The relationship between the high performance human resource management system, innovation and firm performance of enterprises in Vietnam

nnovation and firm performance Many studies have used linear regression analysis using the ordinary least square method (OLS) (Amores-Salvadó et al., 2014; Nham et al., 2016; Nguyen et al., 2019) or a structural equation model (SEM) (Wang and Wang, 2012; Lin, 2013; Omri, 2015; Lu et al., 2015; Soto - Acosta et al., 2015) to assess the impact of innovation on results. operation of businesses. Although these studies use different research methods, they have come to the conclusion that innovation activities have a positive impact on business performance. 1.2.4 . The mediating role of innovation Based on an overview of the works in the world as well as the research of Baron and Kenny (1986) on intermediary variables, it can be seen that innovation plays an intermediary role in the relationship between the human resource management system. high business results and operational performance. Because a highly effective human resource management system with training and motivational activities will enhance enterprise innovation activities by helping workers form new ideas, like promoting and applying new ideas at work. At the same time, when businesses get new ideas and apply these ideas in their work to improve products, services and processes, they will increase operational performance. 7 1.3. Research gaps Firstly, there are very few previous studies in Vietnam and the world that mention the mediating role of behavioral innovation in the relationship between high- performance human resource management systems and performance. Secondly, previous studies still have many debates about the practices of a high performance human resource management system. Therefore, based on the research review and interviews with enterprises in Vietnam, the author has added a job guarantee factor to the highly effective human resource management system. Thirdly, previous studies on the relationship between high performance human resource management systems, innovation and firm performance have left the impact of control variables such as size (in terms of number of employees), the number of years of operation and the business sector to the enterprise's performance. Therefore, in the thesis, author has used the characteristics of the enterprise such as size (calculated by the number of employees), the number of years of operation and the business sector as control variables in the research model. 1.4. Background theories 1.4.1. Resource-based view Most of the studies on the relationship between high-performance human resource management systems and firm performance have been rooted in RBV by Wernerfelt (1984) and Barney (1991) (Datta et al, 2005; Comb et al., 2006; Chand and katou, 2007; Katou, 2008; Chadwick, 2010; Kroon et al, 2012; Jeong and Choi, 2015; Rothenberg et al, 2015; Özçelik et al., 2016). The theory based on the resources of Wernerfelt (1984) and Barney (1991) suggests that enterprises can only create a competitive advantage when their resources ensure 4 factors: (1) Valuable, (2) rare, (3) in-imitable and (4) non-substituable. Source: Barney (1991) Figure 1.1. Theoretical framework for resource-based governance Resources - Value - Rare - Imperfect Imitability - Non-substitutability Compettitive Advantage 8 Human resource management systems are the most sensible competencies to utilize the development of corporate human resources and use them to create core competencies (Wright et al., 2001). In addition, if a business can improve its human capital, it will help create a sustainable competitive advantage that competitors can hardly copy or copy (Rothenberg et al., 2015). ; Özçelik et al., 2016). In addition, based on resource theory (RBV), a high performance human resource management system is a set of human resource activities that, by enhancing employee skills, create participation in decision-making, and promoting employee self-efforts through forms of motivation, can deliver a solid competitive advantage reflected in good financial performance. (Huselid, 1995; Appelbaum et al., 2000; Way, 2002), thereby helping businesses succeed (Richard et al, 2013). 1.4.2. Theory of economy development Atalay et al. (2013), Lu et al. (2015), Nham et al. (2016) used the theory of economic development of economists and scientists. German politics Schumpeter (1934) to illustrate the relationship between innovation and firm performance. Schumpeter (1934) argues that innovation is innovation. Innovation is the physical or mental outcome of cognitive or behavioral activity through the use of all resources and conditions by individuals to create new, intentional products, services and technologies. meaning and value according to a certain purpose or task. At the same time, the process of awareness and creating new ideas for employees is the beginning stage of innovation in enterprises (Kanter, 1986). It can be said that innovative forms of organization, new ideas and management methods to create new products and services, new working methods and new technologies belong to innovation. 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 innovation first introduced to the market will face direct but limited competition and therefore businesses can receive relatively high profits. However, over time, this profit may be reduced by imitation and competition in the market. But if businesses continue 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 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. 