Effects of human resource development activity effectiveness on business performance of jewelry and gem businesses in Thailand.

Author:Jirawuttinunt, Sumittra

    With the complexity, uncertainty and rapid changing due to the impact of globalization, knowledge is viewed as the key of the source of competitive advantage (Grant, 1996; Hall, 2004). While the organizational knowledge is mostly embedded in human mind, firms increasingly focus on human resources as strategic assets that can achieve sustained competitive advantage by their valuable, inimitable and specialized capabilities (Birasnav and Rangnekar, 2010). A number of researches claim that human resource development (HRD), one of the most significant functions of human resource practice, is vital in maintaining and developing the capabilities of both employees and organization as a whole (e.g. Sparkes and Miyake, 2000; Lee and Bruvold, 2003). It can be said that HRD is a crucial tool as strategic management of organizational development and learning to achieve the objectives of organization. That is why modern organizations pay more and more attention to HRD. However, there have been several questions about the value of HRD activity outcomes, such as: Do HRD activities really contribute to achieving organizational objectives and goals or not? What is the mediator to bridge the relationship between the two? And, how are HRD activities measured? Despite the growing importance of HRD research during the last decade, only few researches emphasize HRD activity effectiveness that link to improve corporate values (Hassan, 2007). Thus, this research gains a better understanding of how and why HRD activities in the organizational vision affect HR competency flexibility, continuous performance improvement, innovation establishment and business performance in Thailand context.

    In Thailand, jewelry and gem industry is a major employer and important contributor to the economy by increasing the GDP of Thailand for more than 10 years and becomes one of the top three industries with the highest export value (Gem and Jewelry Institute of Thailand, 2012). In addition, Thailand is known worldwide for its expertise in cutting and polishing diamonds, precious stones, and colored stones, as a hub of high-quality jewelry production and excellent craftsmanship (Gem and Jewelry Institute of Thailand, 2012). Major reasons behind the success of this industry is the combination of the unique techniques and craftsmanship linking employees to skill development. According to the Eleventh National Economic and Development Plan of Thailand (2012-2016), HRD activities are developed and promoted for traders and interested persons to support the Thai gem and jewelry industry so that it can complete in global market.

    Human Resource development activities are defined as all processes of developing or building competencies, expertise and knowledge through organizational development for the purpose of improving performance (Swanson, 2001). In this research, HRD activities comprise formal and Informal training, team-based work, job rotation, performance-based pay and learning by doing (Garavan, 2007). This study suggests that firm with effectiveness of HRD activities turn to the major challenge for corporate values and, ultimately, increasing business performance.

    The key objective of this research is to examine the relationships between effectiveness of HRD activities (i.e. formal and Informal training, team-based work, job rotation, performance-based pay and learning by doing) and business performance via HR competency flexibility, innovation establishment, and continuous performance improvement. Also, this research tests the moderating effects of learning-oriented culture in the relationships of the model. The main research question in this research is how HRD activity effectiveness affects HR competency flexibility, innovation establishment, continuous performance improvement, and business performance. In addition, how learning-oriented culture moderate the relationships among HRD activities effectiveness, HR competency flexibility, innovation establishment, continuous performance improvement and business performance.

    This research is organized as follows. The first part presents the literature review on HRD activity effectiveness that leads to outcomes. The second part details research methods, including data collection, measurement, and statistics. The results are discussed and shown. Consequently, contribution, limitations, future directions, and conclusion are described.


    Human capital theory and knowledge-based view of firm (KBV) is a theoretical framework that explains how HRD activity effectiveness affects business performance. Initially, human capital argues that individuals with more or higher human capital (i.e. skills, knowledge and expertise) can achieve higher performance (Swanson, 2001). In this research, human capital theory is applied to explain the activities of HRD as a key success factor to enhance the competitive advantage of a firm (Sparkes and Miyake, 2000) and, ultimately, tend to increase business performance (Storberg-Walker and Julia, 2004). Consequently, KBV argues that HRD in the context of knowledge transfer is often treated as building the capability to absorb and utilize knowledge for gaining competitive advantage (Grant, 1996; Prieto and Revilla, 2006). Likewise, Tseng and McLean (2008) claims that strategic HRD is contribute to organizational design and innovation. Therefore, HRD activity effectiveness does contribute to the organizational advantage and performance. Accordingly, a conceptual model of this research is shown in Figure 1.


    2.1 Human Resource Development Activity Effectiveness

    HRD definitions and dimensions have been used by several scholars but a universally accepted definition does not exist (Brook and Nafukho, 2006; Haslinda and Hiok, 2009). McLean and McLean (2001) define HRD as any process or activity that has the potential to develop adults' work-based knowledge, expertise, productivity and satisfaction whether for individuals, teams, organizations, nations or the whole humanity. According to Tseng and Lee (2009), HRD is concerned with the provision of learning and development opportunities that increase the success of business strategy and improve individuals, teams, and organizational performance. In this research, HRD activities refer to all processes of developing or building competencies, expertise and knowledge through organizational development for the purpose of improving performance (Swanson, 2001). Garavan et al. (1999) argues that HR includes training and development, organizational development, and career development. On the other hand, the study of Haslinda and Hiok (2009) classifies HRD activities into four elements including: training and development, career planning and development, performance management and change management for organizational development. Furthermore, Garavan (2007) develops a framework for three roles in HRD practices: transactional, traditional, and transformational practices and categorizes 19 activities into three different roles. In order to explore the different aspects of HRD, this research emphasizes only five HRD activities, namely: formal and informal training, team-based work, job rotation, performance-based pay and learning by doing. This is because these five practices represent various aspects of HRD in jewelry and gem industry for Thailand perspectives. For the relationship between HRD activities and business performance, several studies reveal that HRD activities have a positive impact on organizational performance (Garavan et al., 1999; Bae and Rowley, 2004; Jorgensen and Hyland, 2007). In order to clearly investigate the relationship between HRD and performance, this research describes HRD in five activities as follows:

    Formal and informal training refers to the aspects of learning process that engage the acquisition of knowledge, skills, and competencies or changing of attitudes and behaviors to enhance the individual performance (J0rgensen et al., 2008). Training is a learning experience which seeks a qualified change in individuals that will improve ability to gain higher performance (Becker et al., 1997). On the other hand, training and development are generally considered as planned effort by an organization to facilitate the learning of job-related behavior on the part of its employees (Tabibi et al., 2011). Many studies assert that training plays an important role to develop individual capabilities, reinforces employees' motivation, improve productivity and organizational outcomes (i.e. Gomez et al., 2004). Multi-skill training programs also create a climate of learning that generate new knowledge and skill improvement, openness to new ideas, competency flexibility as a response competitive challenge (Gomez, et al., 2004). In addition, theoretical framework of Jorgensen and Hyland (2007) describes the role of HRM in successful continuous improvement (CI) implementation through HRD interventions and indicates that training is able to continuously enhance individual and organizational CI capability. Likewise, Barney and Wright (1998) propose that training in specific skill provide a greater potential for competitiveness. Based on HRD strategy, training activity that aligns with an organizational mission and goal can improve performance of health sector organization (Khan et al., 2011). Thus, these ideas lead to posit the following hypotheses:

    Hypothesis 1: The higher the formal and informal training is, the more likely that the firms will gain greater (a), HR competency flexibility (b)continuous performance improvement, (c) innovation establishment, and (d) business performance,.

    Team-based work refers to a small number of people with complementary skills who are committed to common purposes, performance goals, and approaches for facilitating performance with mutual responsibility (Steckler and Fondas, 1995). Team-based work is based on the...

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