Sage Journals: Discover world-class research

Abstract

Human resource capability is valuable, rare, irreplaceable, and difficult to imitate; therefore, it is crucial for creating sustainable competitive advantages. Human resource capability can be appropriately used to improve the performance of an organization. This study adopted a process perspective to propose an integrated model that comprehensively considers the key variables of human resource capability and organizational effectiveness. In addition, empirical research was conducted by using a state-owned Company-A as an example. The theory of service-profit chain posits that internal customer satisfaction and loyalty influences customer satisfaction and loyalty before affecting a company's profitability and growth. Consequently, we explore the effects of human resource capability, internal customer satisfaction and commitment, and organizational effectiveness. Based on research findings, insightful and practical guidance is suggested for leveraging human resource capability to enhance organizational performance.

1. Introduction

The relationship between human resource management (HRM) and organizational performance has been the major concern of academia scholars [1–4]. Numerous studies have confirmed the positive causal relationship between the HRM and performance of an organization. However, the key mediating variables of these two factors have often been considered to be a “black box” and, thus, only few of these variables have been investigated. Scholars have separately explored the relationship between HRM and organizational performance and between HRM and employee performance, overlooking the interaction between these factors. Traditionally, organizational performance was typically measured based on the level of improvement in the financial performance of an organization [5]. Nevertheless, increasing number of scholars have questioned the accuracy of such method and, therefore, focused on using human resource- (HR-) related outcomes, such as employee incentives, commitment, reduced turnover, and rate of absenteeism [6, 7].

In the field of quality management, relevant research has steered from studying physical products toward analyzing intangible services as service industry becomes increasingly critical and influential in economic systems. Marketing management and HRM simultaneously emphasize the interaction between frontline employees and customers in a service industry [8]. Moreover, internal marketing strongly supports the relationship between HRM and service quality [9, 10]. Because service quality is closely related to the intention and ability of internal customers (i.e., employees) to provide specific services [11], the levels of internal customers’ satisfaction and commitment toward organization, which is highly representative of employee willingness, are aspects worthy of in-depth investigation.

A specific state-owned enterprise (called Company-A in this study), with more than 28,000 employees in Taiwan, holds substantial amounts of resources. Previously, because of its advantages in exclusivity, Company-A experienced low levels of stress in terms of management effectiveness. However, with the liberalization and globalization trends of the economic development, Company-A is currently facing intense competition and challenges in continually enhancing its organizational effectiveness. In addition, Company-A's employees are protected with lifetime employment benefits. Thus, whether the results of the causality between HRM and organizational effectiveness and the relationships among crucial variables are consistent with those obtained based on private for-profit organizations is a focal topic of exploration and comparison.

Based on the aforementioned assertions, this study focused on the following objectives to address the problems mentioned above: (a)

to propose an integrated model that effectively delineates the causal variables of HR capability and organizational effectiveness from a process perspective;

(b)

to investigate the subjective perception of employees on HR capability and job satisfaction and its impact on variables related to organizational performance (i.e., organizational commitment, service quality, and organizational effectiveness);

(c)

to verify the nature of the relationship between organizational commitment and service quality;

(d)

to understand the current subjective perceptions of Company-A employees on the variables relevant to HR capability and organizational performance;

(e)

to confirm the variables relevant to HR capability and organizational effectiveness and compare the results of using Company-A as the study subjects with the findings of previous research;

(f)

to recommend strategies that can effectively improve the organizational effectiveness of Company-A.

2. Literature Review and Hypotheses

2.1. Human Resource Capability

Resource-based view regards competencies, capabilities, and skills or strategic assets as key sources of sustainable competitive advantages [12] because they are valuable, rare, difficult to imitate, and irreplaceable [13]. Capabilities can reconfigure and recombine resources and feature essential properties such as tacitness, being context specific, and temporality. A firm can leverage its HR policies and practices to acquire, cultivate, and retain the capacity to deploy human resources, and this capacity constitutes the basis of HR capability. Human resource has been widely researched in various fields, such as the related literature [14–16].

Numerous studies have proposed various perspectives on the specific activities of HR capability and categorized these activities differently. For example, Schuler and Jackson [17] compiled the activities of HRM, which include planning, employment, evaluation, rewards, and development. Pfeffer [18] outlined seven categories of HR practices: employment security, selective hiring, self-managed teams, high compensation contingent on company performance, extensive training, reduced status distinctions, and information sharing. Based on the concept of building blocks of competitive advantages, Jones and Hill [19] emphasized four crucial HRM activities: hiring strategy, employee training, self-managing team, and paying for performance. By comparison, McDonough [20] advocated that three crucial, closely related, and highly complementary HR practices are the key for innovation-oriented organizations to develop cross-functional teams: (a) training, in which skills and human capital are invested; (b) pay for performance, which emphasizes rewarding employee contributions and achievements; and (c) team development, in which team-based activities are actively developed and promoted.

2.2. Internal Customer Satisfaction

2.2.1. The Nature of Internal Customer Satisfaction

In the literature, internal customer satisfaction can be explained based on two philosophical perspectives, namely, marketing (i.e., internal marketing) and total quality management (TQM; i.e., internal service). Marshall et al. [21] asserted that internal marketing focuses on a firm serving its employees, whereas internal service emphasizes employees serving each other. Therefore, these two concepts are distinct. However, Mohrw-Jackson [22] argued that these two concepts are complementary and are capable of facilitating business success. Internal marketing and internal service are both characterized by common core concepts (which involve customer orientation, cross-functional cooperation, and profitability) and both highly value customer satisfaction as the key to attaining organizational goals.