9 1.5. Research model and hypotheses 1.5.1. Research model Based on literature review and background theories, the model is: 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. HRM Innovation Firm performance Performance evaluation Training Employee participation Production of innovation Job analysis Promotion of innovation Implementation of innovation Operational performance Market performance Employee development Profit sharing Control variables Job security 10 Table 1.1. Research hypotheses H1 High performance human resource management positively impacts on firm performance H2 High performance human resource management positively impacts on innovation H3 Innovation positively impacts on firm performance H4 Innovation plays an intermediary role in the relationship between high performance human resource management system and firm performance 11 CHƯƠNG 2. RESEARCH METHODOLOGY 2.1. Research design To assess the impact of the relationship between the highly effective, innovative human resource management system, and the performance of enterprises, the author used quantitative research. At the same time, the dissertation's data was collected by the author from primary data through a survey of manufacturing and service manufacturing enterprises in 20 provinces / cities across the North, Central and South of Vietnam. Figure 2.1. Research process flowchart Source: Author proposed Step 1: Literature review: The research overview is applied to systematize and find out the theoretical gaps related to the relationship between the highly effective, innovative and innovative human resource management system. performance of the business. Literature review Develop and standardize Vietnamese scale Research gaps Draft scale Preliminary qualitative research Add and develop factors appropriate to the Vietnamese context Background theories Define measurement variables and scales for variables Official quantitative research Collect, analyze data, discuss and propose recommendations 12 Step 2: Researching background theories: Through the general research and the theoretical basis, the author has formulated research hypotheses for independent variables, intermediate variables, dependent variables and control variables. as well as a preliminary scale of the variables in the research model between the highly efficient, innovative human resource management system, and business performance. Step 3: Preliminary qualitative research: The preliminary qualitative research will help the author assess the importance as well as the impact of job security on innovation and business performance. For the preliminary qualitative research, the author directly interviewed 4 administrators from 3 service enterprises and 1 manufacturing and manufacturing enterprise. All managers evaluate that the factor of 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 for the employee”. 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 performance to find independent variables, dependent variables and intermediate variables. First, the author has translated the questionnaire in English into Vietnamese. After that, the author made the correction of terms in the preliminary survey with 2 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 universities. After translating and modifying the term, the author sent a preliminary survey questionnaire along with the original questionnaire in English to a Vietnamese English expert who worked in the United States, fluent in both languages.. The English expert has compared the Vietnamese questionnaire and the English questionnaire then revised some terms in the Vietnamese questionnaire to help the respondents understand the content of the question best. Finally, after completing the editing of the questionnaire with human resource management experts and English experts, the 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 Step 5: Official quantitative research: After building and standardizing Vietnamese scales, the author has conducted official quantitative research on a national scale. 14 CHAPTER 3. RESEARCH RESULTS 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 (Hoang Trong and Chu Nguyen Mong Ngoc, 2008). At the same time, the thesis also tested KMO and Bartlett to measure the compatibility of the survey samples. According to Hoang Trong and Chu Nguyen Mong Ngoc (2008), factor load factor > 0.5 to ensure practical significance level of exploratory factor analysis (EFA). The 1st EFA analysis shows that the factor load factor of TG4 is loaded on both factors, while VH4 has < 0.5 factor load factor, so it has been removed. The results of the second EFA analysis show that the factor load factor of observations> 0.5 and focus on 11 groups of factors with 36 observations. 3.3. Correlation analysis Correlation analysis results show that the independent variables, the intermediate variable and the dependent variable are correlated with each other at the significance level of 5%. At the same time, there is no Pearson correlation coefficients among variables greater than 0.8, so there is no serious multicollinearity phenomenon (Hoang Trong and Chu Nguyen Mong Ngoc, 2008). 3.4. Linear regression analysis To evaluate the mediating role of innovation in the relationship between high performance human resource management system and business performance, the author used representative variables (aggregate variables), the signal is: QTNNL, DM and KQHD respectively. Table 3.1. Impact of HP HRM on innovation Variables Innovation β β chuẩn hóa Sig. VIF 1. 50-100 employees 0,016 0,012 0,786 1,444 1. 100-200 employees -0,056 -0,047 0,302 1,502 2. 5-10 years 0,070 0,057 0,222 1,576 3. 10-20 years -0,007 -0,006 0,894 1,448 4. Service sector 0,070 0,057 0,137 1,067 6. HP HRM 0,858 0,757 0,000 1,020 R2 adjusted 0,569 Durbin - Watson 1,798 F 69,535*** Source: According to the survey and analysis of the author 16 The results of regression analysis in table 3.1 show that the highly effective human resource management system has sig value. is 0.000, so the hypothesis H2 is accepted, meaning that high human resource management system positively affects enterprise innovation. Table 3.2. The mediating role of innovation Variables Firm performance Model 5 Model 6 Model 7 Model 8 1. 