Employee Relations: The International Journal

How and when service-oriented high-performance work systems foster employee service performance: a
test of mediating and moderating processes
Zhen Wang, Haoying Xu,
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Zhen Wang, Haoying Xu, (2017) "How and when service-oriented high-performance work systems foster employee service
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 How and when service-oriented high-performance work systems

foster employee service performance: A test of mediating and moderating

processes

Abstract
Purpose The purpose of this paper is to investigate how and when service-oriented

high-performance work systems (HPWS) impact employees service performance.

Design/methodology/approach Survey data were obtained from 568 frontline service

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employees and their supervisors across 92 branches of a large bank in China. The hypotheses

were tested with hierarchical linear modeling.

Findings The results suggested that service-oriented HPWS affects employee service

performance via its simultaneous impact on employees service ability, customer orientation, and

service climate perception. Moreover, the indirect effects of HPWS on service performance via

service ability and customer orientation are significant only when service-oriented HPWS

consensus is high.

Practical implications To elicit employees provision of excellent service, organisations

should invest in service-oriented HRM practices to improve all of their service ability, customer

orientation, and service climate perception, making them able to, willing to, and having the

chance to perform high-quality service performance. Organisations should also pay attention to

the variability in employees HRM perceptions within the same group.

Originality/value The research contributes to the extant literature by presenting a more

complete understanding of how service-oriented HPWS elicits employee service performance,

and when this HPWS is and is not effective.

Keywords Service-oriented HPWS, Service-oriented HPWS consensus, Service performance,

AMO theory

Paper type Research paper

1
 1. Introduction

As the service industry is thriving and characterised by increasingly fierce competition, the

performance of frontline employees in terms of customer service is highly valued, since it is a

critical ingredient of service organizations achievement of desirable customer outcomes (e.g.,

customer satisfaction, customer loyalty) and organizational financial performance (e.g., sales

growth, revenue growth, and profit growth) (Hong et al., 2013; Ostrom et al., 2015). Against this

background, investigating what predicts employees provision of high-quality service has

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garnered great interest from researchers and practitioners in both management and marketing

disciplines (see Bowen et al., 2016; Subramony and Pugh, 2015 for reviews).

One stream of research has focused on the important role of human resource management in

eliciting employees superior service performance, as it is a critical factor in shaping employees

experiences at work and, arguably, will affect their subsequential performance during the service

delivery process (Schneider and Bowen, 1993). Previous studies have provided both theoretical

and empirical support for the positive effect of generic HRM practices on employees and

organizations service outcomes (e.g., Batt, 2000; Bowen and Pugh, 2009; Zerbe et al., 1998).

Recently, researchers extend this research stream by shifting the focus from generic HRM

practices to service-oriented high performance work systems (service-oriented HPWS), which is

a bundle of HRM practices oriented toward the delivery of high-quality performance (Liao et al.,

2009) and is demonstrated to have a closer relationship with service outcomes than generic HRM

practices (see Hong et al., 2013 for meta-analysis). Relying on human capital theory (Jiang et al.,

2015), empowerment theory (Aryee et al., 2012), climate theory (Chuang and Liao, 2010; Jiang
2
 et al., 2015), and theory of performance (Aryee et al., 2016; Liao et al., 2009), researchers have

provided valuable insights into how service-oriented HPWS is translated into superior service

performance. Despite these, more research is needed to provide a more complete understanding

of both the intermediate mechanisms and boundary conditions of the relationship.

First, in spite of mediators that have been tested, the knowledge of the mechanisms underlies

the service-oriented HPWSservice performance relationship remains fragmented. That said, the

theoretical underpinnings of the intermediate mechanisms need to be synthesised. Indeed, the

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mediators that have been tested can be integrated as the ability, motivation and opportunity

components of the Ability-Motivation-Opportunity (AMO) framework, which postulates that

HRM practices affect individuals performance outcomes through their impact on employees

ability, motivation, and opportunity to contribute (Appelbaum et al., 2000; Lepak et al., 2006).