2.2.2. Internal Customer Satisfaction and Human Resource Capability

The relationship between HR capability and internal customer satisfaction has received considerable attention. For example, Mohrw-Jackson [22] investigated how HR employees can develop and maintain a customer-oriented attitude and implement marketing perspectives into the internal process of their organization. Bowen [23] considered that HR function can simultaneously, positively influence internal and external customer satisfaction. Yeung and Berman [24] proposed a model to verify the capability of HR to improve employee satisfaction and the competency of an organization, which subsequently influences customer and shareholder satisfaction. Bowen [23] also confirmed the effect of HR capability on the satisfaction of internal and external customers. Thus, we propose the following hypothesis:

H1-1: HR capability significantly positively influences internal customer satisfaction.

2.3. Organizational Commitment

2.3.1. The Nature of Organizational Commitment

Organizational commitment is defined as the extent to which an individual identifies and is involved with its organization [25]. Therefore, organizational commitment is related to the attitude that employees exhibit toward their organization. Previously, organizational commitment has been evaluated based on a single dimension; for instance, Porter et al. [26] maintained that organizational commitment represents the relative strength that an individual exerts to identify with and commit to its specific organization. Becker [27] emphasized that organizational commitment is the accumulated involvement that an individual has with its organization and the consequence they must face when leaving the organization.

From a macro-perspective, Meyer and Allen [28] proposed a multidimensional three-component model of organizational commitment that comprises the following dimensions: (a)

Affective commitment, which refers to employees’ emotional attachment to, identification, and involvement with their organization.

(b)

Normative commitment, which is the sense of responsibility that employees perceive toward organizational obligation.

(c)

Continuance commitment, which refers to commitment generated based on the cost of leaving the organization as perceived by the employee.

Meyer and Allen's [28] model postulates that the three components of commitment enhance an employee's work performance; therefore, organizational commitment is highly likely to exert various degrees of influence on work performance, absenteeism, and organizational citizenship behavior. Similarly, Meyer et al. [29] maintained that an individual can expect that the job performance of employees with affective commitment at work is distinct from that of employees who are attached to their organization based on continuance commitment.

2.3.2. Organizational Commitment and Human Resource Capability

The positive relation that HR capability has with employee's organizational commitment has been supported by numerous empirical studies. Gong et al. [30] found that performance-oriented HR system influences the affective commitment of middle managers and thereby enhances organizational performance. By contrast, maintenance-oriented HR system influences the continuance commitment of middle managers; however, no significant relationship was observed between affective commitment and organizational performance. Shagholi et al. [31] verified that participatory management significantly influenced organizational commitment. In a study that focused on Japan and South Korea, Magoshi and Chang [32] asserted that diversity management significantly positively influenced the organizational commitment of employees. Steyrer et al. [33] confirmed that the leadership of top managers significantly influenced the organizational commitment and performance of their subordinates. Therefore, this study proposed the following hypotheses:

H2-1: HR capability significantly positively influences employee's affective commitment.

H2-2: HR capability significantly positively influences employee's normative commitment.

H2-3: HR capability significantly negatively influences employee's continuance commitment.

2.3.3. Organizational Commitment and Internal Customer Satisfaction

Most studies have stated that the satisfaction of internal customers influences organizational commitment [34, 35]. Organizations gaining recognitions from their employees with shared common values have great potentiality to create customer values. Because satisfaction is one of the core values that employees expect their organization to maintain, we can expect that affective commitment is one of the positive outcomes generated from internal customer satisfaction [36, 37]. Thus, this study proposed the following hypothesis:

H3-1: Internal customer satisfaction significantly positively influences affective commitment.

Internal customer satisfaction can enhance employees’ sense of responsibility or obligation toward their organization, which strengthens their normative commitment. Consequently, satisfied employees are not concerned with the gains or losses of leaving the organization. Thus, we propose the following hypotheses:

H3-2: Internal customer satisfaction significantly positively influences normative commitment.

H3-3: Internal customer satisfaction significantly negatively influences continuance commitment.

2.4. Service Quality

2.4.1. The Nature of Service Quality

Service quality critically influences customer-related variables, such as customer satisfaction [38, 39] and loyalty [11], both of which facilitate the retention of customers [11] and elicit repurchase behaviors [9]. Because service marketing is characterized by intangibility, perishability, heterogeneity, and inseparability [40], service quality is comparatively more complex than is the product quality. Therefore, measuring service quality is extremely challenging. In contrast to other models, the SERVQUAL model is the most widely accepted and applied model in relevant domains [41]. SERVQUAL scale is developed based on five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.

SERVQUAL model is also known as the gaps model, which defined service quality as the gap between customers’ expectation of a service and their actual perceptions. There are four major service quality gaps, namely, (a) Gap 1: between management perception and customer expectation; (b) Gap 2: between management perception and service quality specification; (c) Gap 3: between service quality specification and service delivery; and (d) Gap 4: between service delivery and external communication. Because this study focused on employee's service quality, only Gap 3 was investigated.

2.4.2. Service Quality and Internal Customer Satisfaction

From an internal marketing perspective, satisfied employees yield satisfied customers [42]. Employees with a positive attitude are inclined to demonstrate altruistic, assisting, and considerate behaviors [43]. By contrast, unhappy and dissatisfied employees are unlikely to deliver excellent services that would satisfy customers [44].

Heskett et al. [45, 46] proposed the service-profit chain model, which concretely describes the relationship between internal customers (employees) and external customers. This model postulates that the satisfaction and loyalty of internal customers first influence customer satisfaction and loyalty and then affect a firm's profitability and growth. Because internal customer satisfaction is typically regarded as an antecedent of a customer-oriented behavior [47], we propose the following hypothesis:

H4: Internal customer satisfaction significantly positively affects service quality.

