How Collective Engagement Creates Competitive Advantage for Organizations: A Business‐Level Model of Shared Vision, Competitive Intensity, and Service Performance

• Date: 01 March 2020
• Author: Liat Eldor
• Published date: 01 March 2020
• DOI: http://doi.org/10.1111/joms.12438

© 2019 Society for the Adv ancement of Management Stud ies and John Wiley & Son s, Ltd.

How Collective Engagement Creates Competitive

Advantage for Organizations: A Business-Level Model

of Shared Vision, Competitive Intensity, and Service

Performance

Liat Eldor

University of Pe nnsylvania

ABST RACT We argue that collect ive engagement can serve as a unique value-c reation capacity

at the business level by li nking shared vision and ser vice performance. We also propose that

competitive intensity w ill be a market indicator by which man agement can enhance the effect

of shared vision on col lective engagement, and indirectly st rengthen service performa nce

(through collective eng agement). Furthermore, we arg ue that this distinct ive value-creation

capability, embedded in collec tive engagement, generates competitive advantage; s pecifically,

one that competing orga nizations will str uggle to replicate. We examine our moderated-medi-

ation model by using a th ree-time-point method derived from f ive different sources in 198

retail-ser vice branches. Our find ings indicate that collective eng agement, fueled by shared

organizat ional vision, i mproves service per formance. Further more, as this conditional indir ect

effect of shared v ision on service quality and cust omer satisfaction wa s solely generated

through collect ive engagement rather than other mechanisms ( i.e., commitment and involve-

ment), it creates a competitive advantage for enga gement-oriented organi zations.

Keywo rds: collective engagement, competit ive advantage, competitive intensity, customer

satisfaction, service quality, shared vision

INTRODUCTION

Management literature increasingly focuses on the concept of employee engagement,

a trend driven by the desire to fash ion engagement as a contemporary mechanism of

human capital that w ill produce a competitive advantage at the business level (e.g., Rich

et al., 2010). Indeed, strategic management scholars have long stressed the importance

Journal of Man agement Studi es 57:2 March 2020

doi:10. 1111/jo ms.1 2438

Address for re prints: L iat Eldor, The Whar ton School, University of Pen nsylvania, M anagement Depart ment,

3214 Steinberg-Dietrich Ha ll, 3620 Locust Walk, Ph iladelphia, PA 19104-6370, USA (leldor@wha rton.

upenn.edu).

178 L. Eldor

© 2019 Society for the Adv ancement of Management Stud ies and John Wiley & Son s, Ltd.

of identifying a contemporary, novel, hard-to-imitate source of competitive adva ntage

(Barney, 2001). They have emphasized how traditional sources, such as technology a nd

financi al capital, are deficient, as they are ea sily replicated (Sirmon et al., 2007), thereby

requiring f irms to adopt non-traditional means of competitive advanta ge. Human capi-

tal such as an engaged workforce, on the other hand, is an asset that is more diff icult to

duplicate and may provide a source of sustainable, business-level competitive adv antage.

Despite the growing scholarly recog nition of the importance of cultivating a n engaged

workforce (Bakker et al., 2011), research on engagement at the collective level is scarce

(Barrick et a l., 2015; Slåtten and Lien, 2016) and its effectiveness in creati ng competitive

advantage has not been exami ned. Moreover, whereas previous research has successful ly

revealed various importa nt work outcomes of engagement at the individual level – e.g.,

in-role performance and extra-role performance (e.g., Demerouti and Cronpanzano,

2010) – there is a noticeable dearth of research investigating t he effect of engagement

on performance at the business level of analys is (Barrick et al., 2015). This suggests that

engagement as a business-level capability w ith potential to help organizations create and

sustain competitive adva ntage remains unexplored.

