Developing A Conceptual Model For the Relationship Between Human Resource Management, E-Business Strategies and Competitive Advantage | Open Access Journals

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Developing A Conceptual Model For the Relationship Between Human Resource Management, E-Business Strategies and Competitive Advantage

EMAD ALI KASASBEH

PhD student, School of Business Innovation and Technopreneurship, University Malaysia Perlis, Malaysia

Dr. YOSHIFUMI HARADA

School of Business Innovation and Technopreneurship, University Malaysia Perlis, Malaysia

Dr. IDRIS MD NOOR

School of Business Innovation and Technopreneurship University Malaysia Perlis, Malaysia

*Corresponding Author:
EMAD ALI KASASBEH
PhD student, School of Business Innovation and Technopreneurship,
University Malaysia Perlis, Malaysia
Tel: +009622372381
Email: emad_kasasbh@yahoo.com

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Abstract

Critical review of extant literature has shown a plethora of empirical evidences on the significant relationship between, and positive impact of, e-business strategies and organizational competitive advantage. Although few studies have essentially captured the broad conceptualization of e-business strategies to cover the emerging electronic variegate of the traditional business strategy, the significant relationship is still found to be very valid. However, and most importantly, intervening variables have been sparingly introduced into the relationship between e-business strategies and organizational competitive advantage. There are few cases of organizational efficiency, but none has investigated the possible moderating role of human resource management strategy, especially considering knowledge management capacity, reward system and employee capacity building as dimensions, and specifically in the banking sector. Based on insights from the literature reviewed, this study proposes a conceptual model that investigates the moderating effect of human resource management strategy on the relationship between e-business strategies and organizational competitive advantage. Future works will empirically validate the conceptualized constructs and test the fitness of the proposed model.

Keywords

E-Business Strategy; Competitive Advantage; Human Resource Management Strategy; Moderating Effect; Banking Sector

Introduction

The need to implement strategies that enhance competitive advantage has always being the leading consideration [1,2]. Competitive advantage as a broad concept deals with business engineering process (BRP) that will put the organisation in a lead among other competitors within their sector [3]. It specifically addresses what the organisation has in stock that will achieve advantage in the competitive market. In these stances, constructs like strategic planning, competitive intelligence, corporate social responsibility, innovation, and creativity are befittingly used as synonyms for competitive advantage [4-7]. Also, since the advent of technology, most especially information communication technology (ICT), researchers and practitioners of managerial studies generally have been studying and proposing studies on the impact of ICT on organisational growth, and competitive advantage has always being in the research limelight [6,8,9]. One of the prominent concepts of ICT strategy to actualize competitive advantage is e-business strategy. E-business strategy, involving the use of data resource management, telepresence systems, enterprise resource management system (ERP), e-commerce systems, and decision support systems, had been appraised as strategies that influence organizational competitive advantage [10,11].

On the other hand, the importance of human resource management strategy (HRMS), in achieving competitive advantage, cannot be overemphasized, although it has been sparingly introduced in the empirical studies that investigated the impact of e-business strategies on competitive advantage. HRMS deals with the inclusion of employee motivation, in service training system, and all other strategies, that will improve the employees’ productivity [12-14].

This study is extensively motivated by the limitations recorded from past [15-18] on human resources management practices and e-business strategy implementation for organizational competitive advantage, especially in the banking sector. The banking sector, being the prime mover of the economy, should ensure implementation of e-business strategies, with inclusion of others like HRMS in achieving competitive advantage [15,16]. However, as found from extant literature, intervening variables have been sparingly introduced into the relationship between e-business strategies and organizational competitive advantage, and none has investigated the possible moderating role of HRMS. This paper therefore argues for the moderating effect of HRMS in the impact of e-business strategies on competitive advantage. The next section and the third section of this paper respectively present the literature review and the core argument supporting the hypotheses proposed by this study. The fourth section discusses the theoretical background and presents the conceptual model, and the fifth section concludes this paper.