2.4.3. Service Quality and Organizational Commitment

Multiple studies have confirmed the significantly positive relationship between affective commitment and service quality under varying contexts [11, 48, 49]. Thus, this study proposed the following:

H5-1: Affective commitment significantly positively affects service quality.

The willingness of employees to contribute to their organization varies according to the commitment they perceive [28]; therefore, not all forms of organizational commitment can lead to improved job performance [50]. Typically, because affectively committed employees honestly wish to maintain a positive employment relationship with their organization, they would devote more effort to serving their organization than would employees who exhibit normative or continuance commitment. Several studies have advocated that normative commitment is significantly positive related to job performance [51], whereas few scholars observed no significant relationship between the two variables [52]. Many empirical studies have shown a significantly negative relationship between continuance commitment and performance [28, 53], whereas no such phenomenon was observed in certain studies [51, 52]. However, Suliman and Iles [54] identified a significantly positive relationship between these two factors. Because continuance commitment is based on the consideration of gains and losses, we assert that this type of commitment exhibits a negative relationship with job performance. Therefore, H5-2 and H5-3 are proposed as follows:

H5-2: Normative commitment significantly positively affects service quality.

H5-3: Continuance commitment significantly negatively affects service quality.

2.5. Organizational Effectiveness

2.5.1. The Nature of Organizational Effectiveness

Organizational effectiveness refers to the level of success that an organization achieves during the process of pursuing its mission [55]. Because organizational effectiveness involves an organization's mission, the measurement of organizational effectiveness is based on the distinctive ability that the organization displays to ensure its success. Jamrog and Overholt [56] considered crucial unique abilities to encompass HR values. Previously, scholars have measured organizational performance using indicators related to financial performance, such as profitability, return on investment, and earnings per share [5]. However, according to Eccles [57], practitioners and academia experts believe that accrual-based performance indicator is outdated and ineffective. Therefore, scholars have subsequently used subjective psychological well-being as the basis of measurement, focusing on emotional indicators such as involvement, satisfaction, and commitment. Harnesk [58] asserted that an employer does not just employ one element of an individual but the entire individual, including personal, social, and professional qualities. Past researchers have held distinct views on the variables for measuring organizational effectiveness; for example, Robbins [59] recommended using productivity, absenteeism, turnover rate, organizational citizenship behavior, and job satisfaction, whereas Huselid [3] and Sun et al. [60] have suggested using employee productivity and turnover rate.

2.5.2. Organizational Effectiveness and Human Resource Capability

According to theories developed in HRM domains, HR capability is the key factor that directly influences organizational effectiveness. Furthermore, empirical studies have yielded consistent results [2, 3, 66, 67]. Therefore, H6 is proposed as follows:

H6: HR capability significantly positively influences organizational effectiveness.

2.5.3. Organizational Effectiveness and Internal Customer Satisfaction

Internal customer satisfaction is a crucial topic in the philosophy of TQM. Through internal customer satisfaction, HR positively influences organizational effectiveness. The relationship between internal customer satisfaction and organizational effectiveness has been supported in multiple empirical studies. For example, Molina and Ortega [68] indicated that additional training positively impacts organizational performance through employee satisfaction and customer loyalty. Similarly, Matzler et al. [69] found that satisfied internal customers are conducive to increasing productivity. Therefore, we propose the following hypothesis:

H7: Internal customer satisfaction significantly positively influences organizational effectiveness.

2.5.4. Organizational Effectiveness and Service Quality

According to the service-profit chain proposed by Heskett et al. [45], employees’ efforts are particularly essential to delivering high-quality service to satisfy customers and improve business performance. In addition, Yee et al. [70] empirically proved the positive relationship between the service quality and organizational performance of 210 service companies in Hong Kong. Hence, this study proposes hypothesis H8:

H8: Service quality significantly positively influences organizational effectiveness.

3. Research Method and Design

3.1. Research Model

Based on the aforementioned literature review, this study developed a research framework as shown in Figure 1.

Figure 1

The research framework.

3.2. Conceptual Definition and Measurement of Research Constructs

In this study, the variables were measured according to prior studies with modifications based on the context of this study. Table 1 summarizes the conceptual definitions and the references for each construct. The questionnaire of this study comprised five sections, namely, demographic data, items pertinent to HR capability, organizational commitment, service quality, and organizational effectiveness. Regarding the questionnaire, a 7-point Likert scale was adopted, where a score of 1 represents strongly disagree and 7 denotes strongly agree. After completing the questionnaire design, we conducted a pretest to make sure the wordings of questionnaire will be clear enough and respondents fully understand the content.

Table 1

Conceptual definition of the constructs in this study.

Constructs	Conceptual definition	Reference
HR capability	HRM practices that facilitate businesses to sustain their competitive advantage.	[19, 20]
Training	The focus on improving skills and investing in HR capitals.	[61]
Pay for performance	The emphasis on rewarding employees for their contributions and achievements.	[61]
Team orientation	The active development and promotion of team-based activity.	[61]
Internal customer satisfaction	The degree to which employees accept their current job and nature of work.	[62]
Organizational commitment	The extent to which employees identify and are involved with their organization.	[62]
Affective commitment	The extent to which employees are emotionally attached to identify and are involved with their organization.	[62]
Normative commitment	The degree to which employees feel responsible for their organization.	[62]
Continuance commitment	The commitment generated based on the cost of leaving the organization as perceived by the employee.	[62]
Service quality	An employee's performance in providing services to a customer.	[62]
Organizational effectiveness	The level of success that an organization achieves during the process of pursuing its mission.	[55]

3.3. Research Subject and Data Collection

This study adopted employees of Company-A as the population; convenient sampling was used to distribute 400 questionnaires via mail to employees of Company-A in Taichung branch. Overall, excluding 59 invalid questionnaires, we obtained 341 valid questionnaires, yielding a response rate of 85.25%.