Specifically, human capital (Aryee et al., 2016; Liao et al., 2009), collective customer knowledge

(Jiang et al., 2015), and service competency (Chao and Shih, in press) can be categorised as

ability; service orientation (Aryee et al., 2016), perceived organisational support, and

psychological empowerment (Liao et al., 2009) can be categorised as motivation; concern for

customer climate (Chuang and Liao, 2010) and service climate (Jiang et al., 2015) can be

categorised as opportunity. Regretfully, there has been no study simultaneously incorporating all

three AMO components as multiple mediators to examine their mediating effects, thus unable to

provide a more complete understanding of how service-oriented HPWS influences employees

service performance and whether all three AMO components, i.e., ability, motivation and

opportunity, play vital roles in translating service-oriented HPWS into service performance.
3
 Indeed, a recent influential HRM review has highlighted this issue and called for more efforts in

examining the mediating role of all three AMO elements of employee performance (Jiang et al.

2013, p.1471). Therefore, our first purpose is to incorporate all AMO components as multiple

mediators in a single study to offer a more complete understanding of the underlying mechanisms

that link service-oriented HPWS with employee service performance. Following the contention

of Subramony and Pugh (2015, p.360) that human capital resources, attitude, and climate are

indicative of ability, motivation, and opportunity within the AMO model, we examine the
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mediating roles of service ability (i.e., a kind of service-specific human capital resource),

customer orientation (i.e., a kind of service-specific attitude), and service climate perception.

Second, the boundary conditions of the service-oriented HPWSservice performance

relationship is still unclear (Hong et al., 2013). Although previous studies have provided

valuable insights into the underlying mechanisms of the relationship, less has investigated its

boundary conditions (see Chao and Shih, in press; Hong et al., in press; Jiang et al., 2015 for

exceptions). This research inadequacy obstructs our understanding of when service-oriented

HPWS is and is not effective in fostering employees service performance. Integrating the

content- and process-based approaches of HRM research (Bowen and Ostroff, 2004), we posit

that the effect of service-oriented HPWS (the content of HRM system-i.e., the extent to which the

set of HRM practices adopted are driven and revolve around the specific strategic goals of the

organisation) on employees service-specific ability, motivation, and opportunity, and

subsequently the service performance might be contingent upon the consensus of employees

service-oriented HPWS perceptions, which reflects the process of HRM practices-i.e., the extent
4
 to which HRM practices are designed and implemented effectively (Ostroff and Bowen, 2016;

Russo et al., in press). Our position is based on the contention that in an effective HRM system,

both goal-specific HRM content and well-implemented HRM process are both indispensable

elements (Aksoy and Bayazit, 2014; Katou et al., 2014; Pak and Kim, in press; Sanders et al.,

2014).

In general, this study aims to examine how and when service-oriented HPWS fosters

employee service performance (see Figure I). By doing so, we contribute to the literature in at
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least three ways. First, by simultaneously incorporating all three AMO components as the

mediators, we present a more complete understanding of how service-oriented HPWS elicits

employee service performance and whether all the three intermediate processesability,

motivation, opportunityare playing critical roles in the process. Second, by integrating both

content- and process- based approaches of HRM research and examining the moderating role of

HPWS consensus, our study advances the knowledge of when service-oriented HPWS is more or

less likely to foster employee service ability, service motivation, service opportunity, and

subsequently service performance.Third, by considering both the level and the consensus of

group members HPWS perceptions, we extend the growing but still limited body of group-level

HRM research.

-------------------------------------------------------------

Insert Figure I about here

-------------------------------------------------------------

5
 2. Theory and hypotheses

2.1 Ability-Motivation-Opportunity theoretical framework

Ability-Motivation-Opportunity (AMO) framework has suggested that employee performance is

a function of three essential components: ability, motivation, and opportunity (Jiang et al., 2012).

Specifically, ability indicates the knowledge, abilities and skills which are necessary to achieve

superior work performance; motivation is defined as the desire and willingness to perform the job;

opportunity refers to the environmental and contextual mechanisms that enable action and
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provides the necessary support and avenues for the expression of the action (Appelbaum et al.,

2000; Boxall and Purcell, 2003; Lepak et al., 2006). As to how the three components influence

work performance, there are mainly two schools of thought. The earlier scholars have theorized

the complementary interpretation of the AMO model (Blumberg and Pringle, 1982), which can be

reflected by the following function: Performance = f (A*M*O). They argue that in order to

achieve good performance, the three components, i.e., ability, motivation, and opportunity must

all be in presence, and the absence of one component would result in the failure of the

performance (Blumberg and Pringle, 1982). In contrast, the other scholars support the additive

approach of the AMO model (Boxall and Purcell, 2003; Lepak et al., 2006), reflected by the

function: Performance = f (A+M+O). This perspective holds that each component can have a

direct and independent effect on performance. That said, the increase of one component can lead

to the enhancement of the overall work performance (Lepak et al., 2006).

