INCREASING HRS STRATEGIC PARTICIPATION: THE EFFECT OF HR SERVICE QUALITY AND CONTRIBUTION EXPECTATIONS

J I N F E N G U E N , D AV I D A H L S T R O M , S H U - Y U A N C H E N , A N D PA I - W E I T S E N G
Strategic participation is important for HR professionals who wish to have increased inuence in their organizations. While a number of previous studies have suggested a link between strategic human resource management and rm performance, few have explored the specic factors enabling HR strategic participation. This study examines the impact of HR service quality and expectations of HR contributions on HR strategic participation. A total of 244 survey responses were received from 42 companies in Taiwan. All hypotheses were supported, thus signifying signicant relationships between HR service quality, expectations of HR contributions, and HR strategic participation. The study results also indicate that HR professionals are able to proactively increase the value of HR in organizations by enhancing HR service quality and addressing potential internal customers needs accordingly. 2012 Wiley Periodicals, Inc.

Keywords: strategy, strategic HR, HR service quality, expectations of HR contributions

Introduction

uman capital is well understood to be a major driver of firm performance (e.g., Becker, Huselid, & Ulrich, 2001; Huselid, 1995; Pfeffer, 1998). Recently, an emerging body of research has shown that the human resources function has an important role to play in strategy formation and implementation also key components in firm performance (Burgelman, 2001; Collin & Clark, 2003; Takeuchi, 2009;

Ulrich, 1997). HR systems that are actively aligned with firm strategy can positively impact a number of measures, from corporate entrepreneurship and innovation (e.g., Cooke & Sani, 2010; Schmelter, Mauer, Brsch, & Brettel, 2010) to firm growth (C. M. Christensen & Raynor, 2003; OReilly, 2000) to bottom-line performance (Richard & Johnson, 2001; Ulrich, 1997; Yeung & Berman, 1997). The importance of HR at the strategic level in firms suggests that it is crucial to understand the

Correspondence to: Shu-Yuan Chen, PhD candidate, Institute of Human Resource Management at Sun-Yat-Sen University, Taiwan, R.O.C., No. 70, Lien-Hai Rd., Gushan District, Kaohsiung, Taiwan, R.O.C. 804, Phone: (886)9292-97003, Fax: (886)7-5254-939, and visiting scholar at the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, E-mail: salvia.chen@gmail.com
Human Resource Management, JanuaryFebruary 2012, Vol. 51, No. 1. Pp. 324 2012 Wiley Periodicals, Inc. Published online in Wiley Online Library (wileyonlinelibrary.com). DOI:10.1002/hrm.20467

HUMAN RESOURCE MANAGEMENT, JANUARYFEBRUARY 2012

factors that can enable HR to participate strategically in the organization to facilitate such alignment. Previous studies have examined HRs strategic role generally in organizations (e.g., Collin & Clark, 2003; Schuler, Dowling, & De Cieri, 1993; Schuler & Jackson, 2007; Ulrich, 1997, 2001) and in communicating and enhancing HRs value to the organization (Beatty & Schneier, 1997; Huselid, 1995; Ulrich & Beatty, 2001). More recent research in this domain has also started to focus on HRs strategic participation through enabling the employees to create organization-specific competencies (Akhtar, Ding, & Ge, 2008; Lengnick-Hall & LengnickThe importance Hall, 1999; Wright, McMahan, McCormick, & Sherman, 1998). of HR at the This research implies that HR prostrategic level in fessionals who work more closely with other departments in their firms suggests organizations are able to more readily build influence with those that it is crucial departments and positively imto understand pact their efforts (Cialdini, 2006; Pfeffer, 2010; Rahim, Antonioni, & the factors that Psenicka, 2001). Firm employeesinternal cuscan enable HR tomers in this contextare central to participate to HRs influence and increased strategic participation (Ulrich & strategically in Brockbank, 1999). HR professionals seek to satisfy internal customthe organization ers needs by assisting both midto facilitate such dle and top management, and HR services should be perceived as alignment. being worthwhile and credible in supporting HRs potential strategic role in an organization (Hallowell, Schlesinger, & Zornitsky, 1996; Ulrich & Beatty, 2001). In particular, HR service quality has been seen as essential to satisfying internal customers needs (Zheng & Lamond, 2010). Previous work has suggested HR service quality improves employee-related outcomes such as reducing turnover (e.g., Wildes & Parks, 2005) while serving to enhance HRs strategic role (Lengnick-Hall & LengnickHall, 1999). Given the key role that HR has to play in organizational performance, what are the main factors that may lead to HRs

increased strategic participation in an organization? This article maintains that HR strategic participation is positively related to HR service quality in organizations. Similarly, the expectation of HR contributions from internal customers is also positively associated with HR strategic participation. As such, this article focuses on HR service quality and the expectations of HR contributions in facilitating and increasing HRs strategic participation. In doing so, this article employs the theoretical lenses of social power and influence (Cialdini, 2006; French & Raven, 1959; Pfeffer, 2010; Rahim et al., 2001), and expectancy theory (Vroom, 1964). More specifically, a department that has more resources to allocate in an organization and provides good service quality will be more influential (Cialdini, 2006; Gandz & Murray, 1980; Pfeffer, 2010). The internal customers that HR is thus effectively able to serve will be more likely to support HRs strategic participation in the organization. Given the importance and value of a more holistic view of HR service quality and prospective strategic participation, we examine output, process, and input service quality based on recent work on the classification of HR service quality ( Johnson, Tsiros, & Lancioni, 1995; Uen, Wang, & Chen, 2005). In addition, much extant research on HR and strategy has utilized the more developed countries for research sites. Although there is some research on HR and organizational performance in developing economies (e.g., Ambarao, Petrick, Gupta, & Von der Embse, 2000; Budhwar & Boyne, 2004; Chow, Huang, & Liu, 2008; Cooke & Sani, 2010), few studies have systematically investigated the extent to which HR has been deployed strategically to facilitate different business strategies in indigenous environments such as China or Taiwan (see Ngo, Lau, & Foley, 2008). Taiwan, as a major ethnic Chinese economy, represents an important developing economy that is undergoing substantial change across its commercial sector (e.g., Berger & Lester, 2005; Liu, Ahlstrom, & Yeh, 2006), and one in which HR has only recently been studied, albeit at a general level (e.g., Wu, 2004).
Human Resource Management DOI: 10.1002/hrm