4. Analysis and Results

4.1. Demographic Data Analysis

Table 2 presents the demographic information of the samples summarized based on the valid responses.

Table 2

Demographic structure.

Sample demographics	Number of samples	Percentage
Gender
Men	229	67.16%
Women	112	32.84%
Age
<31 years old	14	4.11%
31–40 years old	50	14.66%
41–50 years old	130	38.12%
>50 years old	147	43.11%
Education level
High school or below	127	37.24%
University or college	210	61.58%
Masters or above	4	1.17%
Years of work experience
<5 years	0	0.00%
5–10 years	16	4.69%
11–15 years	16	4.69%
16–20 years	69	20.23%
>20 years	240	70.38%
Nature of work
Postal service (field work)	128	37.54%
Postal service (office work)	102	29.91%
Banking and life insurance service	60	17.60%
Administrative department	51	14.96%

4.2. Measurement Model Analysis

By using the Smart PLS 2.0 software, we employed the partial least square (PLS) method to test the measurement model and the structural model of this study. For the path analysis, the level of significance was examined using the bootstrapping method. In recent years, the PLS analysis has been widely applied in research related to information management, and its application is continuously increasing in number [71]. Table 3 presents the items of the measurement model that were tested in this study.

Table 3

Reliability and validity tests.

Item	Description and criteria	Source
Reliability	(i) Test the correlation between the internal variables of construct. (a) Composite reliability (CR) or Cronbach's α greater than 0.7.	[63, 64]

Convergent validity	(i) Test the extent to which multiple variables in the same dimension are related. (a) The factor loading of the variables of all dimensions must be significant and greater than 0.5. (b) The average variance extracted (AVE) for each dimension must exceed 0.5.	[63, 64]

Discriminant validity	(i) Test the extent to which measurement variables discriminate from other variables of a different dimension. (a) The correlation between each variable and other variables of the same dimension should be higher than the correlation coefficient of varying concept variables (i.e., lower than the square root of AVE for individual dimensions).	[65]

4.2.1. Reliability Analysis

The study conducted confirmatory factor analysis (CFA) on the results obtained from the questionnaire; the analysis results are shown in Table 4. The factor loading, Cronbach's α, CR, and AVE all meet the criteria, indicating a favorable consistency among the variables of corresponding measurement items.

Table 4

CFA results.

Dimension	CR	AVE	Factor loading
Training (HR01)	0.82	0.80	0.86/0.81
Pay for performance (HR02)	0.85	0.75	0.93/0.79
Team orientation (HR03)	0.89	0.61	0.66/0.62/0.89/0.90/0.81
Satisfaction (SAT)	0.97	0.94	0.97/0.97
Affective commitment (CM01)	0.92	0.80	0.85/0.93/0.91
Normative commitment (CM02)	0.86	0.68	0.71/0.87/0.88
Continuance commitment (CM03)	0.77	0.54	0.95/0.58/0.68
Service quality (SQ)	0.96	0.67	0.74/0.87/0.86/0.76/0.82/0.84/ 0.69/0.88/0.84/0.84/0.81
Organizational effectiveness (OE)	0.94	0.80	0.88/0.88/0.91/0.92

4.2.2. Validity Analysis

In this study, the constructs used have been verified and supported by relevant theories and studies; therefore, they meet the requirement of content validity. The questionnaire items for each variable were modified according to the context of the Company-A. In addition, pretest was conducted, in which three experts and 10 Company-A employees of the Taichung region were invited to complete the draft questionnaire, requesting them to provide opinions regarding the meaning and syntax of the questionnaire items. Subsequently, we interviewed these respondents to determine potential problems, the results of which were used to modify the questionnaires. Therefore, the face validity of the questionnaires was satisfactory. According to Table 4, the AVE and factor loading of all the variables ranged between 0.54 and 0.94 and between 0.58 and 0.97, respectively, suggesting that the constructs used in this study's model have satisfactory convergent validity.

Table 5 presents the correlation coefficient matrix for the constructs used in this study; the numbers along diagonal line represent the square root of the AVE for the constructs. In the table, the minimum square root of the AVE is 0.87, which is greater than the maximum correlation coefficient. This shows that the items of the variables in the measurement model are distinct; thus, all constructs have satisfactory discriminant validity.

Table 5

The correlation coefficient matrix of the constructs.

Construct	HR01	HR02	HR03	SAT	CM01	CM02	CM03	SQ	OE
HR01	0.89
HR02	0.34	0.87
HR03	0.44	0.48	0.94
SAT	0.26	0.13	0.41	0.98
CM01	0.07	$- 0.09$	0.14	0.30	0.96
CM02	0.18	0.19	0.27	0.47	0.23	0.93
CM03	0.13	0.09	0.23	0.31	0.06	0.39	0.88
SQ	0.16	0.09	0.27	0.49	0.18	0.37	0.25	0.98
OE	0.31	0.33	0.51	0.53	0.11	0.44	0.22	0.25	0.97

Note: bolded numbers along the diagonal line represent the square root of AVE, whereas the remaining numbers are the correlation coefficient between each variable.

4.3. Structural Equation Modeling

The test results for the hypotheses proposed in this study are summarized in Table 6. Overall, the primary factors influencing internal customer satisfaction (explained variance: $R^{2}$ was 19%) included team orientation (HR capability), affective commitment, normative commitment, and service quality. The primary factor influencing affective commitment (12%) and normative commitment (24%) was internal customer satisfaction, respectively. Normative commitment was not significantly influenced by the research variables. Internal customer satisfaction primarily influenced service quality (27%). Finally, the main factors influencing organizational effectiveness (40%) were team orientation of HR capability and internal customer satisfaction.