AMO framework theorizes that human resource management practices can affect employees

ability, motivation, and opportunity, thus exerting a positive influence on their work performance.
6
 Empirically, previous research has provided support for this theorization by using AMO model as

the overarching framework and incorporating the A, M or O component as the mediators of the

HRM practices-performance link (see Jiang et al., 2012 for a meta-analysis). However, few

studies have incorported all three AMO components into one single study to demonstrate whether

the three components play critical roles in linking HRM practices and performance outcomes,

thus failing to offer us an more integrated picture of how HRM practices influences performance

(Jiang et al., 2013). This is also the case in the servcie-oriented HPWS and service performance
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relationship.

2.2 Service-oriented HPWS and employee service performance

It is generally demonstrated that service-oriented HPWS can exert beneficial effects on

employees service performance (e.g., Aryee et al., 2012, 2016; Liao et al., 2009). Specifically, in

the service-oriented HPWS, the training system provides employees with development programs

to improve their service-related knowledge, abilities as well as skills, while helps employees able

to deliver excellent service performance; the performance appraisal and compensation system

reflects a particular focus on service and thus stimulates employees motivation to deliver

high-quality service; the job design and involvement system will offer employees more

opportunities to engender higher-quality service performance (Hong et al., 2013; Liao and

Chuang, 2004).

However, as aforementioned, the knowledge regarding the intermediate mechanisms

supporting the relationship is fragmented. Starting from this research gap, we draw on AMO

model and simultaneously examine the mediating roles of three domian-specific AMO
7
 components-i.e., service ability, service motivation and service opportunity in the relationship

between service-oriented HPWS and frontline employee service performance. Based on the

definition of the three general AMO components, service ability is defined as employees

knowledge, abilities and skills to deliver superior service and engender customer satisfaction;

service motivation refers to employees motivation and willingness to deliver high-quality service

(represented by customer orientation in this study); service opportunity is reflected by the

contextual mechanisms that enable high service performance and provides the necessary support
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and avenues for the expression of the performance (represented by service climate in this study).

Given that the additive approach has been widely accepted by the mainstream HRM research

(e.g., Jiang et al., 2013; Lepak et al., 2006; Liao et al., 2009), we also adopt this approach of the

AMO model.

2.3 Ability process: The mediating effect of service ability

According to the human capital perspective of strategic HRM research, knowledge, skills, and

abilities (KSAs) are essential, and it is through these KSAs that HPWS exerts influence on

employee performance (Barney, 1991). In the current study, we examine service ability as a

pivotal mediator in the relationship between service-oriented HPWS and employee service

performance. The service ability we focus here is s a domain-specific form of ability and captures

employees overall KSAs to deliver superior service and engender customer satisfaction.

Compared with customer knowledge or expertise (Jiang et al., 2015), our service ability is

broader and hence is more likely to be associated with HPWS (as antecedents), and service

performance (as consequences).

8
 First, service-oriented HPWS will enhance employees service ability. Of the practices

comprising service-oriented HPWS, staffing and training are the two most related to the

enhancement of employees service ability (Jiang et al., 2015). Staffing practices are conducive to

attracting and hiring accomplished service employees by putting a premium on candidates

service ability in recruitment advertisements (e.g., prior experience as frontline service

employees, excellent communication skills), establishing service ability as an important criteria

when assessing candidates, and making hiring decision based on the results of the above. The
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training practice contributes to employees service ability after their entry into an organisation.

Through training, employees are expected to be informed regarding what constitutes excellent

service, how to communicate and interact with customers effectively, and how to cope with the

emergencies which may arise in the service context. Besides the two, other practices are also

important to employees service ability (Aryee et al., 2016; Jiang et al., 2015). For instance,

performance appraisals and compensation practices will motivate employees to improve their

service ability; job design and involvement practices will provide a multitude of opportunities for

employees to apply, thus enhancing their service ability.

Further, strong service ability will translate service-oriented HPWS into high-level service

performance. Several studies have offered evidence for this. For instance, Liao et al. (2009)

found that human capital is one of the important intermediate mechanisms linking HPWS to

service performance. Service ability reflects the service-specific human capital, thus arguably

would mediate the effect of service-oriented HPWS on employee service performance.