INCREASING HRS STRATEGIC PARTICIPATION

As a developing economy, Taiwans cultural and institutional context differs significantly in a number of respects from many of the more developed economies of North America and Europe (House, Hanges, Javidan, Dorfman, & Gupta, 2004; Redding, 1990; Tsui & Lau, 2002; Van Kemanade, 1997). In organizational terms, the HR function in Taiwan was traditionally less sophisticated and thought of more in terms of an administrative personnel department, rather than as a department helping to facilitate and implement strategy, though there has been some change in recent years (Wu, 2004). Thus, we chose to test our hypotheses on HR strategic participation using questionnaire data obtained from top and middle managers as well as HR managers in 42 medium- and large-sized Taiwanese firms. Overall, this article makes four contributions. First, we enrich strategic human resource studies in identifying the important antecedents of HR strategic participation by providing a conceptual analysis of the relationship between HR service quality, expectations of HR contributions, and HR strategic participation. Our hypotheses suggest that improved HR service quality in multiple areas will increase the opportunities for HR strategic participation. Second, by collecting survey data from 42 companies in three main industries in Taiwan, we found the higher degree of HR service quality and expectations of HR contributions will lead to more opportunities for HR strategic participation. Previous studies indicated the importance of HR being strategic in an organization but rarely examined the main factors leading to that strategic participation (Collin & Clark, 2003; Dyer & Reeves, 1995; Ulrich, 1997, 2001). Our empirical results confirm that HR service quality and expectations of HR contribution significantly influence HR strategic participation. Third, this article holds potential contributions for both theory and methods by examining a sample in an ethnic Chinese community in Taiwan. There are significant regional differences among various ethnic Chinese commercial communities in East Asia (Ahlstrom, Chen, & Yeh,
Human Resource Management DOI: 10.1002/hrm

2010; Gong, Chow, & Ahlstrom, 2011), and research is needed on a range of those different communities. This study contributes as one of the first studies on HRs strategic participation in Taiwan (Fang, 2010). Finally, somewhat different from previous studies we also take account of internal customers perspectives of HR strategic participation. As strateOur empirical gic partners, HR professionals need to ensure internal activities results confirm that are aligned with business strategies. In addition, HR professionals HR service quality who can satisfy internal customand expectations ers can earn their trust and the right to sit at the table as strategic of HR contribution business partners (R. Christensen, 2006). Our results suggest that HR significantly professionals should build up influence their influence first in an organization as an important first step HR strategic of becoming strategic participants in their firms. To that end, the participation. results can also help HR practitioners appreciate the importance of HR service quality and managing the expectations of internal customers regarding potential HR contributions.

Literature Review and Hypotheses Power, Inuence, and HR Strategic Participation

HR has come a long way from its origins in the personnel department (Schuler & Jackson, 2007). Ulrich (1997) suggested that HR professionals should move from being HR partners to participating strategically in the organization (Beatty & Schneier, 1997; Ulrich, 1997; Ulrich & Beatty, 2001). Ulrich and Beatty (2001) added that HR professionals can add value by taking on a strategic role such as aligning reward systems across the organization to ensure that they consistently encourage the fulfillment of customer needs or developing training solutions to build organizational capabilities required by the business strategy.

HUMAN RESOURCE MANAGEMENT, JANUARYFEBRUARY 2012

In terms of strategic participation, for example, if a firm is starting a new venture such as a move into a fresh product market, evidence on selection suggests that the firm should try to select and place into that new department some managers with start-up experience (McCall, 1998). HRs strategic participation with the selection activity can thus be crucial to the new ventures success or failure (C. M. Christensen & Raynor, 2003). In addition, if a firm plans to undertake acquisitions, HR professionals can systematically consider a range of related HR issues (i.e., retaining the acquired firms best talent, controlling the cost of integration, managing differences in organizational cultures) and suggest the best integration strategies before the acquisition is completed (C. M. Christensen, Alton, Rising, & Waldeck, 2011; Ulrich, 1997). With the increased Research suggests emphasis on strategic participation, HR professionals can find if HR professionals themselves involved in strategic are encouraged planning and the coordination of HR activities into a coherent HR to determine and system that supports and helps implement firm strategy (Delery, satisfy internal 1998; McCall, 1998). This viewcustomers point suggests that an alignment between HR practices and firm stratneeds, this can egy is important and can enhance organizational outcomes (Delery, help to enhance 1998; Green, Wu, Whitten, & HRs strategic Medlin, 2006). Social power theory (Rahim participation. et al., 2001) suggests that organizational members such as HR professionals are able to encourage change in other departments behavior, attitudes, opinions, as part of the strategic decision process. Therefore, in this study, we define HR strategic participation as HR professionals having more power to influence organizational outcomes through involvement in firm strategy, which is enhanced by linking HR practices to strategy and coordinating HR activities to support other departments activities. Research suggests if HR professionals are encouraged to determine and satisfy internal customers needs, this can help to enhance HRs strategic participation (Ulrich & Lake, 1990).

