresidesatallhierarchicallevelsoftheorganisation,itcanalsooccuratallorganisationallevels.Infact,as
the multi-unit rmhas become a pervasive organisational formin the
contemporarybusiness landscape (Usher, 1999), organisational
ambidexterity at the business unit level is vitalto such
organisations. Lower level business units often simultaneously
execute exploration andexploitation activities, in addition to
undertaking paradoxical thinking and managingconicting demands, and
they do this with more direct contact with important
organisationalstakeholders, such as employees and customers. As a
result, unit-level ambidexterity (i.e. doingtwo different things
equally well, such as efficiency and exibility, adaptability and
alignment,integration and responsiveness, and exploration and
exploitation) could help the rm succeed(BirkinshawandGupta,
2013).Other studies have usedthe social capital perspective
toexamine the impact of HRMpractices onambidexterityonly at those
organisational levels that are mediatedbysocialclimate (e.g.
PrietoandSantana, 2012). We expect that the
relationshipbetweenrm-levelHPWSandunit organisational
ambidexteritywouldbemediatedbythehumancapital ofindividual
employees. Human capital refers to the knowledge, skills and
abilities ofindividual employees that are valuable to the rm(e.g.
SubramaniamandYoundt, 2005;Turner et al., 2013). HPWScanbuy andmake
desirableindividual employeeknowledge,skillsandabilities,
whichinturncanbeusedtocreatevaluefortherm(Snell andDean,1992;
BeckerandGerhart, 1996). Arecent meta-analytical
HRMstudyrevealedthat humancapital
andmotivationactedasmediatorsbetweenHPWSandoperational
outcomes(Jianget al., 2012).
HPWScanbeusedtopromoteorimpedetheefficiencyofindividualemployeeswhenhigh-quality,
valuable, unequalledhumanresourcesact inwaysthat
arerequiredforimplementingandachievingorganisational outcomes
bothat rmandunit levels (Barney,1991; Wrightet al., 1994).
TheuseofHPWScancreateandmaintainvaluablehumancapital,includinggenericandorganisational-specichumancapital,
whichinturnleads toahighlevel of unit organisational ambidexterity
(Kang and Snell, 2009). Going forward, it isimportant to identify
the HPWS that is critical for promoting human capital at the unit
level,andthemediatingroleof thehumancapital of individual
employeesbetweenHPWSandunit organisational ambidexterity.HPWS and
organisational ambidexterityHUMAN RESOURCE MANAGEMENT JOURNAL, VOL
25 NO 1, 2015 80 2014 John Wiley & Sons Ltd.Furthermore, in
this research, we employ a knowledge and learning perspective to
examinethe role of social climate as a moderator at the rm level in
the relationship between HPWS andunit organisational ambidexterity.
The use of HPWS can enable andmotivate individualemployees to
deliver high levels of performance. The high performance
implication here can beseen as the completion of organisational
goals (e.g. Becker and Huselid, 1998; Delery and Shaw,2001)
orthecompletionof individual employees tasks. Thismeansit
couldbearguedthatHPWShasatendencytofocusmoreontheexploitationoftheformal,
theinducedandtheknown, but less on the exploration of the informal,
the uncertain and the unknown. Hence, weargue that HPWS needs to be
complemented with a social climate (i.e. trust, cooperation,
andsharedcodes andlanguages) inorder tofoster a context that
promotes or impedes bothexplorationandexploitationconcurrently.
Inother words, theeffectiveness of HPWSmaydepend on the boundary
conditions of a rms social context that are used to facilitate the
unitsorganisational ambidexterity. Empirical ndings revealed that a
rms context, characterised byitssocial climate,
isconducivetoknowledgecombinationandexchange(CollinsandSmith,2006)
andambidexterity(GibsonandBirkinshaw, 2004). Goingforward,
wearguethat theeffectiveness of a context characterised by HPWS
depends on a rm-level social climate in orderto provide for the
variety and safety needed for employees to engage in ambidextrous
learning.Finally, while there is much research on single-level
outcomes, research on the effect of HPWSon unit-level ambidexterity
at multiple levels is scarce (Raisch and Birkinshaw, 2008; Junni et
al.,2013). Therefore, scholars (e.g. Guptaet al., 2006; Junni et
al., 2013; Turner et al., 2013) havesuggested cross-level analysis
of ambidexterity as a promising direction for future research.