Review of Past Related Studies

This section discusses the conceptualization of the constructs introduced in this study. The past related empirical studies, under the headings of the constructs, are reviewed in view of positioning the direction and hypotheses proposed by this study. Competitive advantage, E-business strategies (e-commerce, e-marketing, e-operation and k-systems), and human resources management are discussed in the following sub-sections.

Competitive Advantage

Competitive advantage is mostly defined by previous studies as organisational performance, firm sustainability and financial efficiency [7,19-24]. These are studies whereby financial institutions were investigated. In other cases, competitive advantage is studied as organizational creativity [5] and innovation [6,19,22], though with different measuring dimensions.

The conceptualization of organisational competitive advantage is often determined by the nature of the organisation being investigated. In financial institutions, or studies that measured competitive advantage using financial measures, it is defined as the yearly turnout profit of the company, measured with return of equity (ROE) or/and return on assets (ROA) [4,5-7,9,19,20]. In these studies, competitive advantage was investigated as the dependent variable.

From the non-financial measure perspective, competitive advantage is defined as the innovative ideas and creative product development process of the organisation [6,19,20,25,26]. It is also defined as service development and increase in sales and growth [5,24,27,28], service quality [22,28,29] responsiveness to customers, organisational core competence and cost effectiveness [4,8,23,25,30,31]. Others like Kuettner et al. [32], Wang et al. [33], Militaru et al. [34] and Daniel et al. [31] conceptualised and measured competitive advantage as organisation’s strategic planning and corporate social responsibility. Notably, in studies that investigated competitive advantage using non-financial measures, it is investigated as moderator, mediator or antecedent variable to the actualization of organisational performance.

Competitive advantage is found to be a mediator in the actualization of organisational performance of insurance company where marketing innovation and creativity are the antecedent variables [5,19]. Its role is also examined in the relationship between customer orientation, innovation differentiation, market differentiation [28,35]. In the same vein, competitive advantage in public sector organizations is investigated to explain the paradox of public sustainable competitive advantage and as an antecedent variable to organisational growth [19,25].

Furthermore, considering other studies that investigated the impact of competitive advantage on organisational performance, it is found that competitive advantage and firms’ performance has significant association with competitive edge and performance [7,19,20,24,36]. The finding provided a large support for the importance of competence as a base of advantage to enhance the firm yield. Also, core competence is reported to have a strong and positive impact on competitive advantage and organizational performance while competitive advantage has significant impact on organisational performance [9,20,21,23,37].

In summary, competitive advantage in the same term as firm/organizational performance, measured with constructs that reflect the organisational growth, or in terms of innovation and other associated constructs. Real estate management (CREAM) practices which are cost, innovation and differentiation [26,28], quality of service or/and management [30,38,39], corporate social responsibility [34,40], and strategy formulation [33,41] are other variables that are found to be related with competitive advantage. This clearly shows that strategy, through different conceptualizations like innovation, quality management, and corporate social responsibility have been found to be related with competitive advantage. Table 1 presents the summary of the review on competitive advantage.

Table 1: Summary of the Review on Competitive Advantage.

Dimensions used The investigated role Associated variable(s) Findings References
Return of equity (ROE) and Return on assets (ROA) Mediator Marketing innovation, creativity and organisational performance Competitive advantage mediates the relationship between Marketing innovation and Creativity and organisational performance Epetimehin [5]; Sigalas et al. [4]; Basheer et al. [6]; Michael [20], Barrett et al. [19]
Innovative ideas and creative product development process Moderator Customer orientation, innovation differentiation, market differentiation and organizational performance Competitive advantage mediates the relationship between Customer orientation, innovation differentiation, market differentiation and organisational performance Vahid et al. [22]; Barrett et al. [19]; Basheer et al. [6]
Organisational core competence and cost effectiveness Independent variable Organisational growth Competitive advantage influences organisational growth Salah [30]; Hana [8]; Daniel [31];
Firm growth Independent variable             Organisational performance competitive advantage influences organisational performance Manlio Del Giudice et al. [28], Sadia [24], Kraja et al. [36], Heinz-Theo et al. [7]
Cost effectiveness, innovation and differentiation Independent variable competitive advantage influences organisational performance Barrett et al. [19]; Heywood et al. [26]
Organisational performance Dependent variable quality of service and total quality management influences organisational performance Yong et al. [38]; Salah [30], Tseng et al. [39]
Dependent variable corporate social responsibility influences organisational performance Mbiadjo et al. [40], Daniel et al. [31], Militaru et al. [34]

From the afore-presented review, competitive advantage, when investigated as dependent variable, is mostly with financial measures. This, has observed and engaged in this study, shows that competitive advantage is sparingly investigated with non-financial measures when being a dependent variable. This is one of the gaps that motivated this study.