HR Service Quality
HR can function as a key service provider to support other departments (Schuler & Jackson, 2007). HR service quality is important in increasing internal customer satisfaction. Service quality is usually evaluated by the degree of customer satisfaction (Yi, 1990), and it can be assessed in several different ways (Johnson et al., 1995). For example, Uen and colleagues (2005) suggested that three aspects of HR service quality from the viewpoints of the internal customers should be included for a comprehensive framework of HR service quality. These include the input, process, and output qualities of HR service. Thus, HR service quality can be suitably defined as the quality of HR professionals service to line managers and employees (Uen et al., 2005). Since output service is assumed to be the most important (Ameritech, 1993), it is discussed first, followed by process and input service qualities. As noted, this article proposes that to have increased strategic participation, HR professionals need more power and influence in their organizations.1 Power, as defined by French and Raven (1959), can compel or encourage others to comply with a request. Kahn, Wolfe, Quinn, Snoek, and Rosenthal (1964) added that power can be manifest in different forms such as reward, coercive, expert, legitimate, informational, and referent power in an organization. Power accrues to HR professionals as they provide requisite services to other departments since they are the primary service provider in an organization. Recent research confirms the importance of power and has added additional principles of influence to more traditional forms of power (Cialdini, 2006). Departments in an organization who allocate (or withhold) rewards and other key resources, devise company policy, and promote company activity to outsiders are perceived to have the most power and influence (Gandz & Murray, 1980; Pfeffer, 2010). When HR professionals exploit HR expertise and specialized knowledge to provide services and fulfill internal customers needs, this encourages other departments to depend on them to solve their problems (Pfeffer,
Human Resource Management DOI: 10.1002/hrm

INCREASING HRS STRATEGIC PARTICIPATION

2010). In doing so, HR professionals are able to build their expert power by providing such specialized knowledge and services in a particular domain to other departments (Cialdini, 2006). Good HR output service quality is assumed to contribute more to internal customers needs and assists in formulating and implementing organizational strategies (Collins & Payne, 1991; Devanna, Fombrun, Tichy, & Warren, 1982; Rafig & Ahmed, 1993). In addition, how HR professionals behave while providing HR services influences service quality as well. When HR professionals solve the problems of internal customers, they achieve high client satisfaction. Such responsive and reliable HR process service will be perceived as worthwhile and credible (Hallowell et al., 1996), which in turn builds up the trust-based dependence relationship (De Jong & van Witteloostuijn, 2004). This results in relational cohesion, which further enhances legitimacy and bestows power on HR in terms of strategic participation. Moreover, HR professionals build their informational power, which indicates one party has the ability to present logically supported and persuasive arguments to others through their input HR service quality (Kahn et al., 1964). HR professionals who provide required information for internal customers build up a dependence relationship with those internal customers (French & Raven; 1959; Raven, 1965). In sum, HR professionals may be able to gain more power and influence in their organizations by providing HR services and resources, thereby building up the HR service dependence relationship with other departments (Pfeffer, 2010). In doing so, HR professionals may increase their opportunities to be involved in strategic decision-making process, further legitimizing their position and strategic participation. How they specifically do that is related to the nature of HR service and its quality.

(Johnson et al., 1995). Uen and colleagues (2005) indicated that if HR professionals provide services with innovativeness, comprehensiveness, and customization for internal customers, they will satisfy internal customers needs and demands. Innovativeness is defined as innovation and improvement of the HR professionals service to internal customers. Comprehensiveness is the HR professionals providing output services with comprehensive solutions that satisfy internal customers needs and enhances organizational outcomes. Customization is the HR professionals providing various services that meet respective internal customers varying needs (Uen et al., 2005). When HR supports innovativeness, comprehensiveness, and customization of its HR services, this builds the HR service relationship with other departments and facilitates HRs strategic participation. Based on the previous discussion, we hypothesize: Hypothesis 1: HR output service quality, which includes innovativeness, comprehensiveness, and customization, is positively associated with HR strategic participation.

HR Process Service Quality

Process service quality refers to the quality of interactions between service providers and internal customers (Johnson et al., 1995). Uen and colleagues (2005) specifically defined HR process service quality as HR professionals providing reliable services for internal customers in an interactive manner. They added that HR should be further perceived as responsive to internal customers. Responsiveness is defined as HR professionals being proactive and enthusiastic in understanding and meeting internal customers needs and clarifying the ambiguities involved with company procedures. Reliability is defined as HR professionals providing the required services in a correct and timely manner, while showing integrity and good communication skills in the process (Uen et al., 2005). When HR professionals act responsively to provide timely and comprehensible HR services to internal customers, they in turn are able to

HR Output Service Quality

Output service quality is a measure of what is produced as a result of providing a service
Human Resource Management DOI: 10.1002/hrm

HUMAN RESOURCE MANAGEMENT, JANUARYFEBRUARY 2012

HR service quality Output service quality Process service quality Input service quality HR strategic participation

Expected HR contribution

FIGURE 1. Research Framework

build expert power and a service dependence relationship with the other departments of the organization. Accordingly, we hypothesize: Hypothesis 2: HR process service quality, including reliability and responsiveness, is positively associated with HR strategic participation.

this builds up HRs expert and informational power and augments the service dependence of other departments. Accordingly: Hypothesis 3: HR input service quality, including structure, physical support, and competence, is positively associated with HR strategic participation.

HR Input Service Quality

Input service quality is assessed by consideration of tangible resources, physical equipment, and knowledge and skills ( Johnson et al., 1995). Uen et al. (2005) indicated that HR professionals should provide a useful information system and a well-established structure to support their services, and HR professionals should have the necessary professional knowledge and skills to meet internal customers needs. HR input service quality includes structure, physical support, and competence (Uen et al., 2005). Structure is defined here as the design and administrative flows and procedures in the HR department that are supportive of HR professionals input service. Physical support occurs when HR professionals provide useful related HR information systems in organizations. HR professionals are considered competent when they demonstrate the professional knowledge and skills to provide services while understanding the needs of internal customers (Uen et al., 2005). When HR professionals competently provide the required information through HR information systems to solve internal customers problems by good input HR service quality,

Expectations of HR Contributions and Strategic Participation

Although HR professionals make many contributions to the organization, not all organizations expect or need the same level of HR contribution. In this study, we would like to understand the general expectations of HR contributions; therefore, we adopted the unidimensional construct of Wright, McMahan, Snell, and Gerharts (2001) HR contribution. The role played by HR professionals is contingent on the expectations of the internal customers (Reichheld & Sasser, 1990). Expectancy theory argues that people act with a view to maximizing their personal outcomes (Vroom, 1964). In the same vein, other departments will support HRs involvement in strategic participation if HR contributions are strongly needed. In addition, based on perspectives of expectancy theory (Georgopoulos, Mahoney, & Jones, 1957; Vroom, 1964), the needs will be reflected in the goals sought. As HR contributions are required by internal customers, the internal customers will seek to support HR involving more in the strategic decision process, in terms of HR strategic participation. Thus, we hypothesize:
Human Resource Management DOI: 10.1002/hrm

INCREASING HRS STRATEGIC PARTICIPATION

Hypothesis 4: Expectations of HR contributions from internal customers are positively associated with HR strategic participation.