In this study we seek to fill this crucial theoretical void and answer a fundamental

managerial question: Can engagement create competitive advantage at the business level

and differentiate organizations from their competitors, above and beyond other well-es-

tablished human capital mechanism constructs (Macey and Schneider, 2008)? Although

strategy literature has pointed out the ‘micro-foundations’ of capabilities and the crucial

role of human capital in creating competitive advantage (e.g., Becker and Huselid, 2006;

Hatch and Dyer, 2004; Rupp et al., 2013), a link between human capital mechanisms

and competitive advantage has gone largely unstudied. Responding to this call, we argue

that collective engagement – a strong willingness to holistically invest physical, emotional,

and cognitive energies in the organization’s business goals – is a unique human capital

capability for creating difficult-to-replicate competitive advantage for organizations, one

that cannot be achieved by means of other, traditional mechanisms such as commitment

or involvement. We are specifically interested in the role of collective engagement in ser-

vice performance. Whereas some evidence on the efficacy of collective engagement has

gradually emerged (Barrick et al., 2015), research has not examined its value in service

performance and its capability to improve service results such as service quality and cus-

tomer satisfaction. Examining the effect of engagement on business level outcomes such

as service performance allows us to map whether its impact mainly stays at the individual

level and attitudinal outcomes or spills over to higher levels and financially substantial

results. This determination is theoretically important as engagement is a relatively new,

yet promising concept in the management literature and research (Christian et al., 2011).

Understanding whether collective engagement can produce service outperformance has

also practical implications, as prior research found that service outperformance is associ-

ated with higher profits (Liao and Chuang, 2004). Furthermore, at the collective level of

analysis, the examination of the effect of engagement on service performance has man-

agerial significance, as this is the level typically analysed and interpreted by executive

management, upon which organizational measures are executed.

To address this question of whether collective engagement can produce competitive

advantage we adopt a resource-oriented approach by integrat ing the job demands-resources

Collective Engagement Creates Competitive Advantage for Organizations 179

© 2019 Society for the Adv ancement of Management Stud ies and John Wiley & Son s, Ltd.

theory (Bakker and Demerouti, 2007) with resource-based strategy models (Barney,

2001; Sirmon et al., 2007) and developing a moderated-mediation model of cultivating

collective engagement as a strategic capability at the business level. Specifically, drawing

on prior research that theorized on the strategic role of management and shared goals in

generating engagement (e.g., Craig and Silverstone, 2009; Macey and Schneider, 2008)

and the strategic collective nature of shared vision (Carton et al., 2014), we focused

on the effect of shared vision on collective engagement. Moreover, strategy literature

theorized that generating competitive advantage is more crucial in challenging market

environments (e.g., Jansen et al., 2009). To under stand the role of a demanding market

environment on the creation of competitive advantage, we examine the way in which the

effect of shared vision on collective engagement is shaped by a market environment of

greater competitive intensity. We assert that collective engagement is a strategic asset for

creating difficult-to-imitate competitive advantage for organizations, one that cannot be

achieved by means of other human capital mechanisms, such as commitment or involve-

ment. Utilizing five sources of data sets (chain headquarters, employees, managers, secret

shoppers, and clients) from 198 retail-service branches at three different points in time,

we examine our moderated-mediation model for studying how collective engagement

can create competitive advantage at the business level, as shown in Figure 1.

COLLECTI VE ENGAGEMENT: A SOURCE FOR COMPETITI VE

AD VAN TAGE

Kahn (1990) origina lly defined employee engagement as ‘the harnessing of organ ization

members’ selves to their work roles, by which they employ and express themselves phys-

ically, cognitively, and emotionally during role per formance’ (p. 694). In a similar vein,

Schaufeli et al. (2002) def ined engagement as a positive, fulfil ling, motivational state

of mind characteri zed by vigour, dedication, and absorption. Macey and Schneider’s

(2008) conceptual taxonomy described engagement as a desirable condition, with or-

ganizational pur pose, passion, energy, and focused effort intended to go well beyond

the status quo. While t he literature offers several definitions of engagement, there is

Figure 1. Theoret ical model of value creation of col lective engagement at the busines s level