E-Business Strategy

E-business strategy generally encapsulates the conceptualised traditional business strategies delivered through the electronic means. By the electronic means, it implies that computer technology, internet service and other associated gadgets are employed in the delivery of the business strategy. With the advent and advancement of technology, electronic means of business models and strategies deliveries have become inexcusable. As earlier observed and highlighted, business strategy under different operational definitions have been investigated in relationship with competitive advantage, and is found to be both significantly related and with strong impact.

Studies have investigated the relationship of e-business models, strategies with environmental and socio-political factors without an explicit unit of the e-business strategy [42-46]. These are done in view of exploring the relationship of some elicited factors with firm performance, whereby e-business strategy takes a leading role. The most instructing part of these studies is an empirically supported relationship between e-business strategy and competitive advantage. Adoption of e-business strategy has been identified as one of the potent factors affecting organisational competitive advantage [15,17,41,47-49].

From the literature reviewed, it is observed that due to the inherent complexity in defining e-business strategy, studies have often concentrated on distinguishing units of e-business strategy for simplicity and comprehension purposes [41,50-52]. E-business strategy is investigated as (a) e-commerce; comprising e-retails, e-sales and e-purchases [41,49,51,52-54], (b) e-marketing [15,17,40,55] (c) e-operations which involves supply chain management (SCM), data analysis, audit and reporting [16,50,56,57] and (d) knowledge-based systems (k-system) [58-60]. Table 2 presents the summary of the categories of E-business strategies.

Table 2: Categories of E-Business Strategies and their Dimensions.

Categories of E-Business Strategy Dimensions References
E-commerce Retail, sale and Purchase Chengbo et al. [51]; Ray et al. [41]; Chadwick et al. [49], Bakos et al. [54], Augusto et al. [52], Xia et al. [53]
E-Marketing Internet Marketing, Mobile marketing Huong et al. [55]; Mbiadjo et al. [40]; Macik et al. [15], Hammed et al. [17]
E-Operations Supply Chain Management, Data analysis, Audit and Reporting Rana et al. [50], Chen et al. [56], Chang et al. [16], Yuen [57], Cao [18], Caniato et al. [48]
K-system ERP, Intelligent system, Knowledge-Based system Syahrul [58], Reyes and Raisinghani, Massa et al. [61], Euripidis et al. [59], Lipitakis et al. [60]

E-Commerce

E-commerce basically is the act of buying and selling goods and/or services using the electronic means. Initially, this act is credited to online shopping portals, but has now been extended to online banking systems. There have been experiences whereby payment of bills and mobile phone credit top-up (service procurement) are done via banking portals. This clearly is an introduction of commercial activities into banking activities, probably as a strategy. This study employs sale and purchase [41,49,51-53], as befitting sub-variables to investigate e-commerce strategy in commercial banks.

E-Marketing

Marketing, as traditionally defined, explains the process of getting goods and services into the interest mind of the consumers, or potential consumers. In commercial banking through the use of technology, internet marketing which involves marketing done through the online means and mobile marketing is done through mobile computing services. This study uses internet marketing and mobile marketing [15,17,40,55] since they are the experienced e-marketing strategy that duly fit in to commercial banking circumstance.

E-Operations

Fundamentally, in organisational studies, operations are often discussed in manufacturing companies, with supply chain management taking the leading attention. In the commercial banking circumstance, this study considers data analysis, audit and reporting [20,50,56,62] as contextualised e-operations strategies that fit in to commercial banking study.