Method Participants
This study seeks to determine the relationship between HR service quality and HR strategic participation in a sample of HR professionals in medium- and large-sized companies in Taiwan. Therefore, the participating companies were selected from the three biggest industries in Taiwannamely, the electronic manufacturing, financial and insurance, and service industries. Each firm had 200 or more employees. Participants were HR managers and important internal customers, including top and middle managers the HR professionals frequently interact with in each company. A total of four top and middle managers and one or two HR managers in each company were invited to complete the survey.

Procedure
Initially, we telephoned the qualifying companies in those industries and asked if they were willing to participate in the survey; 62 companies responded positively. After that, we mailed questionnaires to those 62 companies and asked one HR professional in each company for assistance in distributing the surveys. The top and middle managers evaluated the HR service quality (including output, process, and input), expectations of HR contributions, and HR strategic participation, while the HR managers evaluated HR strategic participation in their companies. Participants were asked to return all completed questionnaires in the envelopes provided them. In all, 11 companies did not return the surveys and were excluded, giving a total of 51 companies and 295 completed questionnaires for a response rate of 82 percent (51 out of 62 organizations). Since we planned to do analysis at the organizational level but collected individual data, we had to aggregate the data. We calculated the Rwg value as suggested by James,
Human Resource Management DOI: 10.1002/hrm

Demaree, and Wolf (1993) to measure the interrater reliability before aggregating the individual level data to organizational level. James et al. (1993) have noted that Rwg helps researchers understand if the individual data among one particular group have enough interrater agreement for further aggregation to be used as an indicator of organizational-level scores. The cutoff criterion of Rwg is .70 (James et al., 1993). According to Maurer and Alexander (1992), organizational constructs aggregated from individual-level data that do not take interrater agreement results into account might affect the measurement sense and statistical significance of the results. The results indicated that nine of our sample firms were not able to meet the Rwg criterion of .70, and thus they were excluded from aggregation. This left us with 244 final valid individual samples aggregated into 42 firm samples for further analysis. The valid samples consisted of 38 percent from the electronic manufacturing industry, 31 percent from the financial and insurance industry, and 31 percent from other service industries. Most (62 percent) HR executives in the sample organizations were senior managers (e.g., vice president, director), 29 percent were middle managers, and only 9 percent were other line managers. Over half (55 percent) of the sampled companies had a headcount of between 200 and 1,000 employees, 26 percent had 1,001 to 3,000 employees, and the remaining 19 percent had over 3,000 employees.

Measures
Independent Variables We adopted Uen et al.s (2005) three dimensions of human resource service quality scales: output quality, process quality, and input quality. The three scales are discussed as follows (refer to the Appendix for further details of the measurement items). In order to examine the scale validity, we further implemented confirmatory factor analysis (CFA) on the HR service quality scale. We did first-order CFA with three factors (output, process, input service quality) and higher-order CFA with eight factors (comprehensiveness, innovativeness,

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and customization under output service quality; responsiveness and reliability under process service quality; structure, physical support, and competence under input service quality) model comparison. The result indicated that comparing to first order with the three-factor model (2 2040.81***, df 737, CFI .79, IFI .80, RMSEA .094), higher order with the eight-factor model (2 1627.49***, df 729, CFI .85, IFI .85, RMSEA .083) has a significantly smaller chisquare value and a better goodness-of-fit model that offers evidence of convergent and discriminant validity (Anderson & Gerbing, 1988). In addition, we further examine the discriminant validity between each two factors. The results are shown in Table I. The result also supWe did first-order CFA ported significant discriminant validity between factors (2 > with three factors 3.84). Based on the scale validity result, we will adopt eight(output, process, factor for further analyses. input service quality)
and higher-order CFA with eight factors (comprehensiveness, innovativeness, and customization under output service quality; responsiveness

excluded the item HR staff are very innovative in physical support, as it obviously does not belong to this factor. Concerning the content validity of the items, we excluded this item even though the alpha coefficient of physical support was .69 in this case. The finalized physical support measurement in this study had three items used for further analysis. The Cronbachs alpha of structure and competence were .90 and .85, which once again shows high internal consistency. Expectations of HR Contributions We adopted Wright et al.s (2001) HR contribution scale. In this study, we measured the expectations of HR contributions from the perspective of top and middle managers. Therefore, all the items were modified to begin with I expect. The sample items of expectations of HR contributions are as follows: I expect the HR professionals to perform the job the way I would like it to be performed; I expect HR professionals to be very responsive to meeting customer (front-line managers and employees) needs; and I expect HR professionals to provide value-added contributions to the firms bottom line (see the Appendix for detailed scale items). The Cronbachs alpha for expectations of HR contributions was .94, which shows high internal consistency. Dependent Variable The scale of HR strategic participation was adopted from Wright et al.s (1998) strategic involvement of HR scale. The sample items of HR strategic participation are as follows: Meet with the facility manager to discuss how HR can support the facilitys long-range strategy; Propose innovative HR programs to enhance competitiveness; and Identify future HR issues that could help or hinder future competitiveness. The Cronbachs alpha of HR strategic participation was .92, which shows high internal consistency. The data of HR strategic participation were collected from the two sources of HR managers and top and middle managers to examine the interrater reliability. The consistent results of HR strategic participation perceptions in an organization after excluding
Human Resource Management DOI: 10.1002/hrm

HR Output Service Quality HR output service quality includes the three variables of comprehensiveness (five items), innovativeness (three items), and customization (four items). The Cronbachs alphas were .85, .90, and .87, which shows high internal consistency. HR Process Service Quality

and reliability under process service quality; structure, physical support, and competence under input service quality) model comparison.

