The article examined in this critique “Leveraging human assets for MNCs performance: the role of management development, human resource system and employee engagement” by Hooi (2019) seeks to examine the relation between management development (MD), human resource system (HRS), and employ engagement (EE) on firm performance with a particular emphasis on EE being a key element in facilitating the beneficial impact. The subject matter is human asset management and development, a theme that has become essential in human resource (HR) literature due to the significant competitive leverage it can bring. There is some theoretic background offered regarding the role of human assets in an organization and the influence on business performance. Hooi (2019) discusses the challenges of accurately measuring the effect of human resource and employee development concepts on indicators and firm performance but recognizes how these elements ultimately “provide direction, facilitate change, use resources, work with people, achieve results” (2730). The research problem that the author identifies is demonstrating the connection of MD, HRS, and EE to firm performance in a multidimensional index, and to establish whether the EE is a missing link in the HR system-firm performance relationship.
Format and Abstract
The article is formatted professionally, with all necessary information available and clearly noted title, author, abstract, dates, and subsections marked without confusion. The title is slightly long, but appropriate to list all the necessary elements examined in the study, with abbreviations later provided, but not common enough to be used in the title. The author’s research institution is listed, but no further credentials are provided. No conflict in the research is indicated. The publication journal is respected with a multi-decade history, with an average impact factor (Taylor & Francis Online, 2020). The writing throughout the study is academic, logical, and easy to follow, industry-specific terms are appropriately utilized. The abstract follows an appropriate length encompassing the basics of the study, but no conclusions or recommendations are outlined after the brief results which is not a major issue as the reader can easily understand the fundamentals by reading the abstract. There is also a lack of details in the abstract including sample size, significance values, and the results just generally outline the relationship between the variables. The introduction is well formulated, giving an enticing but informative background on the research topic, identifying the three major factors investigated in the study but synthesizing them effectively to lead to the research question in the end. References are correctly formatted and placed at the end of the study.
Hooi (2019) provides a very detailed and structured literature review that is highly relevant to the research topic and problem. The literature review is broken down into parts taking each of the unique elements such as MD, HRS, and EE, and examining them separately in the context of firm performance. Then, there are sections which bring these concepts together examining the literature which covers all three. The literature takes note of each of the variables and highlights their place in a modern organization, including their impact and utilization in a firm functioning and activities. The role of each of the concepts is highlighted in the context of HR for organizations and its importance is supported by extensive evidence. The author uses a good range of literature, all of it being scholarly from various business, management, and HRM literature over the last 25 years. References are diverse and are represented accurately to build a strong knowledge and application base of HR principles and justification for the topic. After examining the literature review, it is clear that the specific concepts selected in the forms of MD, HRS, and EE, are all interconnected within the HRM of organizations, which is the reason why they are being investigated in the study.
The literature review presents many insights of insight and examination of the topic from various perspectives, once again, seeking to establish connections and logical flow when creating the context for the study. There are some elements of debate present in the review, mostly regarding definitions or perspectives regarding some of the concepts such as in the section when Hooi (2019) discusses employee engagement and firm performance. The literature review also has little theoretical background, mostly focusing on practical research and applications. There are few mentions of any specific HR or business theory in relation to the topic at hand. The literature review also provides no quantitative data at any point to support any of the concepts, but it is notable that this does not take away from the validity of the information being presented. It is notable that each separate section in the literature review is followed by a short hypothesis by Hooi (2019). In particular, the hypothesis states what impact the author predicted each aspect has on firm performance or the relation that the concept had in connection to others in influencing performance, to be later confirmed or denied by the research.
Research and Design
The design of the study is appropriate for the real-world application data being collected. The questionnaire survey was developed specifically for the study. The methodology of online questionnaires does have its limitations, even if the sample is carefully selected. One of the major advantages is access to individuals in distant locations across a range of large MNCs. However, the major disadvantage remains that the validity of data can face certain uncertainty. Particularly, since the responses were guaranteed anonymity, there did not seem to be any validation measures for those taking the survey. The questionnaire was reviewed based on previous empirical research and also examined by an active third-party researcher in the field of management which helped to rephrase questions, balance scales, and adjust the length to ensure higher validity.
The researchers followed ethical protocols by providing clear guidelines and ensuring the confidentiality of responders. There were also measures to prevent common method variance and to ensure psychological separation by shifting response formats presented on different scales, creating an 87.4 total variance score on exploratory factor analysis (Hooi, 2019). Since the survey was used in a multi-country context, questions relating to host countries or other cultural factors were excluded. The design of the questionnaire presented high Cronbach’s alpha scores signifying consistency and reliability for further analysis, indicating that it was well-developed in the context of the research method and topic.
Sample and Data Collection
The data collection method selected for the research was an online questionnaire. The questionnaire had a range of questions, a majority of which used scales allowing for a greater range of depth in the answers. The author used disproportionate stratified random sampling, with the managerial staff of 10 MNCs contacted randomly for participation. That is an appropriate sampling method given that the respondents are heterogenous, it allows for the research to obtain representatives from subgroups within the sample. Hooi (2019) notes that the majority of respondents were from MNCs with over 1,000 employees but represented diverse levels of management and came from different areas of the company ranging from marketing to general management. The sample of 498 is extensive despite only a 37.5% response rate, it is on average greater than many other studies in HRM. Managerial populations are smaller than the general employee population, and this sample size across 10 firms is diverse enough to provide some level of accuracy in data. The data collection method was appropriate given the scale that the researcher was seeking to encompass in the research.