K-Systems Strategy

Organisations are now employing the use of many software systems of different capacities and capabilities. The leading systems adopted so far in the banking industries are enterprise resource planning (ERP) [61,63]. Biometric system is also a good example of intelligent system. This study captures all the intelligence-based software systems used for banking activities as knowledge-based systems (K-system). K-system strategy is therefore defined as process, methods and techniques through which organisations deploy k-systems for optimal performance [59,61,63].

Human Resource Management Strategy

Human resource management practices deal with how organisations manage their employees, from the recruitment, in-service training, and succession plan, to how the organization downsizes. Organization behaviourists have posited that human resource management is an integral part of the organisational culture. It deals with the organisation’s strategic role in companies’ growth, organisational efficiency and organisational performance [13,64]. This study uses knowledge management capacity, reward system, employee capacity building [14,65] as dimensions used in measuring its human resource management practices.

Human resource management practices or strategy, as some studies prefer it addressed, has recorded significant attention in business management studies. Its strategic role in companies’ growth, organisational efficiency and organisational performance [12,13,66-71], the relevance of intellectual capital [72], its relationship with knowledge management [8,65], innovation [73], and the host of others channels are niches of studies with remarkable implications.

On another end, Saravanan et al. [74], Hsieh et al. [56], and Othman [75] developed competitive strategy framework for enhanced organisational competence, Lengnisk-Hall et al. [76] proposed a way of investigating strategic human resource management (SHRM) practices, while Emily [77] investigated the need for a paradigm shift from product competence to organisational performance as induced by SHRM. Lepak et al. [8] also worked on a sustainable system to manage multiple employee groups, while Wang et al. [79] investigated the working dimensions for HRM. These studies – as shown above – have endeavoured to show the significance of HRM practices in organisational competitive advantages, mostly as a mediator where competitive advantage is measured with financial dimensions.

Proposing the Moderating Effect of Human Resource Management Strategy in the Impact of E-Business Strategy on Competitive Advantage

Previous studies have extensively reported positive impact of e-business strategy (e-commerce, e-marketing, e-operations, and k-system) on competitive advantage. E-commerce, with retails, sales and purchases as sub-variables, is reported to be positively related with competitive advantage [51,52]. The impact of e-marketing on competitive advantage is positively found through customer experience enhancement, internationalized audience and sales performance [29,40,55].

Also, e-operation strategy has been found to be positively influencing competitive advantage [31,62], and adoption of knowledge based systems (K-systems) in organisations has also been attributed to one of the factors influencing organizational competitive advantage [8,28,72]. These studies have fundamentally posited positive influence and relationship between e-business strategy and competitive advantage. The moderating effect of human resource management strategy in the relationship is therefore encouraged.

The strategic role of human resource management (HRM) has been investigated through a comparative study between the Spanish and German companies, and the result showed significance of HRM practices in companies’ strategic growth [64]. Buller et al. [13], in support of this, reported that HR practitioners and HR professionals who are conversant with business strategy are strategic partnership. Human resource practices are found to be strongly associated with firm performance [14,66] and competitive advantage [80]. Human resource in business and corporate strategy affect the turnover rate of employee and improve financial performance [12,67].

In the same vein, Mukulu et al. [66] and Gurbuz et al. [67] found a relationship between strategic human resource management, competitive strategy and firm performance. The study concluded that HR has an important role in the development of SHRM, and it has a positive relationship with financial and market performance. Strong relationship is found between the competence-based human resource management and strategic human resource management [79,80]. There are other studies on other human resource-related organisational practices like intellectual capital, strategic resources, and reward system and knowledge management capacity which are found to be of significant impact on organisational performance and competitive advantage [65]. The studies provided evidence that knowledge management capacity play a mediating role between strategic human resources practices and innovation performance.

Strategic global human resources management (SGHRM) and the strategic resources of the firm influence the rate of corporate strategic choices which lead to a sustained competitive advantage [56,73]. Competitive advantage is seen to be increasingly important through strategic initiative and supported by reward system [76,81]. Studies have also reported a moderating role of HRM practices the relationship between HRM effectiveness and labour productivity [12,13]. Table 3 presents the summary of the review on the role of human resource management practices in the antecedents of competitive advantage.

