Relationship Between High-Performance Work Systems and Innovation Performance (Low-Level Employee’s Perception) with Mediating Role of Dynamic Capabilities and Moderating Role of Hierarchal Culture

Abstract

In this research, we examined theoretically how human resource practices such as high-performance work systems help build dynamic capabilities which enhance an organization's innovation performance. We also theorized that firms within a hierarchical culture where employees follow a structured system would not have a strong influence in transforming dynamic capabilities into innovation. We analyzed and tested our hypothetical model by using cross-sectional studies from 50 pharmaceutical companies in Pakistan. Our findings demonstrate that dynamic capabilities (DCs) serve as a mediator in the relationship between high-performance work systems and innovation performance (IP). Moreover, the association of dynamic capabilities (DCs) and innovation performance is found to be significantly moderated by hierarchical culture (IP). We found that the relationship of high-performance work systems, innovation performance and dynamic capacities were not significantly influenced by hierarchical culture.