Inthis study, we examine the relationshipbetweenrm-level
HPWSandunit organisationalambidexteritythat crossesrmandunit
levels(cf. TushmanandOReilly, 1996; GibsonandBirkinshaw, 2004;
OReilly and Tushman, 2004). No previous research has examined this
crucialquestion: Howdoes rm-level HPWS affect unit-level
organisational ambidexterity acrossmultiple levels, through the
unit-level human capital of employees and rm-level social
climate?We endeavour to make several theoretical contributions to
the literature. First, we go beyondthefocusonasinglelevel
ofanalysisofambidexteritybyinvestigatingrm-level HPWSinpromoting
organisational ambidexterity across unit and rmlevels, thereby
addressingprevious calls for anunderstandingof organisational
ambidexterityacross multiple levels(OReillyandTushman, 2011;
BirkinshawandGupta, 2013; Junniet al., 2013).Second, this study
examines whether the relationship between rm-level HPWS
andorganisational ambidexterity at the unit level would be similar
to the relationship found at thermlevel by Patel et al. (2013)
(i.e. homology; Morgeson and Hofmann, 1999). As Chen et al.
(2005:376) stated, [i]f researchers nd that relationships are
homologous across levels of analysis, itadds to the parsimony and
breadth of theories. In contrast, should relationships prove not to
behomologous across levels, it signals a boundary condition and a
need to rene theories.Third,
ourfocusonunit-levelhumancapitaladdsamissingpiecetoresearchonstrategicHRM
and organisational ambidexterity. We not only test the idea that
unit-level human capitalmediates the effects of HPWSonunit
organisational ambidexterity, but alsoextendit
byshowingthattheeffectmaydependonrm-level social
climateasaboundaryconditiontopromotetheunitorganisationalambidexterity.
Inaddition, wenotonlytesttheideathatanindividual employees human
capital stimulates the occurrence of unit
organisationalambidexterity, but also extend it by revealing the
effect of rm-level HPWS on unitorganisational ambidexterity,
through the mediating effect of an individual employees
humancapital. Overall, wecontributetothebroader
literatureonambidexterityandHRM, whichstates that animportant issue
is to identify the conditions anindividual needs to haveto. .
.excel at both exploration and exploitation (Gupta et al., 2006:
696). We identifyYi-Ying ChangHUMAN RESOURCE MANAGEMENT JOURNAL,
VOL 25 NO 1, 2015 81 2014 John Wiley & Sons Ltd.organisational
systems i.e. HPWS, humancapital andboundaryconditions (rms
socialclimate) that facilitate the occurrence of unit
organisational ambidexterity. More
specically,wecontributetotheunderstandingofhowHRpracticesimpact
lowerlevel unitsofarmrather than focusing on macro-level outcomes.
We make these contributions by using
amultisourceandmultilevelresearchdesignandasampleofbankingservicermsinTaiwan.Studies
into ambidexterity have revealed that bank branches achieve service
and salesambidexterity by creating a work context that assists
their judgement about how to divide theirtime, attention and
efforts between requests for service excellence and sales targets
(Gibson
andBirkinshaw,2004).Inordertoachievethealignmentofservingandsellinginthebanks,itisimportanttodesignpeersupportandprocesses,
aswell assystemssuchasHRsystems,
toencouragemoresocialinteractionamongteammembers(Yuet al., 2013).
Thiswillshapetheoccurrence of ambidexteritybothat the bankbranches
andamongindividual employees(Jansenet al., 2008; Peters, 2011; Yuet
al., 2013). Thisstudyisamongtherst toempiricallyexamine HPWS and
managers ambidexterity in a developing economy. Previous research
hasfocused predominantly on high-technology rms in advanced
economies (e.g. Wang and Raq,2014), and on optometry and telecom
industries in advanced economies (e.g. Cagarra-NavarroandDewhurst,
2007).THEORY AND HYPOTHESISTheoretical backgroundBowen and Ostroff
(2004: 206) stated that the content of work systems should be
largely drivenby the strategic goals and values of the
organisation, and that HR practices must be designedaround a
particular strategic focus, such as service or innovation. The core
of this statement isthat work systems must reect how employees add
value, and this is accomplished by
linkingthepracticeswithinasystemtowardssomestrategicobjective.
Therefore, allpartsofHPWSmust be chosen and designed to achieve a
specic strategic objective. This strategic
perspectiveofHPWSissimilartotheargumentthatworksystemsshouldutilisebothhorizontallyandvertically
aligned HR practices in order to affect both the ability and
motivation of
employeesandtoachievetheorganisationsgoals(BeckerandGerhart, 1996;
Takeuchi et al., 2007). AllHPWS have goals to attract, retain and
motivate human resources towards the achievement oforganisational
objectives, by producing a t between the knowledge, skills and
abilities of theperson and the duties and responsibilities required
by the job (Patel et al., 2013). Scholars haveindicatedthat
humanresources, ratherthanthepracticesdevelopedbythesystems,
canbeused to generate better performance (Huselid, 1995; Wright et
al., 2001). Similarly, theoccurrence of unit organisational
ambidexterity is likely to arise from the rms unique HR baserather
than froma set of practices (Barney, 1991). More explicitly, unit
organisationalambidexteritycanbecreatedbybeingexiblewithtimeallocationandfocusingattentiononhumanresources(Lepaket
al., 2003; GibsonandBirkinshaw, 2004).Similarly, scholars have
stated that versatile individuals have the motivation and ability
topursue a range of apparently conicting opportunities, tackle
conict and engage inparadoxical thinking(GibsonandBirkinshaw, 2004;
SmithandTushman, 2005). Moreover,individual employees
withvaluableknowledge, skills andexperiences
areabletoperformmultiple functions and tasks, so that they act more
like generalists than specialists (Leana andBarry, 2000).