HR process service quality includes the two variables of responsiveness (three items) and reliability (nine items). The Cronbachs alphas were .88 and .91, which also shows high internal consistency and reliability. HR Input Service Quality

HR input service quality includes the three variables of structure (seven items), physical support (four items), and competence (six items). We

TABLE

Descriptive Statistics
SD
.671 11.35 .63 .60 .64 .072 .190 .79** (4.17*) .62** (6.43*) .64** (15.23*) .66** (10.13*) .53** (3.95*) .66** (3.90*) .26 .45** .61** .43** .58** .01 .62** (10.81) .69** (4.37*) .20 .49** .74** .60** (3.88*) .64** (6.03*) .70** (7.94*) .78** (7.8*) .66** (12.95*) .70** (7.25*) .62** (6.22*) .10 .49** .57** .50** (7.97*) .73** (3.85*) .75** (8.14*) .91 .49** (4.46*) .73** (3.86*) .88 .76** (5.21*) .87 .028 .254 .64** (9.74*) .85 .210 .203 .90 .097

Descriptive statistics and correlations for study variables

1 2 3 4 5 6 7 8 9 10 11 12

Mean
1.48 4.39 4.28 4.21 4.11

Controls

1 HR executive level

2 Headcount

HR output service quality

3 Innovativeness

4 Comprehensiveness

Human Resource Management DOI: 10.1002/hrm

5 Customization

HR process service quality 4.38 4.58 .49 .072 .159 .68 .020 .086

6 Responsiveness

7 Reliability

HR input service quality 4.15 4.10 4.28 5.11 4.78 4.16 .65 .034 .180 .70 .162 .108 .51 .122 .036 .51 .067 .059 .59 .006 .082 .56 .013 .105 .70** (19.54*) .64** (20.46*) .68** (12.36*) .28 .41** .64** .90 .79** (6.25*) .80** (6.21*) .24 .65** .78** .69 .81** (4.88*) .00 .55** .65** .85 .03 .57** .71** .94 .33** .29 .92 .63**

8 Structure

9 Physical support

10 Competence

11 Expectations of HR contributions

12 HR strategic participationb

13 HR strategic participationc

INCREASING HRS STRATEGIC PARTICIPATION

**Correlation is signicant at the 0.01 level (two-tailed), Cronbachs alpha coefcient is shown in diagonal column. a computed in thousands. b HR strategic participation evaluated by HR managers, dependent variable. c HR strategic participation evaluated by top and middle managers (chi-square difference).

11

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invalid samples indicated high interrater reliability (r 0.63, p 0.01). We used the HR managers data for further analysis as the dependent variable. All measurement scales in this study used a five-point Likert scale, from 1 (strongly disagree) to 5 (strongly agree).

Control Variables HR executive level and the headcount of the companies were included as the control variables.

Results
The descriptive statistics and correlations of the variables are shown in Table I. The results indicate fairly high correlation coefficients among HR service quality variables, which may suggest some potential multicollinearity problems.

However, as noted earlier, the concept of HR service quality can be represented by the three aspects of output, process, and input. These concepts are typically related because they have sequential relationships in the three-stage process. We further performed a VIF test for all variables of HR service quality, as shown in Table II. Although the VIF test results did not indicate serious multicollinearity between variables, the results in Table II still imply high correlation among HR service quality variables; the sample size influences the statistical significance. However, the result in Model 2 of Table II still implies that the combination of all variables of HR service quality have significant influence on HR strategic participation (R2 .49), though only structure under input service quality meets the significance level (B .82, p .05). Schwab (2005) suggested that method, measurement, and data analysis response to multicollinearity should be driven by the

TABLE

II

Hierarchical Regression of HR Service Quality (All Variables Combination) and HR Strategic Participation
Strategic Participation Model 1 Model 2 1.26 .11 .02 .11 .07 .37 .05 .08 .32 .03 .25 .15 6.43*** .70 .32 1.35 1.44 4.00 3.30 6.31 3.83 3.73 5.73 4.51 5.04 1.66 VIF

Constant Control variables HR executive level Headcounta HR output service quality Innovativeness Comprehensiveness Customization HR process service quality Responsiveness Reliability HR input service quality Structure Physical support Competence Expectation of HR contributions F R
2

4.49 .19 .05

.71 .04

R 2
*p .05. a computed in thousands.

Human Resource Management DOI: 10.1002/hrm

INCREASING HRS STRATEGIC PARTICIPATION

13

conceptual model of interest. Therefore, based on our theoretical model, all HR service quality variables were included for further analysis. Considering that multicollinearity may reduce the statistical power and attenuate multiple regression coefficients (Schwab, 2005), each variable was examined respectively for hypothesis testing, but the variables in the same dimensions (input, process, and output) were also examined collectively to identify the model parameters. The results also indicate that expectations of HR contributions have no significant correlation with HR service quality variables and HR strategic participation, which was evaluated by the HR managers. However, the expectations of HR contributions did have a significant correlation with HR strategic participation, which was evaluated by the top and middle managers. The data of HR service quality and HR strategic participation were provided by the same respondents (top and middle managers), while the data of HR strategic participation came from two sources (the HR managers and top and middle managers). The results imply that even though potential common method bias among the independent variables might exist, it was not severe (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Moreover, HR strategic participation was measured from the two different sources of HR managers and top and middle managers. The correlations
TABLE III

show high interrater reliability for HR strategic participation from these two different sources. To minimize potential common method bias in this study, we only adopted the data of HR strategic participation derived from the HR managers for further analysis.