Statistics and Analysis
The primary statistical test used in this study was a two-stage structure equation modeling (SEM) which, as noted by Hooi (2019) is highly effective in testing hypothesized relationships between constructs, simultaneously able to evaluate several. However, to justify this statistical analysis, the author conducted graphical and statistical analyses in the form of nonsignificant Kolmogorov–Smirnov statistic and scatterplots to confirm that there was a possible relationship between variables and SEM assumptions were not violated in any manner. The two-factor modeling, which first covered the relationship between variables and theoretical constructs, and then the structural model which focused on associations between constructs, is highly effective for this type of complex multifactorial study which attempts to determine the influences of multiple concepts on a single variable simultaneously. The results were presented on a stage-by-stage basis, explaining the process of analysis in detail and presenting tables outlining the results of each modeling. In the end, the author also calculated the level of mediation and magnitude of mediating effects, which provides the direct and indirect effects of the various variable relationships and the influence of EE in these contexts. Overall, the statistical models and analysis are highly detailed, understandable, easy to follow, and can be repeated in exact steps. The findings are clearly explained within each stage of the analytical process.
Discussion and Conclusions
The discussion of the study is comprehensive and brings together the data. Hooi (2019) discusses each concept and seeks to explain the result based on the topic and earlier hypotheses. He draws on literature and places these findings in context through modern applications and theory. He explains the practical uses of these results and provides recommendations. The value of the study and results is discussed on how to better leverage human assets, once again supported by diverse literature. The article includes a section on the limitations of the study, which is analytical and detailed. The author also provides insight into future directions, indicating a deep understanding and passion for the topic. There are proposals to increase sample sizes and the use of longitudinal studies with more valid methodologies and stringent rules. The conclusion of the study is well-formulated, albeit slightly sentimental. It outlines the basics of the study and results, highlighting key outcomes. The author also discusses the contributions of the study to modern HRM and emphasizes how the knowledge aids in the understanding of the key concepts on which the research was focused.
Other research in IHRM is generally supportive of Hooi’s (2019) research on the leveraging of human assets. Mabey (2008) conducted a large multinational study which emphasized the importance of management capability and development in firm performance. However, he noted that patterns of management development differed from country to country and among organizations. The biggest impact on firm performance was seen based on internal organizational management development strategies and the recognition that these strategies were given by the line managers. Another study by Salehi and Moghadam (2019) highlights that certain management characteristics inherently impact firm performance, via return on assets and stock value. Among management characteristics are capability, entrenchment, and overconfidence, with these being improved through HR interventions such as management development which can help companies hire and train managers with potentially performance-positive characteristics.
Meanwhile, human resource systems were analyzed by Ferguson and Reio Jr. (2010) who sought to investigate how HR inputs and processes/practices contributed to organizational outputs in performance. Their findings indicated that across HRMS, there were medium to large effects on positive firm performance. This is an indicator that HR should examine entire HR systems for productive leverage points that can enhance organizational output and invest attention and funding into the implementation of initiatives within the context of these points. A study by Albrecht et al. (2015) focuses on the role of HRM practices of engagement in influencing the organizational climate, job resources and demands, and employee performance as well as competitive advantage. The results indicate that without practices aimed at engagement, other HR initiatives are poorly adapted. It is suggested that HRM practitioners should go beyond routine administration of practices and consider a way to facilitate employee engagement which helps in better implementation of said practices and will help organizations achieve a competitive advantage.
In general, the research agrees with Hooi (2019) that leveraging human assets is critical. Gahlawat and Kundu (2019) discuss progressive human resource management practices, which include MD, HRS, and EE initiatives highlighted by Hooi, as generally supportive of increased firm performance. MNCs that adopt a range of innovative and progressive practices are more resilient, flexible with adaptation to change, and have higher employee satisfaction and engagement. Therefore, HRM in modern organizations should strive to take the lessons learned from this literature and multiple studies in order to create internal incentives and practices that boost firm performance.
Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M. (2015) ‘Employee engagement, human resource management practices and competitive advantage’, Journal of Organizational Effectiveness: People and Performance, [online] 2(1), pp.7–35. Web.
Ferguson, K. L., & Reio, T. G. (2010) ‘Human resource management systems and firm performance’, Journal of Management Development, 29(5), 471–494. Web.
Gahlawat, N. and Kundu, S.C. (2019) ‘Progressive human resource management and firm performance’, International Journal of Organizational Analysis, 27(3), pp.471–493. Web.
Hooi, L.W. (2019) ‘Leveraging human assets for MNCs performance: the role of management development, human resource system and employee engagement’, The International Journal of Human Resource Management, 32(13), pp. 2729–2758. Web.
Mabey, C. (2008) ‘Management development and firm performance in Germany, Norway, Spain and the UK’, Journal of International Business Studies, 39(8), pp.1327–1342. Web.
Salehi, M. and Moghadam, S.M. (2019) ‘The relationship between management characteristics and firm performance’, Competitiveness Review: An International Business Journal, 29(4), pp.440–461. Web.
Taylor & Francis Online (2020) The International Journal of Human Resource Management. Web.