Importantly, GibsonandBirkinshaw(2004: 211) statedthat
ambidexterity iscreated by encouraging individuals to make their
own judgments as to how best divide
theirtimebetweentheconictingdemandsforalignment andadaptability.
Inotherwords, unitorganisational
ambidexteritycanbepromotedwhenorganisationsusepracticestodevelopHPWS
and organisational ambidexterityHUMAN RESOURCE MANAGEMENT JOURNAL,
VOL 25 NO 1, 2015 82 2014 John Wiley & Sons
Ltd.resourceexibilityintheiremployment,
suchthathumanresourceshavethediscretionandmotivationtodevotetheir
effortstoactivitiesassociatedwithexplorationandexploitation(Patel
et al., 2013). Previous studies haverevealedthat rms needtoinvest
inthehumanresourcespracticesthatboostemployeemotivation, skill,
andadaptability(Adleret al., 2009:109) in order to help their
employees achieve the diverse goals of the organisation (Wright
andSnell, 1998).
AlthoughresearchershaveexaminedtherelationshipbetweentheuseofHPWSand
ambidexterity, the focus has been on contextual ambidexterity,
knowledge combination andexchange, or adaptive capability(Wei
andLau, 2010; Patel et al., 2013). While this line ofresearch is
valuable in revealing the potential impact of HPWS on
organisational ambidexterity,it offers limited insight into the use
of rm-level HPWS to facilitate organisationalambidexterityat the
lower levels of rms. Furthermore, it has beenassumedthat
HPWSrepresentsaconduit forthedevelopment ofunit organisational
ambidexterity; however, theactual mechanisms linking HPWS andunit
organisational ambidexterity across
multilevelanalysishaverarelybeenexamineddirectly.Building on HPWS
perspective, knowledge and learning perspective, and the
organisationalambidexterity approach, we identify that rm-level
HPWS promotes the development ofunit-level employee human capital,
and this in turn inuences the increase in unit
organisationalambidexterity. Furthermore, across levels, rm-level
social climate moderates the effect ofrm-level HPWSonunit
organisational ambidexteritythroughunit-level employeehumancapital.
The discussion leads to an integrative model presented
schematically in Figure 1.Firm-level HPWS, unit-level employee
human capital and unit-levelorganisational ambidexterityPrevious
studies have focused mainly on macro-level HPWS, especially the
macro-level impactsof HPWS on organisational ambidexterity (Prieto
and Santana, 2012; Patel et al., 2013). Scholarshave theoretically
and empirically suggested that macro-level HR practices are not
useful to theFigure
1Anintegrativemultilevelmodelofhigh-performanceworksystems,
humancapitalandunitorganisationalambidexterityFirm-Level Use of
High-Performance Work Systems Unit-Level Employees Human Capital
Unit Organisational Ambidexterity Unit Level Firm Level Firm-Level
Social Climate Notes: The dashed line separates firm-level
constructs and unit-level constructs. Arrows crossing the dashed
line representcross-level relationships with the outcome
variables.Yi-Ying ChangHUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO
1, 2015 83 2014 John Wiley & Sons
Ltd.samedegree(orinthesameway)inallemployeegroups(Lepaket
al.,2007).Correspondingtothese arguments, rm-level HPWSoffers a
contextual cue for managers toformtheirperceptions and experience
of the work system (Liao et al., 2009: 375). Research has found
thatanindividuals strategicvalues of humancapital
wereaffectedbymacro-level HPWS(e.g.DeleryandDoty, 1996;
LepakandSnell, 1999). Moreover, anindividual
employeeshumancapitalisassessedbythevalueofthatemployeesknowledge,
skillsandabilitiestotherm(e.g. Wright et al., 2001; Subramaniam and
Youndt, 2005). These valuable human resources
notonlytendtobemoreeffectiveforacquiringandassimilatingnewknowledgefromvarioussources(BrownandDuguid,
1991), butalsohavethepotentialabilitytolearn, combineandapply new
knowledge within the organisation (Wright and Snell, 1998; Taylor
and Greve, 2006).Strategic HRM research has argued that HRM can be
used to buy and make required employeeknowledge,
skillsandabilities, whichcancreatevaluefortheorganisation(e.g.
