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Numerous studies have recognized the significance of human resource practices in improving firm performance (Boon, Den Hartog, & Lepak, 2019; Russell et al., 2018; Combs et al., 2006; Jewell, Jewell, & Kaufman, 2022). Despite a considerable amount of studies that have been published, one of the most significant current discussions on HPWS--performance is to study the process of how HPWS is linked with performance (Bowen & Ostroff, 2004; Lee, Pak, Kim, & Li, 2019).
Previous studies have tended to focus on the direct relationship between HR systems and performance rather than how HPWS is linked with performance. Some studies have investigated the linkages between HPWs and performance in a systematic way. Although some research has been conducted on HPWS-performance, the mechanism by which HPWS is associated with performance outcomes has not been established (Murphy, Torres, Ingram, & Hutchinson, 2018; Meuer, 2017; Wang, Zhang, & Wan, 2022).
However, Wei and Lau (2010) suggest that these studies have been unsuccessful to provide an adequate explanation for the linking mechanism over which HPWS influences performance. Therefore, in addition to the importance of considering the influence of HPWS on performance, there is a greater urge to explore the mechanism over which HPWS influences performance outcomes. A search of the literature revealed few studies which used a multi-level approach to assess the influence of HPWS on performance as well as the mechanism of how HPWS influences performance at various levels (Nien-Chi & Lin, 2019; Kundi, Sardar, & Badar, 2022).
In literature, the term coordination is widely used to recognize a process of how job activities are properly regulated and managed in organizations (Fu, Bosak, Flood, & Ma, 2019). Theorists (Tushman &Nadler, 1978) have treated coordination as an information processing test. In recent years, coordination has been perceived as a relational process that encompasses combined perceptions of the job along with work conditions (Crowston & Kammerer, 1998). It is based on that “coordination is the management of task interdependence” (p. 90). In this manner, relational coordination is usually inferred as coordination between employees learned by relationships in performing interdependent work (Gittell, 2001). Gittell (2000) pointed out that organizations performing in conditions of uncertainty, reciprocal interdependence, and time constraints will be most productive when there is a high degree of relational coordination among employees. Collectively, communication and relational networks are assumed to contribute to a system of a firm’s social capital that is expected to strengthen performance (Leana &Van Buren, 1999; Havens, Gittell, & Vasey, 2018).
Building on the findings by Gittell et al. (2010) in the healthcare of the United States, the current study intends to further seek the mechanism through which HPWS promotes relational coordination, and consequently influences unit-level performance. The current study does so in a distinct context - the banking sector in the developing country of Pakistan. This study theorizes that relational coordination, which develops through frequent; high-quality communication ties backed by relationship ties of shared knowledge, goals, and mutual respect, facilitates firms to better accomplish their desired performance (Romanow, Rai, & Keil, 2018). Through this research, we hope to add to the existing HPWS and performance literature, explaining how relational coordination help to illustrate the process by which HPWS impacts organizational performance.
Despite the agreement, still researchers are critical of the mechanism by which HR practices influence performance (Sun, Xing, Yin, & Yang, 2018; Gerhart, 2012). Recent studies (e.g. Graham, Zheng, Gracey, & Plater, 2020) have pointed to establishing a better theoretical description of HPWS-performance linkages, thus shifting focus on the mechanism linking HPWS to performance.