50-100 employees -0,211** -0,165** -0,184** -0,168** 2. 100-200 employees -0,178** -0,149** -0,132* -0,136* 3. 5-10 years -0,071 -0,026 -0,069 -0,040 4. 10-20 years -0,102 -0,028 -0,046 -0,027 5. Service sector -0,040 -0,024 -0,059 -0,039 6. HP HRM 0,562*** 0,364*** 7. Inovation 0,536*** 0,262*** R2 adjusted 0,035 0,347 0,320 0,375 Durbin - Watson 1,641 1,752 1,760 1,773 F 3,272** 28,603*** 25,413*** 27,648*** Source: According to the survey and analysis of the author The results of linear regression analysis (model 6) show that the highly effective human resource management system has sig value. It is 0.000 so the hypothesis H1 should be accepted, meaning that the high performance human resource management system has a positive impact on firm performance. At the same time, the standardized coefficient β of the high performance human resource management system is 0.562. - The results of linear regression analysis (model 8) show that innovation has sig value. is 0.000, so the hypothesis H3 is accepted, meaning that innovation has a positive impact on the business performance of the business. In addition, the standardized β coefficient of innovation is 0.262. - It can be seen that when adding innovation to the research model, the standardized β coefficient of the high performance human resource management 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 relationship between high performance human resource management system and business performance. 17 H 1 : 0 ,562 * * * H 4 : 0 ,362 * * * S o u rce: A cc o rding to th e su rvey a nd a n alysis of th e a uth o r In additio n , in o rd er to co n sid er w hich h u m an reso u rce m an ag e m ent activities are th e m o st im p o rtant influ en cing b u sin ess p erfo rm an ce and in n o v atio n , th e auth o r also u sed th e first -o rd er co n stru ct . F o r p erfo rm a n ce results in clud e m a rk et a nd op eratio n al p erfo rm a n ce - Th e results of lin ear reg ressio n an aly sis (m od el 2 a) sh o w ed th at sig . v alu e of training , p erfo rm an ce ev alu atio n and job secu rity < 0 .05 , m eaning th at th ey h av e a p o sitiv e im p act o n m ark et p erfo rm an ce . Th e stand ardized β co efficients of training and p erfo rm an ce ev alu atio n and job secu rity are 0 .193 , 0 .223 and 0 .254 resp ectiv ely . S o job secu rity h as th e g reatest im p act o n m ark et p erfo rm an ce . - R esults of lin ear reg ressio n an aly sis (m od el 2b) sh o w ed th at sig . v alu e of training , p erfo rm an ce ev alu atio n and job secu rity < 0 .05 , m eaning th ey h av e a p o sitiv e im p act o n op eratio n al p erfo rm an ce . Th e stand ardized β of training , em ploy ee ev alu atio n and job secu rity are 0 .214 , 0 .167 , 0 .275 resp ectiv ely , m eaning job secu rity h as th e g reatest im p act o n op eratio n al p erfo rm an ce . - In additio n , em ploy ee p articip atio n , p rofit sh aring , em ploy ee d ev elop m ent and job an aly sis h av e sig . v alu es > 0 .05 , m eaning th ey h av e n ot affect o n m ark et and op eratio n al p erfo rm an ce . In n o v atio n in clud es: P rod u ctio n of in n o v atio n , p ro m otio n of in n o v atio n a nd im plem entatio n of in n o v atio n - Th e results of lin ear reg ressio n an aly sis sh o w ed th at sig . v alu e of em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , job secu rity < 0 .05 , m eaning th ey h av e p o sitiv ely im p act o n th e p rod u ctio n of in n o v atio n . Th e stand ardized β co efficient of em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , job secu rity and p rofit sh aring are 0 .264; 0 .192; 0 .168 and 0 .096 resp ectv ely . S o em ploy ee p articip atio n h as th e g reatest im p act o n n ew id ea fo rm atio n . H P -H R M FP H P -H R M FP In n o v atio n H 2 : 0 ,757 * * * H 3 : 0 ,536 * * * 18 - Th e results of lin ear reg ressio n an aly sis sh o w ed sig . v alu e of em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , em ploy ee d ev elop m ent and p rofit sh aring < 0 .05 , m eaning th at th ey h av e a p o sitiv e im p act o n th e p ro m otio n of in n o v atio n . Th e stand ardized β co efficient of em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , em ploy ee d ev elop m ent and p rofit sh aring , resp ectiv ely , w as 0 .222; 0 .168; 0 .243 and 0 .116 . S o em ploy ee p articip atio n h as th e g reatest im p act o n p ro m otio n of in n o v atio n . - R esults of lin ear reg ressio n an aly sis sh o w ed sig . v alu e of em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , em ploy ee d ev elop m ent and job secu rity < 0 .05 , m eaning th ey h av e a p o sitiv e im p act o n th e im plem entatio n of in n o v atio n . Th e stand ardized β co efficient em ploy ee p articip atio n , p erfo rm an ce ev alu atio n , em ploy ee d ev elop m ent and job secu rity is 0 .254; 0 .158; 0 .182; 0 .127 resp ectiv ely . S o em ploy ee p articip atio n h as th e g reatest im p act o n th e im plem entatio n of in n o v atio n . In term s of size (in term s of n u m b er of em ploy ees) , enterp rises w ith o v er 200 em ploy ees w ill h av e b etter m ark et results and b etter p erfo rm an ce th an b u sin esses w ith 50 -100 and 100 -200 em ploy ee (m od el 1 a , 1b) . In additio n , this study h as also sh o w n th at th e differen ce in th e n u m b er of y ea rs in op eratio n d o es n ot affect th e differen ce in firm p erfo rm an ce . E stim atio n results sh o w th at th ere is n o differen ce in m ark et and op eratio n al p erfo rm an ce b etw een m an ufactu ring and service secto rs in V ietn am . 19 Table 3.3. Summary table for linear regression analysis of firm performance ***, **, * Significant at level of 0,1%, 1% và 5% Source: According to the survey and analysis of the author Biến Market perfomance Operational performance 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