BeckerandHuselid, 1998; Lado and Wilson, 1994). Previous studies
(e.g. Subramaniam and Youndt, 2005)have argued that the role of
human capital is rarely examined explicitly as a mediator
betweenHPWS and organisational ambidexterity at the unit level. In
the context of the service
industry,individualemployeesneedtolearntotackleconictingdemandsinordertosearchfornewknowledgeandskillsandreneexistingservicesandproductstomeetcustomersneeds.
Atthesametime,
individualemployeesneedtofullvariousrolesandcarryoutvarioustaskswithina
certainperiodof time (FloydandLane, 2000; GibsonandBirkinshaw,
2004) asrequestedbycustomers. One of the keyfunctions of rm-level
HPWS is toimprove anemployees knowledge and skills and to make
managers more adaptive to deal withcontradictory dual demands
(Lengnick-Hall and Lengnick-Hall, 2003). Firm-level HPWS is ableto
assist various functional employees, such as customer service
experts, to cooperate togetherat the unit level and subsequently
engage in disperse exploratory and exploitative activities
byintegratingtheiremployeecapabilities (Kaupplia, 2010).
Forinstance, rm-level
HPWScanhelpselectanddevelopservicetalentsattheunitlevel
throughservicequality-focusedandexibility-focusedrecruiting,
training, information sharing, andincentive systems. In
thisinstance, information-sharing practices can assist unit
employees to acquire and assimilate
new,in-depthknowledgewithinanarrowrangeof restrictions
(BrownandDuguid, 1991) andsituated in diverse knowledge domains to
both pursue ambidextrous activities (Kang and
Snell,2009).Firmsalsouserecruiting/staffingpracticestohelpunitemployeesupgradetheirskillsandabilities
tobeambidextrous, throughtheselectionof employees withapotential
andopenness to learning new skills and the selection of employees
with current competency to tthe current job requirements (Lepak and
Snell, 1999). Firms can develop ambidextrousemployees at the unit
level through intensive training to improve current job-related
skills (BaeandLawler, 2000; Guthrie, 2001)
andthroughskill/knowledge-basedincentivesystemsthatencourage
employees at the unit level to gain new knowledge and skills beyond
their currentjobs (Guthrie, 2001). The above-mentioned rm-level
HPWS, in turn, boosts
individualmanagershumancapitalbyhelpingmanagershostcontradictorythinking,fullcurrentandnew
job roles, rene existing knowledge, and acquire new knowledge. As
rm-level HPWS ismorelikelytoaffecttheunit-level
employeehumancapital (asdiscussedearlier), weexpectthat unit-level
employee human capital will mediate the inuence of rm-level HPWS on
unitorganisationalambidexterity.Hypothesis1:
Firm-levelHPWSrelatestounit-levelemployeehumancapital.Hypothesis 2:
Unit-level employee human capital mediates the relationship
betweenrm-levelHPWSandunitorganisationalambidexterity.HPWS and
organisational ambidexterityHUMAN RESOURCE MANAGEMENT JOURNAL, VOL
25 NO 1, 2015 84 2014 John Wiley & Sons Ltd.Firm-level HPWS and
unit organisational ambidexterity: moderating effect of
rm-levelsocial climateIntegrating social capital perspective (e.g.
Nahapiet and Ghoshal, 1998) and HPWS perspective(Wright andMcMahan,
1992; Huselid, 1995), wearguethat rm-level
HPWSmaycreateapositivesocialclimateatthermlevel,
whichthenexertsapositivetop-downeffectonunitorganisational
ambidexterity. As the social capital perspective suggests, social
climate within arm is vital for increasing interaction and
information exchanges (Mayer et al., 1995; Nahapietand Ghoshal,
1998). Trust also enhances the possibility of an exchange of
information and ideasbecause trustworthy social conditions improve
actors beliefs that an existing exchange will leadto later
reciprocities (Coleman, 1990). Asocial climate of trust supports
the exchange of valuableideas among employees that will, in turn,
lead to greater innovation and rm growth (CollinsandSmith,
2006).Astrongrm-level social climateof trust, cooperation,
andsharedcodes andlanguagemayalsoact asasituational enhancer
(Howell et al., 1996), andcanfurther strengthenthepositive inuence
of rm-level HPWS on unit organisational ambidexterity through
unit-levelemployeehumancapital. Thereareat least tworeasons for
this statement. First, astrongrm-level social climate provides a
specic context for rm-level HPWS to promote anindividual employees
awareness of creativesolutions andinnovativethinking,
whichwillupgradetheunit-level employeehumancapital
intheworksetting. Hofmannet al. (2003)demonstrated that the social
climate within a rmemphasises or de-emphasises
certaincontent-specic role expectations for employees as
theyrespondtothe inuence of theirleaders.