Table 6

Results of the hypothesis testing.

Hypothesis/variable relation	Hypothesis	Path coefficient	Test result
H1-1 Training → internal customer satisfaction	+	0.12 ns	Rejected
H1-2 Pay for performance → internal customer satisfaction	+	−0.11 ns	Rejected
H1-3 Team orientation → internal customer satisfaction	+	0.41^***	Supported
H2-1-1 Training → affective commitment	+	0.01 ns	Rejected
H2-1-2 Pay for performance → affective commitment	+	−0.19^*	Rejected
H2-1-3 Team orientation → affective commitment	−	0.11 ns	Rejected
H2-2-1 Training → normative commitment	+	0.01 ns	Rejected
H2-2-2 Pay for performance → normative commitment	+	0.03 ns	Rejected
H2-2-3 Team orientation → normative commitment	−	0.03 ns	Rejected
H2-3-1 Training → continuance commitment	+	0.01 ns	Rejected
H2-3-2 Pay for performance → continuance commitment	+	−0.00 ns	Rejected
H2-3-3 Team orientation → continuance commitment	−	0.12 ns	Rejected
H3-1 Internal customer satisfaction → affective commitment	+	0.28^**	Supported
H3-2 Internal customer satisfaction → Normative commitment	+	0.44^***	Supported
H3-3 Internal customer satisfaction → continuance commitment	−	0.26 ns	Rejected
H4 Internal customer satisfaction → service quality	+	0.40^***	Supported
H5-1 Affective commitment → service quality	+	0.02 ns	Rejected
H5-2 Normative commitment → service quality	+	0.15 ns	Rejected
H5-3 Continuance commitment → service quality	−	0.06 ns	Rejected
H6-1 Training → organizational effectiveness	+	0.05 ns	Rejected
H6-2 Pay for performance → organizational effectiveness	+	0.14 ns	Rejected
H6-3 Team orientation → organizational effectiveness	+	0.26^**	Supported
H7 Internal customer satisfaction → organizational effectiveness	+	0.41^***	Supported
H8 Service quality → organizational effectiveness	+	−0.04 ns	Rejected

R square: internal customer satisfaction (0.19)/affective commitment (0.12)/normative commitment (0.24)/continuance commitment (0.11)/service quality (0.27)/organizational effectiveness (0.40)

Note: ^*P < 0.05; ^**P < 0.01; ^***P < 0.001; ns denotes not significant.

5. Conclusion and Recommendation

5.1. Conclusion

Based on a process perspective, this study proposed an integrated model that comprehensively considers crucial constructs relevant to HR capability and organizational effectiveness. In this study, empirical research was conducted, in which a state-owned Company-A was used as an example. Research results reveal the internal customer satisfaction, which is highly valued in internal marketing, was primarily influenced by team orientation, affective commitment, and normative commitment. However, the effects of training, pay for performance, and continuance commitment were not as strong as expected. This is possibly because Company-A is a state-owned enterprise, with employees protected with lifetime employment benefits, the nature of work is fixed, and the salary system is inflexible. Thus, its salary system cannot influence employees’ work performance. Hence, the constructs of training and pay for performance cannot exert an effect similar to that in private enterprises.

The service-profit chain model postulates that the satisfaction of internal customers influences customer satisfaction and loyalty before affecting the profitability and growth of the company. In this study, we extended this model by investigating the mediating effects of organizational commitment on the relationship between internal customer satisfaction and service quality. The results indicated that internal customer satisfaction significantly positively influenced affective and normative commitments, whereas these two types of commitment did not significantly positively influence service quality. This can be explained by the lifetime job assurance that employees possess, which limited the effects of organizational commitment. Furthermore, the affective commitment and normative commitment that employees exhibit toward their organization predominantly originate from job satisfaction rather than HR practices.

Service quality is the crucial construct relevant to employees’ productivity and the sustainable competitiveness of Company-A. Internal customer satisfaction and team orientation are the key factors influencing service quality. This finding verifies the benefits of teamwork as supported by numerous studies (e.g., De Leede et al. [72]; McDonough, [20]). Overall, this study concludes that team orientation and internal customer satisfaction are among the most essential factors that influence Company-A's effectiveness.

5.2. Recommendation

5.2.1. Recommendations for Company-A

The vision of Company-A is to be a trustworthy company in its domain area that provides excellent services to customers. To achieve this goal, its HR capability with valuable, rare, irreplaceable, and difficult to imitate in essence, is crucial for creating sustainable competitive advantages and should not be neglected.

Since research findings reveal the importance of team-orientation and internal customer satisfaction, by offering extensive training to improve employees’ skills and implementing team-oriented pay-for-performance system, employees’ engagement and commitment with their company can be greatly improved, hence enhancing their ability to achieve company's goals and mission. To adequately utilize human resources, Company-A should actively promote cross-functional teamwork activities. Under this approach, Company-A employees can improve their work performance, thereby enhancing their affective commitment and normative commitment to their organization.

Moreover, the nature of work in Company-A is generally fixed; therefore promoting teamwork provides the opportunity for infusing flexibility and vitality into employees’ jobs. This would facilitate the reform of Company-A, thereby providing better diversified and innovative services that would improve customer satisfaction effectively.