HR Output Service Quality and HR Strategic Participation

The hierarchical regression analysis results of HR output service quality and HR strategic participation are shown in Table III. The results show that the innovativeness of HR output service quality is positively associated with HR strategic participation (B .54, p .01). The supporting results imply that HR professionals providing more innovative output services will lead to a greater extent of HR strategic participation. Moreover, the results indicate that the comprehensiveness of output service quality is positively associated with HR strategic participation (B .50, p .01). The results also suggest that the more comprehensive HR output service quality is, the greater the extent to which HR professionals will be involved in strategic participation. The results support the notion that the ability of HR output service quality to solve more problems for internal customers will enable a greater degree of HRs strategic participation (B .53, p .01).

Hierarchical Regression of HR Output Service Quality and HR Strategic Participation

HR Strategic Participation Model 1 Model 2 2.33 .08 .00 .54** 2.64 .04 .00 2.49 .05 .00 2.05 .06 .00

Constant Control variables HR executive level Headcounta HR output service quality Innovativeness Comprehensiveness Customization F R2 R 2
*p .05, **p .01. a computed in thousands. Human Resource Management DOI: 10.1002/hrm

4.67 .04 .01

.47 .02

4.41* .24 .22

.27 .50** .24 .53** .11 3.07* 4.42** 2.81* .20 .26 .28 .17 .24 .26

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TABLE

IV

Hierarchical Regression of HR Process Service Quality and HR Strategic Participation

HR Strategic Participation Model 1 Model 2 2.35 .06 .01 .52** .61** .47 4.99** .28 .26 3.38* .21 .19 .02 1.86 .04 .01 2.01 .06 .01 .43 b .16 3.74* .29 .27

Constant Control variables HR executive level Headcounta HR process service quality Responsiveness Reliability F R
a

4.67 .04 .01

2 2

p .1, *p .05, **p .01. computed in thousands. b p .053.

Hypothesis 1 stated that HR output service quality, including innovativeness, comprehensiveness, and customization, are positively associated with HR strategic participation. The results of the three variables pooled together in Model 2 show that output quality is positively associated with HR strategic participation (R2 .26), although the innovativeness, comprehensiveness, and customization in this model did not meet the significance level because of the high correlation among the HR output service quality variables in the model. Thus, Hypothesis 1 is generally supported.

Moreover, the results indicate that the reliability of process service quality is positively associated with HR strategic participation (B .61, p .01). The results imply that the more reliable HR process service quality is, the greater the extent of HRs strategic participation. The results of the two variables pooled together in Model 2 show that process quality is positively associated with HR strategic participation (R2 .27), although only responsiveness in this model met conventional significance levels (B = .43, p = .05) because of the high correlation among the HR process service quality variables. The results provided support for Hypothesis 2.

HR Process Service Quality and HR Strategic Participation

Hypothesis 2 stated that HR process service quality, including responsiveness and reliability, is positively associated with HR strategic participation. The hierarchical regression analysis results of HR process service quality and HR strategic participation are shown in Table IV. The results show that the responsiveness of process service quality is positively associated with HR strategic participation (B .52, p .01). The supporting results imply that HR professionals that are more active during the service process will lead to a greater degree of HR strategic participation.

HR Input Service Quality and HR Strategic Participation

The hierarchical regression analysis results of HR input quality and HR strategic participation are shown in Table V. The results show that the structure of HR input service quality is positively associated with HR strategic participation (B .81, p .01). The supporting results imply that the provision of more structured and well-controlled input service by HR professionals will lead to a greater extent of HR strategic participation. Besides, the results indicate that physical support of input service quality is positively associated
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TABLE

Hierarchical Regression of HR Input Service Quality and HR Strategic Participation

HR Strategic Participation Model 1 Model 2 1.35 .04 .00 .81** .63** .75** .47 9.92** .44 .42 6.18** .33 .31 6.33** .33 .31 .02 1.92 .17 .01 1.48 .03 .01 1.02 .17 .00 .04 .70* .10 6.16** .46 .44

Constant Control variables HR executive level Headcount Structure Physical support Competence F R
2 2 a

4.67 .04 .01

HR input service quality

*p < .05, **p < .01. a computed in thousands.

with HR strategic participation (B .63, p .01). The results imply that the more HR input service resources HR professionals can provide, the greater HRs strategic participation will be. The results also support that HR professionals competence will lead to a greater extent of HR strategic participation (B .75, p .01). We can infer that greater competence supported by HR input service quality will influence the degree of HR strategic participation. Hypothesis 3 stated that HR input service quality, including structure, physical support, and competence are positively associated with HR strategic participation. The results of the three variables pooled together in Model 2 show that input quality is positively associated with HR strategic participation (R2 .44), although only physical support in this model meets the significant level (B .70, p .05), because of the high correlation among the HR input service quality variables. We conclude that the results support Hypothesis 3.

contributions from internal customers are positively associated with HR strategic participation. The results show that the expectations of HR contributions are positively associated with HR strategic participation (B .45, p .05, R2 .11), which supports Hypothesis 4. The supporting results imply that the higher the expectations of HR contributions, the greater the extent of HR strategic participation will be.