Wearguethatwhenanemployeeisembeddedinarm-widecontextcharacterisedbyahighlevel
of trust, cooperationandsharedunderstanding, theemployeeis
likelytoaccessandbecomeexposedtovariousnewknowledgedomainsforambidextrousactivities(SubramaniamandYoundt,
2005)becausethecontentofrm-levelHPWSresonateswiththerms social
climate. As a result, individual employees are more likely to
upgrade theirknowledge, skills and abilities as requested by the
rm-level HPWS, and thus are more
readytoparticipateincreatingasocialclimatethatcontributestothermsgoalsandvalues.
Theresult is aboost tointra-unit knowledge exchange andcreative
thinking, whichcreates
apositiveenvironmentforunitorganisationalambidexterity.
Ontheotherhand, whenthereisaweaksocialclimateoftrust, cooperation,
andsharedcodesandlanguageatthermlevel,individualemployeesmaybelesseffective,
asthesocialcontextfosteredinthatrmbytheHPWSmaygiverisetocognitivedissonanceamongthermsemployees.
Thus, knowledgeexchangewithinthermmaybestied,
whichwouldnegativelyaffect unit organisationalambidexterity at the
unit level. HPWS may shape a managers motivation to pursue a
varietyofdifferentgoalsandtoengageinambidextrousbehaviours.
Yettheabilityoforganisationstoleveragetheir
HPWSeffectivelyandtomakeuseof theunit-level humanresources
byimprovingunit employees knowledge,
skillsandabilitiesisconstrainedbytheuncertaintyandequivocalityassociatedwiththewaysinwhichexplorationandexploitationneedtobepursued
(Floyd and Lane, 2000). A rms social climate may help unit
employees reduce suchuncertainty and equivocality by fostering the
exchange of information, opinions andjudgements with other
colleagues (Mayer et al., 1995). It stimulates a
comprehensiveassessment of divergent goals as well as debate about
expected outcomes (Maurer et al.,
2011)thatcontributestoimprovedtransparencyandcommonexpectationsaboutthefullmentofexploratoryandexploitative
roles andbehaviours. Giventhese benets froma rm-levelsocialclimate,
wearguethatarmssocialclimatecanfurtherreinforcesuchclimateeffectsonunit
organisational ambidexterity.Yi-Ying ChangHUMAN RESOURCE MANAGEMENT
JOURNAL, VOL 25 NO 1, 2015 85 2014 John Wiley & Sons
Ltd.Asocial climateimproves mutual learningprocesses amongmanagers
andmayfurtherimprovethecompetencyaswellaswillingnessofunitemployeestoengageinambidextrousbehaviours.
Without a shared code and language, individual managers may nd it
difficult toapply informational resources and knowledge within
their own activities because they will eachtend to develop specic
languages, world views and thought worlds (Cox, 1993). However, ina
social climate that is characterised by heightened trust,
collaboration and shared languages,it is easier toassimilate
andapplydivergent ideas andknowledge fromother colleagues(Nahapiet
and Ghoshal, 1998). By providing a useful context for combining
knowledge acrossinternal organisational boundaries, asocial
climateimproves theeffectiveness of HPWSincontributing to unit
organisational ambidexterity, through the advancement of
employeehumancapital.A
strongsocialclimatemeansalowvulnerabilityonthepartofrmcontext(BowenandOstroff,
2004). Such a climate offers a safe context for unit employees with
valuable knowledge,skills and abilities to perform various roles
and tasks. The unit employees are likely to perceivethe rm context
as facilitating their efforts to achieve unit ambidextrous
behaviour and to feelmore comfortable directing their efforts
towards fostering unit ambidextrous behaviours, suchas engaging in
contradictory thinking and undertaking various roles (Dirks and
Ferrin, 2001).Second, as noted earlier, unit-level employee human
capital promotes the
intra-unitexchangeofinformationandknowledgebycreatingaconstructivesocial
climatewithintherm. Wereasonthat arm-level social climateof trust,
cooperation, andsharedcodesandlanguage, which facilitates an
inter-unit ow of information and knowledge, complements
theintra-unit exchange by enhancing employees human capital in
order to promote unitorganisational ambidexterity. Whenthereis
ahighlevel of intra-unit exchange, individualemployees are likely
to be exposed to and have access to a range of internal knowledge.
In sucha case, individual employees at the entry point of knowledge
from other parts of the rm aremore capable of interpreting and
understanding the acquired knowledge either using their ownenhanced
expertise or using that of other employees that they can easily
locate within the rm.Moreover, as newlyacquiredknowledgeis
quicklysharedacross therm, it canbemoreefficiently incorporated
into routine activities, and understood and applied in more depth
andbreadth within the unit in the context of organisational
ambidexterity. Thus, fromtheknowledge and learning perspective
(Kang and Snell, 2009), a strong rm-level social
climatecreatesaboundaryconditionthat ampliesthepositiveeffect of
rm-level
HPWSonunitorganisationalambidexteritythroughunit-levelemployeehumancapital.