5.2.2. Recommendations for Subsequent Studies

This study explored HR capability from the perspective of sustainable competitiveness and focused on three dimensions, namely, training, pay for performance, and team orientation. Subsequent studies can extensively investigate other possible HR dimensions, such as the effects of specific HRM functions. Moreover, since Company-A is transforming from state-owned to private enterprise, newly hired employees are managed by different HR system and no longer viewed as civil servants as their senior counterparts. By using a flexible and highly effective pay-for-performance system, Company-A can effectively improve the motivation and attitudes of employees toward their job. In this circumstance, subsequent studies can thoroughly analyze and compare the effects that the constructs studied in this study have on the cognition and performance of senior and new Company-A employees. Finally, the dynamic relationships of research constructs can be analyzed by other approaches, such as qualitative research, multiple criteria decision making analysis, and fuzzy set qualitative comparative analysis.

Footnotes

Conflict of Interests

The authors declare that there is no conflict of interests regarding the publication of this paper.

References

Arthur

J. B.

Effects of human resource systems on manufacturing performance and turnover

Academy of Management Journal 1994 37 3 670 687

10.2307/256705

Pfeffer

Competitive Advantage through People: Unleashing the Power of the Workforce 1994

Boston, Mass, USA

Harvard Business School Press

Huselid

M. A.

The impact of human resource management practices on turnover, productivity, and corporate financial performance

Academy of Management Journal 1995 38 3 635 672

10.2307/256741

Delery

J. E.

Doty

D. H.

Modes of theorizing in strategic human resource management: tests of universalistic, contingency, and configurational performance predictions

Academy of Management Journal 1996 39 4 802 835

10.2307/256713

2-s2.0-0030305470

Harel

G. H.

Tzafrir

S. S.

Baruch

Achieving organizational effectiveness through promotion of women into managerial positions: HRM practice focus

International Journal of Human Resource Management 2003 14 2 247 263

10.1080/0958519021000029108

2-s2.0-0345530113

Jansen

P. G.

van der Velde

M. E.

Telting

I. A.

The effectiveness of human resource practices on advancing men's and women's ranks

Journal of Management Development 2001 20 4 318 331

10.1108/02621710110388974

Pass

Human resource management and competitive performance in the manufacturing sector: the missing link

Management Research News 2002 25 8–10 150 153

Mattsson

Improving service quality in person-to-person encounters

The Service Industries Journal 1994 14 1 45 61

10.1080/02642069400000004

Schneider

Bowen

D. E.

Employee and customer perceptions of service in banking: replication and extension

Journal of Applied Psychology 1985 70 3 423 433

10.1037/0021-9010.70.3.423

2-s2.0-0009127451

10.

Bowen

D. E.

Gilliland

S. W.

Folger

HRM and service fairness: how being fair with employees spills over to customers

Organizational Dynamics 1999 27 3 7 23

10.1016/s0090-2616(99)90018-9

11.

Zeithaml

V. A.

Parasuraman

Berry

L. L.

Delivering Quality Service: Balancing Customer Perceptions and Expectations 1990

12.

Mabey

Salaman

Storey

Strategic Human Resource Management 1998

London, UK

Sage

13.

Barney

Firms' resources and sustained competitive advantages

Journal of Management 1991 17 1 99 120

14.

Coetzer

Sitlington

Using research informed approaches to strategic human resource management teaching

The International Journal of Management Education 2014 12 3 223 234

10.1016/j.ijme.2014.06.003

15.

Pournader

Tabassi

A. A.

Baloh

A three-step design science approach to develop a novel human resource-planning framework in projects: the cases of construction projects in USA, Europe, and Iran

International Journal of Project Management 2015 33 2 419 434

10.1016/j.ijproman.2014.06.009

16.

Sikora

D. M.

Ferris

G. R.

Strategic human resource practice implementation: the critical role of line management

Human Resource Management Review 2014 24 3 271 281

10.1016/j.hrmr.2014.03.008

2-s2.0-84901625335

17.

Schuler

R. S.

Jackson

S. E.

Human Resource Management: Positioning for the 21st Century 1996

St. Paul, Minn, USA

West Publishing Company

18.

Pfeffer

Seven practices of successful organizations

California Management Review 1998 40 2 96 124

10.2307/41165935

19.

Jones

G. R.

Hill

C. W.

Theory of Strategic Management 2010 9th

South Western, Ky, USA

20.

McDonough

E. F.

Investigation of factors contributing to the success of cross-functional teams

Journal of Product Innovation Management 2000 17 3 221 235

2-s2.0-0033738615

10.1016/s0737-6782(00)00041-2

21.

Marshall

G. W.

Baker

Finn

D. W.

Exploring internal customer service quality

Journal of Business & Industrial Marketing 1998 13 4-5 381 392

10.1108/08858629810226681

2-s2.0-0542443376

22.

Mohrw-Jackson

Broadening the market orientation: an added focus on internal customers

Human Resource Management 1991 30 4 455 467

10.1002/hrm.3930300403

23.

Bowen

D. E.

Market-focused HRM in service organizations: satisfying internal and external customers

Journal of Market-Focused Management 1996 1 1 31 47

10.1007/bf00129602

24.

Yeung

A. K.

Berman

Adding value through human resources: reorienting human resource measurement to drive business performance

Human Resource Management 1997 36 3 321 335

2-s2.0-0031237382

25.

Greenberg

Baron

R. A.

Behavior in Organizations 1997 6th

Englewood Cliffs, NJ, USA

Prentice Hall

26.

Porter

L. W.

Steers

R. M.

Mowday

R. T.

Boulian

P. V.

Organizational commitment, job satisfaction, and turnover among psychiatric technicians

Journal of Applied Psychology 1974 59 5 603 609

10.1037/h0037335

2-s2.0-0000373192

27.

Becker

H. S.

Notes on the concept of commitment

American Journal of Sociology 1960 66 1 32 40

10.1086/222820

28.