Discussion Contributions
In establishing several key factors leading to HR strategic participation, this study makes four main contributions. In terms of theory, we enrich strategic human resource studies in identifying the important antecedents of HR strategic participation by providing an analysis of the relationship between HR service quality, expectations of HR contributions, and HR strategic participation. This study further identifies the important components of HR service quality to HR strategic participation. We have studied HR service quality from the three aspects of input, process, and output service quality to acquire a more comprehensive view of overall HR service quality. The results contribute to theory in identifying

Expectations of HR Contributions and HR Strategic Participation

The hierarchical regression analysis results of expectations of HR contributions and HR strategic participation are shown in Table VI. Hypothesis 4 states that expectations of HR
Human Resource Management DOI: 10.1002/hrm

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TABLE

VI

Hierarchical Regression of expectations of HR Contributions and Strategic Participation

HR Strategic Participation Model 1 Model 2 2.42 .04 .01 .45 .47 1.89* .13 .11 .02

Constant Control variables HR executive level Headcount F R

2 a

4.67 .04 .01

Expectations of HR contributions

R 2
*p < .05 a computed in thousands.

three key components of HR service quality and suggesting reasons for their connection to HR strategic participation. In terms of empirical contribution, by collecting survey data from 42 companies in Taiwans main industries, we also determined that the higher degree of HR service quality and expectations of HR contributions led to more opportunities for HR strategic participation. Previous studies suggested the importance of HR playing a strategic role in organizations (Becker et al., 2001; Schuler & Jackson, 2007; Ulrich, 1997, 2001) but rarely examined the specific factors leading to increased HR strategic participation. We found the HR service quality and expectations of HR contribution significantly influenced HR strategic participation. With all hypotheses supported, the results indicate that improving HR output service quality (innovativeness, comprehensiveness, and customization), process service quality (responsiveness and reliability), and input service quality (structure, physical support, and competence) may positively increase the opportunities for HR strategic participation. The results thus indicate the importance of HR service quality and extend the previous work of van Donk and Esser (1992), who suggested that the HR department plays an important role for middle management in coordinating the organizations executive and operating levels.

Third, this study adds to our understanding of HR in developing economies. Much research conducted on HR has focused on firms in developed economies or these firms forays into developing economies (Ahlstrom, Bruton, & Chan, 2001; Bruton, Ahlstrom, & Chan, 2001; Peterson, Napier, & Shul-Shim, 2000). More recently, HR research has started to emphasize firms in developing economies (e.g., Budhwar & Varma, 2010; Cooke & Sani, 2010; Ngo et al., 2008; Rowley & Cooke, 2010). Specifically, this study adds to our understanding of HR in Taiwan, which also enhances our understanding of ethnic Chinese communities and their many nuances and regional differences (Ahlstrom et al., 2010; Gong et al., 2011; Liu et al., 2006). This is the first major study in Taiwan, where previous research on HR usually focused on the personnel function and not on high-level strategic participation. Research on firms from ethnic Chinese communities has found increasing strategic flexibility even among more traditional manufacturing firms rather than the near-exclusive reliance on an ownermanager for key strategic decisions, as was traditionally the case (Liu et al., 2006). The evidence presented here further strengthened the argument that HR can have an important role to play in firm strategy, even in a region where strategy has traditionally been a heavily top-down process and HR
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has typically not been thought of in strategic terms (Budhwar & Varma, 2010; Wu, 2004; Young, Peng, Ahlstrom, Bruton, & Jiang, 2008). HR strategic participation is suggested by many researchers for its importance on organizational performance (Delery, 1998; Green et al., 2006). The importance of HR involvement in strategic participation implies that HR can be at the center of firm strategy formulation. This changes the traditional view that HR was only to carry out firm strategies and increases the importance of HR to its internal customers inside a firm. Finally, in terms of contributions to practice, as strategic partners, HR professionals need to work to align internal activities with business strategies (Chow et al., 2008; McCall, 1998). In addition, HR professionals who can satisfy internal customers can earn their trust and the right to sit at the table as strategic business partners (R. Christensen, 2006). Moreover, rather than having formal power, HR professionals can build their influence in an organization through expert and referent power (Cialdini, 2006; French & Raven, 1959). The result implies that HR professionals are not participating more strategically because of formal power arrangements, but through the building of influence within their organizations, which is a key first step. The results also help HR practitioners understand the importance of HR service quality and expectations of HR contributions. HR professionals can proactively increase HR value by improving HR service quality. Moreover, by understanding and satisfying internal customers needs, HR would be more able to build reciprocal relationships with other departments and thereby enhance the credibility of HR services. The credibility of HR services not only improves HR service quality, but also satisfies internal customers and helps to build a working relationship between HR professionals and internal customers. In other words, the greater the dependence relationship between HR professionals and internal customers, the more power and influence HR professionals will build within the organization, particularly at the strategic level. In addition, the results of the interrater reliability of the HR managers and top and
Human Resource Management DOI: 10.1002/hrm

middle managers for HR strategic participation suggest that there is agreement in their perceptions of HR strategic participation, which provides somewhat different results from Wright et al.s (2001) study, which had suggested different perceptions between HR managers and line managers. The results of our study support that there is consistency in the perceptions of HR managers and line managers in terms of HR service quality.

Limitations and Future Research

Future studies

Three limitations should be noted. should take First, a moderately sized sample resulted from the strict criteria and different aspects of resulting useable data. However, expectations of HR the hypotheses supported in this study still have substantial implicontributions into cations with substantive effects. account and the Future research can try to validate the results with a larger sample potential mediators size. The potential problem of high correlation among the HR service of strategic quality variables is a point of conparticipation. This cern. Although the VIF test for collinearity did not show problematic will enhance the multicollinearity among variables, the correlation among the varivalidity of this ables still influenced the statistical significance. Future research could research and add to develop a new HR service quality the understanding construct by referring to different service quality components from of the mechanism internal service perspectives to address this problem. In addition, reof the strategic searchers could try to modify and enhancement of validate the current HR service quality scale by aggregating HRs role. highly correlated variables to build a second-order measurement model. In addition, this study mainly focused on HR service quality, the expectations of HR contributions, and their influence on HR strategic participation. We did not take the potential interaction of HR service quality into account in this study because of the limitations of the sample size. Future studies can collect more data and examine the interactive effect of HR service quality.

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Finally, in trying to understand the general perceptions of expectations of HR contributions, this study adopted a unidimensional construct of expectations of HR contributions. However, compared with a threedimensional construct of HR service quality, it seems the two constructs may not be directly comparable. In addition, the internal customers might have different expectations toward HR. Future studies should take different aspects of expectations of HR contributions into account and the potential mediators of strategic participation. This will enhance the validity of this research and add to the understanding of the mechanism of the strategic enhancement of HRs role.

potential needs for HR services, and can serve to increase HRs participation in and value to the organization, particularly in strategic terms. The dependent relationship between HR professionals and internal customers will provoke greater expectations of HR services and enhance HRs strategic role in the organization. Finally, this study also demonstrates the importance of expectations of HR contributions and service quality for HR to become an active strategic partner in the organization.

