Commitment-based HR practices and organizational performance : the mediating role of organizational learning capability and social capital

The main objectives of this study were to investigate (a) the relationship between commitment-based HR practices (e.g. selection, compensation, training and development) and organizational performance, organizational learning capability, and organizational social capital; (b) the relationship between organizational learning capability and organizational performance; (c) the relationship between organizational social capital and organizational performance; and (d) the mediating role of organizational learning capability and organizational social capital on the relationship between commitment-based HR practices and organizational performance. Specifically, this study hypothesized that (a) commitment-based HR practices, organizational learning capability and organizational social capital relationship are positively related to organizational performance and (b) the relationship between commitment-based HR practices and organizational performance is mediated by organizational learning capability and organizational social capital. To test the hypotheses, the Partial Least Square – Structural Equation Modelling (PLS-SEM) statistical technique was employed to analyze the survey data collected from 401 Japanese MNCs organizations in Kedah, Pulau Pinang, Perak, Selangor, Kuala Lumpur, Melaka and Johor. The results of the study showed that (a) commitment- based HR practices are positively related to organizational performance, organizational learning capability and organizational social capital; (b) organizational learning capability has no influence on organizational performance; (c) organizational social capital is positively related to organizational performance; and (d) organizational learning capability does not mediate the relationship between commitment-based HR practices and organizational performance, and organizational social capital fully mediates the relationship between commitment-based HR practices and organizational performance. Theoretically, the study contributes to knowledge by providing support for the importance of commitment-based HR practices and the mediating role of organizational social capital which influence the organizational performance of Japanese MNCs in Malaysia. Practically, this study provides guidelines to policy-makers and HR practitioners to understand that business success depends on the organization’s capabilities and abilities to utilize its human resources to achieve its business objectives and goals. The result of this study is able to offer evidence that commitment-based HR practices help promote mutual and long-term relationships in the organization at all levels. Hence, HR practitioners need to institute HR practices that encourage network-building relationships characterized by trust, cooperation and commitment towards the organization.