Meyer

J. P.

Allen

N. J.

A three-component conceptualization of organizational commitment

Human Resource Management Review 1991 1 1 61 89

10.1016/1053-4822(91)90011-z

2-s2.0-44949270736

29.

Meyer

J. P.

Paunonen

S. V.

Gellatly

I. R.

Goffin

R. D.

Jackson

D. N.

Organizational commitment and job performance: it's the nature of the commitment that counts

Journal of Applied Psychology 1989 74 1 152 156

10.1037/0021-9010.74.1.152

2-s2.0-0001107981

30.

Gong

Law

K. S.

Chang

Xin

K. R.

Human resources management and firm performance: the differential role of managerial affective and continuance commitment

Journal of Applied Psychology 2009 94 1 263 275

10.1037/a0013116

2-s2.0-60349086017

31.

Shagholi

Hussin

Siraj

Naimie

Assadzadeh

Moayedi

Current thinking and future view: participatory management a dynamic system for developing organizational commitment

Procedia Social and Behavioral Sciences 2010 2 2 250 254

10.1016/j.sbspro.2010.03.006

32.

Magoshi

Chang

Diversity management and the effects on employees' organizational commitment: evidence from Japan and Korea

Journal of World Business 2009 44 1 31 40

10.1016/j.jwb.2008.03.018

2-s2.0-57449089240

33.

Steyrer

Schiffinger

Lang

Organizational commitment—a missing link between leadership behavior and organizational performance?

Scandinavian Journal of Management 2008 24 4 364 374

10.1016/j.scaman.2008.04.002

2-s2.0-56549114783

34.

Wallace

J. E.

Corporatist control and organizational commitment among professionals: the case of lawyers working in law firms

Social Forces 1995 73 3 811 840

10.1093/sf/73.3.811

35.

Williams

L. J.

Hazer

J. T.

Antecedents and consequences of satisfaction and commitment in turnover models: a reanalysis using latent variable structural equation methods

Journal of Applied Psychology 1986 71 2 219 231

10.1037/0021-9010.71.2.219

2-s2.0-0000189486

36.

Bansal

H. S.

Voyer

P. A.

Word of mouth processes within a services purchase decision context

Journal of Service Research 2000 3 2 166 177

10.1177/109467050032005

37.

Garbarino

Johnson

M. S.

The different roles of satisfaction, trust, and commitment in customer relationships

Journal of Marketing 1999 63 2 70 87

10.2307/1251946

2-s2.0-0033423162

38.

Cronin

J. J.

Taylor

S. A.

SERVPERF versus SERVQUAL: reconciling performance-based and perceptions-minus-expectations measurement of service quality

Journal of Marketing 1994 58 1 125 131

10.2307/1252256

39.

McAlexander

J. H.

Kaldenberg

D. O.

Koenig

H. F.

Service quality measurement

Journal of Health Care Marketing 1994 14 3 34 40

2-s2.0-0028063435

40.

Armstrong

Kotler

Marketing: An Introduction 2011 10th

Upper Saddle River, NJ, USA

Pearson Education

41.

Parasuraman

Zeithaml

V. A.

Berry

L. L.

SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality

Journal of Retailing 1988 64 1 12 40

42.

Valarie

A. Z.

Bitner

Services Marketing: Integrating Customer Focus across the Firm 2000 2nd

New York, NY, USA

McGraw-Hill

43.

Motowidlo

S. J.

Does job satisfaction lead to consideration and personal sensitivity?

Academy of Management Journal 1984 27 4 910 915

10.2307/255889

44.

Rogers

J. D.

Clow

K. E.

Kash

T. J.

Increasing job satisfaction of service personnel

Journal of Services Marketing 1994 8 1 14 26

10.1108/08876049410053267

45.

Heskett

J. L.

Jones

T. O.

Loveman

G. W.

Sasser

W. E.

Jr. Schlesinger

L. A.

Putting the service-profit chain to work

Harvard Business Review 1994 72 2 164 174

46.

Heskett

Sasser

W. E.

Jr. Schlesinger

The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value 1997

New York, NY, USA

Free Press

47.

Hoffman

K. D.

Ingram

T. N.

Service provider job satisfaction and customer-oriented performance

Journal of Services Marketing 1992 6 2 68 78

10.1108/08876049210035872

48.

Boshoff

Mels

A causal model to evaluate the relationships among supervision, role stress, organizational commitment and internal service quality

European Journal of Marketing 1995 29 2 23 42

10.1108/03090569510080932

49.

Boshoff

Tait

Quality perceptions in the financial services sector: the potential impact of internal marketing

International Journal of Service Industry Management 1996 7 5 5 30

10.1108/09564239610149939

2-s2.0-0030500669

50.

Iles

Forster

Tinline

The changing relationship between work commitment, personal flexibility and employability: an evaluation of a field experiment in executive development

Journal of Managerial Psychology 1996 11 8 18 34

10.1108/02683949610150033

51.

Meyer

J. P.

Allen

N. J.

Smith

C. A.

Commitment to organizations and occupations: extension and test of a three-component conceptualization

Journal of Applied Psychology 1993 78 4 538 551

10.1037/0021-9010.78.4.538

2-s2.0-23144467997

52.

Caruana

Ramaseshan

Ewing

M. T.

Harrison

Nicholls

M. G.

Does a market orientation affect organizational commitment?

Proceedings of the 4th International Meeting on Innovation—New Products, Processes and Techniques, Part II

July 1997

Sydney, Australia

Decision Sciences Institute

815 817

53.

Allen

N. J.

Meyer

J. P.

The measurement and antecedents of affective, continuance and normative commitment

Journal of Occupational Psychology 1990 63 1 1 18

10.1111/j.2044-8325.1990.tb00506.x

54.

