Antecedents and outcomes of employee empowerment practices: A theoretical extension with empirical evidence

• DOI: http://doi.org/10.1111/1748-8583.12243
• Author: Yishuai Yin,Ying Lu,Yue Wang
• Published date: 01 November 2019
• Date: 01 November 2019

ORIGINAL ARTICLE

Antecedents and outcomes of employee

empowerment practices: A theoretical extension

with empirical evidence

Yishuai Yin

1

|Yue Wang

2

|Ying Lu

2

1

School of Business, Jiangnan University

2

Department of Management, Macquarie

Business School, Macquarie University

Correspondence

Ying Lu, Department of Management,

Macquarie Business School, 4 Eastern Road,

Macquarie University, North Ryde, NSW

2109, Australia.

Email: candy.lu@mq.edu.au

Abstract

Despite being often touted as a best practice to enhance

organisational performance, in reality, employee empower-

ment practices have not been widely adopted. This paper

combines transaction cost economics with organisational

behaviour and resource‐based views to examine anteced-

ents and outcomes of empowerment practices, from both

cost‐efficiency and value‐creation perspectives. On the

basis of a study of 99 multinational subsidiaries in China,

we found that human asset specificity, a key characteristic

of employee–employer exchange, related significantly to

organisations' adoption of empowerment practices. We also

found that empowerment practices had a positive impact

on organisational performance, and they mediated the rela-

tionship between human asset specificity and performance.

In addition, results showed that task interdependence

strengthened the impact of empowerment practices on per-

formance outcome. The paper contributes to research on

empowerment practices by offering a theoretically more

comprehensive and balanced analysis of why and when

empowerment is good for performance, with the support

of empirical evidence.

KEYWORDS

employee empowerment practices, firm performance, human asset

specificity, resource‐based view, task interdependence, transaction

costs theory

Received: 19 July 2017 Revised: 19 March 2019 Accepted: 17 April 2019

DOI: 10.1111/1748-8583.12243

564 © 2019 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/hrmj Hum Resour Manag J. 2019;29:564–584.

1|INTRODUCTION

There has been considerable interest in employee empowerment practices in management research and practice in

recent decades (Lawler, Mohrman, & Benson, 2001; Maynard, Gilson, & Mathieu, 2012). Having been grounded in

organisational behaviour (OB) and resource‐based view (RBV), most existing studies suggest that empowerment prac-

tices enhance organisational performance, through fostering employees' motivation, positive attitude, and initiative to

respond to changing and competitive work environments (Patel & Cardon, 2010) or through developing valuable and

inimitable human resources (Jiang, Lepak, Hu, & Baer, 2012). For these reasons, empowerment practices are often

touted as a best practice to enhance employee productivity and organisational performance (Maynard et al., 2012).

The current literature, however, has some limitations. First, there is an implicit assumption that empowerment

practices can enhance organisational performance, regardless of an organisation's characteristics (Kaufman, 2015).

However, this view may be flawed (Wall, Cordery, & Clegg, 2002), as recent research indicates that not many orga-

nisations adopt empowerment practices (Wood & Wall, 2007). Second, because of the near‐universal treatment of

empowerment practices as a general recipe for organisational performance (Wall et al., 2002), it is not surprising that

this concept is taken as a given in existing studies, and the focus is on the performance implications of those prac-

tices. However, we know little about why firms adopt empowerment practices in the first place (Wood, Burridge,

Rudloff, Green, & Nolte, 2015). In large part, this is because the subject has been studied mainly from OB and

RBV perspectives that focus on the value‐creation potential of empowerment practices (Jiang et al., 2012; Patel &

Cardon, 2010). We agree with OB and RBV reasoning that empowerment practices can bring psychological and stra-

tegic values to organisations. However, we argue that, without a sound analysis of the cost efficiencies of empower-

ment practices, the answer to the question, of why some firms adopt empowerment practices whereas others do not,

remains theoretically unconvincing. That is perhaps why, despite all the advocated benefits, empowerment practices,

in reality, have not been widely adopted.

Answering recent calls to draw on organisational economics to advance the field of strategic human resources

management (HRM) (Kaufman, 2012, 2015), we argue, in this paper, that firms adopt empowerment practices primar-

ily as a mode of work organisation to reduce the internal transaction costs of managing employee–employer

exchange relationships. Employment relations are, fundamentally, a type of economic behaviour and should be stud-

ied through systematic economic analysis. This paper contributes to the research on empowerment practices in three

ways. First, this paper introduces key concepts and ideas from transaction cost economics (TCE) to examine how

asset‐specific features of employee–employer exchanges might influence the degree to which empowerment prac-

tices are adopted in organisations. Second, we combine TCE, OB, and RBV to develop a more comprehensive frame-

work that predicts how empowerment practices may improve organisational performance and mediate the

relationship between human asset specificity and organisational performance, from both cost‐efficiency and value‐

enhancing perspectives. Third, we take a contingency perspective to examine how the impact of human asset spec-

ificity, as an antecedent to empowerment practices, and the impact of empowerment practices on organisational per-

formance may be affected by the task interdependence feature of employee–employer exchanges.

In Section 2, we review the current literature on empowerment practices and explain, in detail, why a theoretical

extension to include TCE into the analysis of the topic can help academics and practitioners better understand

empowerment practices. In Section 3, we synthesise TCE, OB, and RBV perspectives into a theoretical model that

examines antecedents and performance consequences of empowerment practices. Section 4 describes our empirical

study. Section 5 presents the empirical results. Section 6 concludes with the implications of our findings for research

and practice.

2|EXISTING LITERATURE ON EMPOWERMENT PRACTICES

Employee empowerment practices denote HR practices that grant employees greater autonomy to executetheir pri-

mary work (Robbins, Crino, & Fredendall, 2002). Seibert, Silver, and Randolph (2004) drew on previous research

YIN ET AL.565