Incombination, theaboveargumentssuggest:Hypothesis 3: Firm-level
social climate moderates the positive relationship betweenrm-level
HPWS and unit organisational ambidexterity through the indirect
effect ofunit-level employee human capital, such that the effect is
stronger when there is a
positivesocialclimateatthermlevel.METHODSample and
procedureWetestedour hypotheses inasampleof bankingrms inTaiwan.
Thebankingsector isespeciallysuitablefor our studybecauseunit-level
organisational ambidexterityis vital
inassistingbankingrmstoserveexistingproducts/servicesandrenewproducts/servicesorprocesses
in order to survive in the changing environment. We chose the
branches because theyare geographically diverse, and are
independent decision units in the areas of types of productsHPWS
and organisational ambidexterityHUMAN RESOURCE MANAGEMENT JOURNAL,
VOL 25 NO 1, 2015 86 2014 John Wiley & Sons Ltd.and services
provided, markets and customer base. Each branch has (a) its own
seniormanagement team, (b) its own costs and revenues, and (c) its
own responsibilities with respectto various traits of their
operations, such as following exploration and exploitative
innovation.Each branch offers a variety of products, services
andsales, including enterprise andindividual loans, mortgages,
savings and insurance, corporate banking, corporate leasing,
etc.Inaddition, eachbranchoperates inmarkets withvarious
environmental dynamismandcompetitiveness which condition needs
branches pursuing diverse innovations (Han et al., 1998;Jansenet
al., 2008). Studiesintoambidexterityinthebankingsector(e.g. Yuet
al., 2013)haverevealed that banks, both at branch and unit levels,
can achieve service and sales ambidexterityby using HR practices,
such as incentive systems, to motivate branch managers and
employees.In early 2010, we sent surveys to selected participants
together with a supporting letter fromthechief executiveofficer
(CEO) of therm. Thesurveys
weredevelopedinEnglishandtranslatedintoChinese usingthe
back-translationmethod(Brislin, 1980). Altogether,
1,490managersand4,000employeesweresurveyedacrossatotal of
808branchesof 58bankingrms. After 4 weeks, with three rounds of
reminders, we received responses from 616
managersand2,998employees.Our nal sampleincluded808branchesin58rms,
withresponsesfromatotal of 536managers(35.9per
centresponserate)and2,887employees(72.1per centresponserate).
Wecompared rms included in our nal sample with rms that had been
excluded, and did notndsignicant differencesbetweenthemintermsof
thenumberof full-timeemployeesornumber of units of banks. Following
Armstrong and Overton (1977), we also compared early(rst10per
cent)andlate(last10per
cent)respondentstoassessnon-responsebiasoneachdimension of
management innovation. No signicant differences emerged across
thesedimensions. Ofthemanagersinoursample, 63per centwerefemale.
Theiraverageagewas35.1years.Onaverage,themanagershadworkedinthermfor12.3yearsandhadbeenintheir
current job for 4.24 years. Of the employees in our sample, 59 per
cent were female. Theiraverage age was 37 years, with an average
organisational tenure of 18 years. Of the managersinoursample,
63per centwerefemale.Toalleviatethecommonmethodbias,
weobtaineddatafrommultiplesources. First, 536managers from 808
branches of 58 banking rms were chosen randomly from a list
providedby the rm. These participants were told the studys purpose
and were asked to rate unit-levelambidexterity. Second, the 2,887
employee respondents ratedtheir ownhumancapital ingeneral. Third,
twoseniormanagersfromeachrmsheadquartersratedrm-level HPWS.Fourth,
threeemployeesfromeachrmsheadquartersratedtherm-levelsocialclimate.Weconductedaseriesofconrmatoryfactoranalyses(CFA)toexaminethediscriminantvalidity
of these constructs. Like Liao et al.s (2009) one-factor solution
of rm-level HPWS, wefound that the one-factor model of rm-level
HPWS t the data better [2(72) = 735.38,non-normedt index(NNFI) =
0.92, comparativet index(CFI) = 0.92, incremental t index(IFI) =
0.92, and root mean square error of approximation (RMSEA) = 0.05].
In addition, the onehigher-factor of unit-level organisational
ambidexterity represents the construct well [2(65) = 537.91, NNFI =
0.91, CFI = 0.91, IFI = 0.91, andRMSEA = 0.05]. Taken together,
theseresultsprovidedevidenceofdiscriminantvalidity.MeasuresUnit
organisational ambidexterityUnit organisational ambidexterity was
measured using a12-itemscale adapted fromLubatkin et al. (2006).