Table 3: Summary of the review on the role of human resource management practices in the antecedents of competitive advantage.

Human Resource management Practices Associated variable Findings References
Human resource Company’s strategic growth as the dependent variable Human resource practices significantly influence Company’s strategic growth Buller et al. [13], Ayse et al. [64]
  Organisational performance as the dependent variable Human resource practices positively influence Organisational performance Darwish et al. [12], Buller et al. [13]
Human resource practices Firm performance Human resource practices strongly associate with firm performance Darwish et al. [12], Mukulu et al. [66]; Miller et al. [82]; Wang et al. [79]
  Competitive advantage Strong association Wang [80]
  Turnover rate of employee and Financial performance Positive effect Darwish et al. [12]; Gurbuz et al. [67]
  Perceived financial and market performance SHRM had positive correlation with the perceived financial and market performance, and no relationship with turnover Gurbuz et al. [67]
HRM practices with technological innovation Entrepreneurship Technological innovation could moderate the effect HRM on entrepreneurship Wang et al. [79]
Human resource practices Strategic human resource Strong relationship exists between the competence-based human resource management and strategic human resource Wang [80]
  Business competition Influences business competition Kalyani et al. [78]; Stanton et al. [69]
Strategic human resource management Business effectiveness Positive relationship between SHRM and effectiveness Stanton et al. [69]
As intellectual capital Organisational performance Intellectual capital affects organisational performance Paula and Michela
Knowledge management capacity Organisational performance Relationship between strategic human resource practice and innovation performance Knowledge management capacity play a mediating role between strategic human resources practices and innovation performance Chen et al. [65]
Reward system Competitive advantage Reward system significantly influences competitive advantage Chen et al. [56]; Lengnisk-Hall et al. [76]; Benevene et al. [81]
HRM practices Work force productivity HRM practices positively influences work force productivity Othman [75]; Wang et al. [71]

From the review presented in Table 3, it is revealing that human resource management practice is mostly investigated in organisational studies as one of the antecedent factors to organisational performance, firm performance or competitive advantage. In these cited studies, human resource management is always found to be positively related to, and significantly influence organisational performance, or competitive advantage. The only different findings, where human resource management practice is found not to be related to firm performance is where turn-over is used as the measure of the organisational performance [67,77]. This is the profound observation from the empirical findings, irrespective of the dimensions used in measuring the human resource management practice or strategy. On the other end, human resource management practices, where measured with knowledge management capacity, has also been found to mediate the relationship between HR strategy and innovation performance [65]. This aligns with Wang et al. [79] which reported that technological innovation moderates the effect of HRM on entrepreneurship. This is the basis of proposing the moderating role of human resource management strategy, measured by knowledge management capacity, reward system and employee capacity building.

The presented conceptual model of this study, shown in Figure 1, depicts the different measures of e-business strategies, competitive advantage and the human resource management strategies, and their dimensions. The main and corollary hypotheses proposed by this study are thereby listed.

internet-banking-conceptual

Figure 1: Conceptual Research Model.

MAIN HYPOTHESIS 1

H1: Human resource management strategy moderates the effect of e-commerce strategy on competitive advantage.

Corollary Hypotheses

H1a: Knowledge management capacity moderates the effect of e-commerce strategy on competitive advantage.

H1b: Reward system moderates the effect of e-commerce strategy on competitive advantage.

H1c: Employee capacity building moderates the effect of e-commerce strategy on competitive advantage.

MAIN HYPOTHESIS 2

H2: Human resource management strategy moderates the effect of e-marketing strategy on competitive advantage.

Corollary Hypotheses

H2a: Knowledge management capacity moderates the effect of e-marketing strategy on competitive advantage.

H2b: Reward system moderates the effect of e-marketing strategy on competitive advantage.

H2c: Employee capacity building moderates the effect of e-marketing strategy on competitive advantage.