Acknowledgments
The authors would like to thank the editor and all reviewers for their helpful and thorough suggestions and comments to revise the manuscript considerably. In addition, the authors also thank The Chinese University of Hong Kong Center for Entrepreneurship and Marc Ahlstrom of Burlington College for their support and assistance with this research.

Conclusion
Regarding the increased strategic participation of HR, our findings suggest that, first, HR professionals need to provide recognized service quality (input, process, and output service quality) to satisfy internal customers needs, thereby building credibility to allow for the increased strategic participation of HR. The detailed variables in our model are further helpful for HR professionals to construct their HR service quality. Second, the high expectations of HR contributions are also important for increasing HR strategic participation. These expectations mainly identify

Note
1. The emphasis of power here is on the less formal and includes the forms of power most closely related to social influence (Cialdini, 2006).Those most closely related to social influence include expert power and referent power, which are derived from the expert authority and knowledge of the HR department and the right to provide instruction and direction, respectively (e.g., Kenrick, Neuberg, & Cialdini, 2007).

JIN FENG UEN (PhD, National Sun Yat-sen University) is a professor at National Sun Yat-sen University. He obtained his PhD in management in 1998. His research interests include strategic human resource management, management in high-tech industry, and the HR roles transformation in an organization. He has published over 40 peer-reviewed articles in journals such as the Journal of Business and Psychology, International Journal of Human Resource Management, and International Journal of Contemporary Hospitality Management. DAVID AHLSTROM (PhD, New York University) is a professor at The Chinese University of Hong Kong. He obtained his PhD in management and international business in 1996, after having spent several years in small and medium-sized enterprises (SMEs) and start-ups. His research interests include management in Asia, entrepreneurship and innovation, and management history. He has published over 70 peer-reviewed articles in journals such as the Strategic Management Journal, Academy of Management Review, Journal of International Business Studies, and Journal of Management Studies. He also coauthored International Management: Strategy and Culture in the Emerging World. He is currently editor-in-chief of the Asia Pacic Journal of Management.
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SHU-YUAN CHEN is currently a PhD candidate at National Sun Yat-sen University in Taiwan and visiting scholar in the school of Labor and Employment Relations at University of Illinois at Urbana-Champaign. Her research interests include HR roles and inuence, HR strategic participation, HR power, strategic talent management, and recruitment issues. PEI-WEI TSENG (MBA, National Sun Yat-sen University) currently works in the Administration Department of Wealth Management Group in Taipei Fubon Commercial Bank Co., Ltd.

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APPENDIX

Measurement Items

HR output service quality Factors Innovativeness Items 1. The HR professionals will improve the current solution. 2. The HR professionals will propose new solutions. 3. The HR professionals will improve the current service. 4. The HR professionals will provide accurate information. 5. The HR professionals will provide new services. 6. The HR professionals will provide solutions that are consistent with organizational goals and strategies. 7. The HR professionals will provide comprehensive solutions. 8. The HR professionals will provide solutions that motivate employees behaviors for better performance. 9. The HR professionals will provide services to solve my problems. 10. The HR professionals will provide solutions to solve my problems comprehensively. 11. The HR professionals will provide exible solutions. 12. The HR professionals have stable service quality.

Comprehensiveness

Customization

HR process service quality Factors Responsiveness Items 1. HR professionals are enthusiastic. 2. HR professionals will actively help me. 3. HR professionals are empathetic. 4. 5. 6. 7. 8. 9. 10. 11. 12. HR professionals can carry out their work in an appropriate way. HR professionals can nish their work on time. HR professionals have integrity. HR professionals will respond to my inquiries. HR professionals can get along with me. HR professionals can protect my privacy. HR professionals will clearly inform me of their solutions and services. The behaviors of HR professionals are predictable. HR professionals will keep their promises.

Reliability

HR input service quality Factors Structure Items The service process design of the HR professionals is efcient. The service process design of the HR professionals is thoughtful. The administrative system of the HR department can support its services. The administrative system of the HR department can respond to the changes in the organization. 5. The structure of the HR department clearly denes the authority and responsibility of HR professionals. 6. The HR professionals have a good relationship with other groups (unions, consultants, etc.). 7. The HR professionals will ask for more expenses to get the work done well. 8. The HR database is user-friendly for information retrieving and sharing. 9. The equipment of the HR department is user-friendly. 10. The HR information system can help to collect and analyze required data. 1. 2. 3. 4.

Physical support

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Competence

11. 12. 13. 14. 15. 16.

HR professionals have good communication skills. HR professionals have the ability to manage changes in the organization. HR professionals understand my needs and expectations. HR professionals have professional HR knowledge and skills. HR professionals have organizational management knowledge. The HR internal administrative system can monitor the current situation in the organization.

Expectations of HR contributions Factors Expectations of HR contributions Items 1. I expect the HR professionals to perform their job the way I would like it to be performed. 2. I expect HR professionals to be very responsive to meeting customer (front-line managers and employees) needs. 3. I expect HR professionals to provide me with useful and timely information regarding HR issues. 4. I expect HR professionals to help to enhance the rms competitive position. 5. I expect HR professionals to provide value-added contributions to the rms bottom line. 6. I expect HR professionals to contribute to building and/or maintaining the rms core competence. 7. I expect HR professionals to contribute to building the rms human capital (employees/managers) as a source of competitive advantage. 8. I expect the policies, practices, and procedures emanating from the HR professionals to help front-line business partners in their jobs. 9. I expect the HR professionals to develop a well-coordinated set of policies, practices, and procedures. 10. I expect the HR policies, practices, and procedures to help support the rms business plan.

Human Resource Management DOI: 10.1002/hrm