The 12 items showed good reliability( =
0.90).Becauseofthehighlevelofagreementbetweenraterswithinthesameunit[meanrwg
= 0.92, intraclass correlationcoefficient (ICC)(1) = 0.23, ICC(2) =
0.74], we averagedtheYi-Ying ChangHUMAN RESOURCE MANAGEMENT
JOURNAL, VOL 25 NO 1, 2015 87 2014 John Wiley & Sons
Ltd.responses of managers within each unit to create an aggregated
measure of unit-levelorganisational ambidexterity.
Weusedthemainstudydata536managers ratingsof unitorganisational
ambidexterity to conduct a CFA. The CFA results showed that the
one-factormodel t thedatawell [2= 57.35, df = 9, p < 0.01, RMSEA
= 0.04, CFI = 0.92, goodness-of-tindex (GFI) = 0.92, Tucker-Lewis
index (TLI) = 0.90]. The results indicated that the measure
wasvalidandreliable. Inthis study, unit organisational
ambidexterityshowedgoodreliability( = 0.81). Following previous
studies (e.g. He and Wong, 2004; Lubatkin et al., 2006), this
studycalculated the unit organisational ambidexterity as the
multiplication score of exploration andexploitation,
andtheabsolutedifferencescoreofexplorationandexploitation.Firm-level
HPWSWeusedthe37-itemHPWSthat Liaoet al. (2009)
developedfromextantliterature especially for banking rms
(Zacharatos et al., 2005). The HPWS was
adaptedspecicallytohelpambidextrous managers
improveserviceperformanceonaseven-pointscale. The HPWS scale has
eight unique dimensions for HR systems. Two senior managers
fromeach rms headquarters rated the items that were used to direct
individual managers in eachbanking rm. We followed previous
research and used the eight dimensions to create an indexof HPWS
(Sun et al., 2007; Takeuchi et al., 2007; Chuang and Liao, 2010) (
= 0.92). Tests
showedthatmanagersfromthesamermhadahighlevelofagreementregardingrm-levelHPWS[meanrwg
= 0.90, ICC(1) = 0.24, ICC(2) = 0.72].Firm-level social
climateFollowingpreviousresearch, weviewedarmssocial
climateasconsisting of trust, cooperation, and shared codes and
language (Mayer et al., 1995; Mayer andDavis, 1999; Chatman and
Flynn, 2001; Collins and Smith, 2006). Trust was measured using
a12-itemscaleadaptedfromMayerandDavis(1999). Firm-level social
climatewasratedbythree employees at each rms headquarters. The
measures showed good reliability ( = 0.93 fortrust; = 0.85 for
cooperation; and = 0.91 for shared codes and language). Tests
revealed thatthethreeemployeesfromeachrmsheadquartershadahighlevel
ofagreementregardingrm-level social climate: trust [mean rwg =
0.91, ICC(1) = 0.22, ICC(2) = 0.71], cooperation[mean rwg = 0.91,
ICC(1) = 0.22, ICC(2) = 0.71], and shared codes and language
[meanrwg = 0.90, ICC(1) = 0.23, ICC(2) = 0.72]. We, therefore,
averaged the responses of the employeeswithin each rms headquarters
to create aggregated measures of rm-level trust,
cooperation,andsharedcodesandlanguage.Unit-levelemployeehumancapital
Weusedave-itemhumancapitalscaledevelopedbySubramaniamandYoundt(2005)onaseven-pointscale.
Theitemswereadaptedtodescribeservice-relatedknowledge,
skillsandabilities( = 0.89). Testsshowedthatdirectorsfromthesame rm
had a high level of agreement regarding unit-level employee human
capital [meanrwg = 0.90, ICC(1) = 0.23, ICC(2) = 0.73].Control
variablesFirst, we controlled for manager age and tenure within the
rm, which areexpected to positively relate to organisational
ambidexterity (Tushman and OReilly, 1996: 27).Second, we controlled
for a managers tenure in his or her current function, which is
related toanincreasinglevel of specialisationandtherefore is
expectedtonegativelyrelate tounitorganisational ambidexterity (cf.
Gibson and Birkinshaw, 2004: 211). Third, we controlled for levelof
education because increasing levels of education are linked with an
increasing cognitive
abilitytoprocessinformationandtolearn(Papadakiset
al.,1998).Thismaypositivelyrelatetounitorganisationalambidexterity(Adleret
al., 1999: 51). Educationaleffectsincludedtwodummyvariables:
onereectingmanagerswithamastersdegreeor higher, andanother
reectingHPWS and organisational ambidexterityHUMAN RESOURCE
MANAGEMENT JOURNAL, VOL 25 NO 1, 2015 88 2014 John Wiley & Sons
Ltd.managers with bachelors degrees. Managers with degrees below
the bachelors level were thereferencegroup(Momet al., 2009).
Fourth, wecontrolledsizeeffect(numberofsubordinatesunder a manager)
(Lewin et al., 1999) and environmental uncertainty because these
are linked toa rms motivation to adjust to changing resource
conditions (Lubatkin et al., 2006).RESULTSTable
1presentsdescriptivestatisticsandcorrelations.Wetestedthehypothesesusinghierarchical
linearmodelling(HLM) analyses.