MAIN HYPOTHESIS 3

H3: Human resource management strategy moderates the effect of e-operation strategy on competitive advantage.

Corollary Hypotheses

H3a: Knowledge management capacity moderates the effect of e-operation strategy on competitive advantage

H3b: Reward system moderates the effect of e-operation strategy on competitive advantage

H3c: Employee capacity building moderates the effect of e-operation strategy on competitive advantage.

MAIN HYPOTHESIS 4

H8: Human resource management strategy moderates the effect of k-system strategy on competitive advantage.

Corollary Hypotheses

H4a: Knowledge management capacity moderates the effect of k-system strategy on competitive advantage.

H4b: Reward system moderates the effect of k-system strategy on competitive advantage.

H4c: Employee capacity building moderates the effect of k-system strategy on competitive advantage.

Underpinning Theories

Contingency and Life Cycle theories are the underpinning theories that provide comprehensive insights for the underlying variables investigated in this study. Notably, the robustness of Information system (IS) as tools is not the only factor that ensures effective delivery of e-business strategy. Organizational culture, involving human resource management practices, is also important in the actualization of organisational competitive advantage. This justifies the inclusion of human resource management practices as potent contingencies for organizations.

Contingency Theory

Contingency theory is one of the theories that have gained prominence in the discourse of organisational management and performance. It is a behavioural theory that argues that there is no absolute best way of organisational leadership or cooperation. It rather points to dependants – known as contingents – as the determinants of these outputs. These determinants are suggested within the range of technology, suppliers and distributors, customers and competitors, consumers’ interest groups, government and unions.

Fiedler [83] accounts for the first theory of Contingency. Fiedler [83] states that effective leadership must be adjustable in manner that will be consistent with the organizational context like employees’ attributes and tasks. The theory focuses on environmental factors as the strong variables that influence leadership. Otley [84] and Jones [85] further worked on the Fiedler’s contingency theory, and modelled Efficiency and organisational performance as the main dependent constructs, while strategy, technology, task, organisational size, organizational structure and organisational culture as the main independent constructs. This posits that for organisational performance to be actualized, strategy, technology, task, organisational size, organizational structure and organisational culture are possible antecedents.

In this study, technology-defined strategy conceptualised as e-business strategy is the main antecedent being investigated. It is only further sub-divided into four categories. Also, the human resource strategy which is investigated as the moderating variable fits into the strategy construct, as antecedents of organisational performance. However, in this study, it is investigated as a moderator, but duly justified by the Life Cycle theory.

Life Cycle Theory

Miller and Friesen’s Life cycle theory explained that company strategy and structure, and environmental factors are contributory to the changing of the life cycle of an organisation. The theory expounds that when organization grows in her business maturity, sophisticated operations and strategic procedures and tools will be more deployed [14]. It is noteworthy that human resource management practice which is an integral part of the organisational culture influences the company’s growth which is conceptualized as competitive advantage in this study. This study therefore argues for the moderating role of human resource management practice. It is judged to be the practical mover of the organisational growth along its developmental phases.

Conclusion

Human resource management practices or strategy has been extensively investigated as antecedents to companies’ growth, organisational efficiency and organisational performance. It is however sparingly investigated as moderator. With the four sub-variables of the e-business strategy which are investigated as the antecedents to banking organisation’s competitive advantage, the inclusion of human resource management strategy has been theoretically supported. The presented conceptual model of this study, shown in Figure 1, depicts the different measures of e-business strategies, competitive advantage and the human resource management strategies, and their dimensions. It is a proposed model, with associated hypotheses that are argued by this study based on limitations and gaps observed from previous studies. It is aimed at investigating the moderating role of human resource management strategies in the impact of e-business strategies on competitive advantage in the banking section using non-financial measures. However, it can be adopted or/and adapted in investigating similar situations, even in different contexts and countries. The investigation of the moderating role of human resource management strategy in this research model is the main theoretical contribution of this study. Future work will therefore include testing for the reliability and construct validity of the constructs conceptualised and investigated in this study. Also, the goodness of fit of the proposed model, as well as the hypotheses proposed, will be tested.

References

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