Suliman

Iles

Is continuance commitment beneficial to organizations? Commitment-performance relationship: a new look

Journal of Managerial Psychology 2000 15 5 407 422

10.1108/02683940010337158

55.

Chang

W.-J. A.

Huang

T. C.

The impact of human resource capabilities on internal customer satisfaction and organisational effectiveness

Total Quality Management & Business Excellence 2010 21 6 633 648

10.1080/14783363.2010.483075

2-s2.0-77953671688

56.

Jamrog

J. J.

Overholt

M. H.

Measuring HR and organizational effectiveness

Employment Relations Today 2004 31 2 33 45

10.1002/ert.20015

57.

Eccles

R. G.

The performance measurement manifesto

Harvard Business Review 1991 69 1 131 137

2-s2.0-0025930128

58.

Harnesk

Partnership with internal customers: a way to achieve increased commitment

TQM Magazine 2004 16 1 26 32

10.1108/09544780410511452

2-s2.0-1142276106

59.

Robbins

S. P.

Essentials of Organizational Behavior 1984

Englewood Cliffs, NJ, USA

Prentice Hall

60.

Sun

L.-Y.

Aryee

Law

K. S.

High-performance human resource practices, citizenship behavior, and organizational performance: a relational perspective

Academy of Management Journal 2007 50 3 558 577

10.5465/amj.2007.25525821

2-s2.0-34547152341

61.

Lau

C.-M.

Ngo

H.-Y.

The HR system, organizational culture, and product innovation

International Business Review 2004 13 6 685 703

2-s2.0-10244234006

10.1016/j.ibusrev.2004.08.001

62.

Malhotra

Mukherjee

The relative influence of organizational commitment and job satisfaction on service quality of customer-contact employees in banking call centres

Journal of Services Marketing 2004 18 3 162 174

10.1108/08876040410536477

63.

Fornell

Larcker

D. F.

Evaluating structural equation models with unobservable variables and measurement error

Journal of Marketing Research 1981 18 1 39 50

10.2307/3151312

64.

Nunnally

J. C.

Psychometric Theory 1978 2nd

New York, NY, USA

McGraw Hill

65.

Chin

W. W.

Marcelin

B. L.

Newsted

P. R.

A partial least squares latent variable modeling approach for measuring interaction effects: results from a Monte Carlo simulation study and an electronic-mail emotion/adoption study

Information Systems Research 2003 14 2 189 217

10.1287/isre.14.2.189.16018

2-s2.0-0042242856

66.

Guest

D. E.

Human resource management and performance: a review and research agenda

International Journal of Human Resource Management 1997 8 3 263 276

2-s2.0-2842511491

67.

Karami

Analoui

Cusworth

Strategic human resource management and resource based approach: the evidence from the British manufacturing industry

Management Research News 2004 27 6 50 68

10.1108/01409170410784202

68.

Molina

J. A.

Ortega

Effects of employee training on the performance of North-American firms

Applied Economics Letters 2003 10 9 549 552

10.1080/1350485032000100297

2-s2.0-0242369833

69.

Matzler

Fuchs

Schubert

A. K.

Employee satisfaction: does Kano's model apply?

Total Quality Management and Business Excellence 2004 15 9-10 1179 1198

10.1080/1478336042000255569

2-s2.0-8644242412

70.

Yee

R. W. Y.

Yeung

A. C. L.

Edwin Cheng

T. C.

An empirical study of employee loyalty, service quality and firm performance in the service industry

International Journal of Production Economics 2010 124 1 109 120

10.1016/j.ijpe.2009.10.015

2-s2.0-74449087909

71.

Marcoulides

G. A.

Chin

W. W.

Saunders

A critical look at partial least squares modeling

MIS Quarterly 2009 33 1 171 176

2-s2.0-60949099805

72.

De Leede

Looise

J. C.

Alders

B. C. M.

Innovation, improvement and operations: an exploration of the management of alignment

International Journal of Technology Management 2002 23 4 353 368

10.1504/ijtm.2002.003015

2-s2.0-0036168775

The Effects of Human Resource Capability and Internal Customer Satisfaction on Organizational Effectiveness

Abstract

1. Introduction

2. Literature Review and Hypotheses

2.1. Human Resource Capability

2.2. Internal Customer Satisfaction

2.2.1. The Nature of Internal Customer Satisfaction

2.2.2. Internal Customer Satisfaction and Human Resource Capability

2.3. Organizational Commitment

2.3.1. The Nature of Organizational Commitment

2.3.2. Organizational Commitment and Human Resource Capability

2.3.3. Organizational Commitment and Internal Customer Satisfaction

2.4. Service Quality

2.4.1. The Nature of Service Quality

2.4.2. Service Quality and Internal Customer Satisfaction

2.4.3. Service Quality and Organizational Commitment

2.5. Organizational Effectiveness

2.5.1. The Nature of Organizational Effectiveness

2.5.2. Organizational Effectiveness and Human Resource Capability

2.5.3. Organizational Effectiveness and Internal Customer Satisfaction

2.5.4. Organizational Effectiveness and Service Quality

3. Research Method and Design

3.1. Research Model

3.2. Conceptual Definition and Measurement of Research Constructs

3.3. Research Subject and Data Collection

4. Analysis and Results

4.1. Demographic Data Analysis

4.2. Measurement Model Analysis

4.2.1. Reliability Analysis

4.2.2. Validity Analysis

4.3. Structural Equation Modeling

5. Conclusion and Recommendation

5.1. Conclusion

5.2. Recommendation

5.2.1. Recommendations for Company-A

5.2.2. Recommendations for Subsequent Studies

Footnotes

Conflict of Interests

References