Wegrandmean-centredtheinterpretationfor theHLMresults,
whichensurestheLevel
1affectsarecontrolledforduringtestingoftheincremental
effectsoftheLevel 2variables, andreducesmulticollinearity in Level
2 estimation by lessening the correlation between the Level 2
interceptandslopeestimates(HofmannandGavin,
1998).BeforeconductingHLManalyses, weexaminedthedegreeof
between-groupvarianceinindividual-level humancapital
andunitorganisational ambidexterity. Resultsofnull
modelsrevealedthat26per
centofthevarianceinindividual-levelhumancapital, 32per
centofthevarianceinunitorganisational
ambidexterity(multiplicationofexplorationandexploitation)and24per
cent of thevarianceinunit organisational
ambidexterity(absolutedifferenceofexploration and exploitation)
reside between individuals (the grouping variable),
respectively.Thechi-squaretestsrevealedthat thebetween-individual
variancesweresignicant; i.e.
theintercepttermssignicantlyvariedacrossindividuals.Hypothesis1predictsthatrm-level
HPWSrelatestounit-level employeehumancapital;Hypothesis 2 predicts
that unit-level employee human capital mediates the
relationshipbetweenrm-levelHPWSandunitorganisationalambidexterity.
TheresultsinModel1andModel 2 revealed that rm-level HPWS was
signicantly related to unit-level employee humancapital ( = 0.42, p
< 0.01), unit-level employee human capital mediated the
relationship betweenrm-level HPWSandunit organisational
ambidexterity( = 0.53, p < 0.01, Model 2), andtheeffect of
rm-level HPWS remained signicant but was reduced in magnitude ( =
0.22, p < 0.01,Model2). Thus,
Hypotheses1and2weresupported.Hypothesis 3 proposes a positive
cross-level interaction between the rm-level social
climateandunit-levelemployeehumancapitalinpredictionsofunitorganisationalambidexterity.InModel
5, we regressed the slope estimates for unit-level employee human
capital obtained fromLevel 1onsocial climateat Level 2totest this
interaction(BrykandRaudenbush, 1992).Moreover, as spurious
cross-level interaction may be found if between-groups interactions
arenot controlledfor (HofmannandGavin, 1998), we includedthe
interactions of rm-levelHPWS rm-level social climate at Level 2.
The results revealed that the interaction ofrm-level HPWS rm-level
social climate was not signicant, whereas the
cross-levelinteractionwas signicant ( = 0.42, p < 0.01, Model
5). These results provide support forHypothesis3andsuggest that
apositiverm-level social
climateenhancedtheinuenceofunit-levelemployeehumancapitalonunitorganisationalambidexterity.Toexaminewhether
theinteractioneffect was mediatedbytheindividual-level humancapital
speciedinthisstudy, wefollowedEdwardsandLamberts(2007)procedure,
whichintegrates moderated regression analysis and path analysis to
analyse comprehensivelysimultaneous moderation and mediation. In
Table 2, for the unit-level employee human capitalpath, the
indirect effect was 0.20 (p < 0.05) at high rm-level social
climate and 0.10 (p < 0.05)at low rm-level social climate, and
the difference was signicant [0.20 (0.10) = 0.30, p <
0.05].Theresults, thus, suggest that theindirect effect of rm-level
HPWSonunit organisationalambidexterity, through unit-level employee
human capital, was stronger at a higher rm-levelYi-Ying ChangHUMAN
RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 1, 2015 89 2014 John Wiley
& Sons
Ltd.TABLE1Means,standarddeviationsandcorrelationsMeanSD1234567891011121.Managerage36.195.672.Managertenureintherm11.972.270.103.Managertenureinthecurrentjob3.450.530.21***0.16***4.Size(logofmanagerssubordinates)1.220.150.15**0.13**0.035.Education1(masterabove)0.300.450.000.000.19***0.12**6.Education2(bachelor)1.000.000.21***0.010.030.010.007.Environmentaluncertainty5.571.150.23***0.08**0.030.15***0.12**0.038.Unit-levelemployeehumancapital4.011.190.030.13**0.01*0.15***0.13**0.010.10**9.Firm-levelHPWS4.531.030.010.07*0.05*0.16***0.14**0.000.040.08*10.Firm-levelsocialclimate4.080.590.020.000.020.010.010.000.08**0.11**0.49***11.Unitorganisationalambidexterity(multiplicationofexplorationandexploitation)16.754.180.010.010.000.010.000.010.06**0.29***0.07*0.28***12.Unitorganisationalambidexterity(absolutedifferenceofexplorationandexploitation)0.800.630.010.020.000.000.030.000.05**0.010.010.16**0.17***p