9
 H1. Employees service ability mediates the relationship between service-oriented HPWS

and employee service performance.

2.4 Motivation process: The mediating effect of customer orientation

Customer orientation refers to the importance that individuals place on understanding and

meeting customers needs and expectations regarding products and services and the extent to

which individuals are willing to devote extra efforts to satisfying the customers needs (Kelley,

1992). It has generally been recognized that customer orientation, a kind of service-oriented
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attitude, can be reflective of employees strong motivation to deliver high-quality service (e.g.,

Grizzle et al., 2009; Liao and Subramony, 2008). In the current study, customer orientation

represents the motivational process through which service-oriented HPWS exerts influence on

employee service performance. We recognize that just like service orientation (a conceptually

similar construct), customer orientation can also be conceptualized as a form of human capital

(e.g., Ployhart et al., 2009). However, drawing on Ployhart and Moliternos (2011) distinction

between can do (ability) and will do (willingness) human capital characteristics and

consistent with the work of Aryee et al. (2016), we argue that the will-do attribute of customer

orientation suggests that it is a motivational variable.

Through several different practices, service-oriented HPWS can help create more

customer-oriented employees. First, staffing practices usually highlight that a customer-oriented

attitude is an essential job requirement, and candidates chosen usually rank highly in this regard.

Second, training practices make salient the importance of a customer-oriented attitude in the

service context, and employers aim to instill such an attitude in employees through relevant
10
 training programs. Third and the most importantly, performance appraisal and compensation

practices link employee rewards directly to service performance, which serves as a strong

inducement for customer-oriented attitudes. In addition, practices such as performance feedback

and information sharing will help employees understand the importance of a customer-oriented

attitude in the pursuit of excellent service delivery and organisational profits, which in turn

stimulates a higher level of customer orientation.

Once employees customer orientation is shaped, it will drive employees to engage in

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customer-oriented behaviours and further promote high-quality service delivery (Brown et al.,

2002). In one respect, highly customer-oriented employees place a strong emphasis on customers

needs and expectations during interaction. As such, they will be motivated to work hard in order

to meet those needs and expectations, essential to the goal of promoting customer satisfaction

(Franke and Park, 2006). In another respect, they have strong motivation to engage in and enjoy

building long-term relationships with customers. During interactions with customers, they might

make extra effort to assist them with difficulties or recommend products and services they might

like but not be aware of (Susskind et al., 2003). As a result, all these extra efforts will ensure the

delivery of high-quality service.

H2. Employees customer orientation mediates the relationship between service-oriented

HPWS and employee service performance.

2.5 Opportunity process: The mediating effect of service climate perception

Service climate refers to employees perception of the importance in meeting customers need

effectively (Schneider et al., 1998, p. 151). In organizations characterized by high level of service
11
 climate, employees will anticipate that the behaviors which help to improve customer service

quality would be expected, rewarded, supported by the procedures and practices of the

organizations (Schneider et al., 1998, 2000). Service climate has been shown as a crucial factor

through which HPWS is associated with units service performance (Hong et al., 2013). Based on

the definitions of service opportunity and service climtae, and in line with the contention of

Subramony and Pugh (2015, p.360), we propose that service climate (Burke et al., 1992)

represents the opportunity process for shaping the effect of service-oriented HPWS on employee
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service performance. Specifically, service climate can reflect the favourable climate (contextual

mechanism) that enables high service performance and provides the necessary support for the

expression of superior service performance.

First, service-oriented HPWS can help employees perceive a positive service climate in the

workplace. The HPWS system can be seen as a symbolic signaling system sending messages as

to which behaviours are expected, encouraged, and rewarded in order to help employees make

sense of their organisational situation (Bowen and Ostroff, 2004). In a similar vein,

service-oriented HPWS might serve to signal and convey the message to employees that superior

service delivery is valued, expected, and rewarded in the working group; such a message, in turn,

will facilitate the creation of a service climate (Chuang and Liao, 2010; Jiang et al., 2015).

Indeed, a recent meta-analysis (Hong et al., 2013) provides ample evidence that service-oriented

HRM practices is conducive to fostering a favourable service climate at the collective level. Since

it is individuals psychological service climate (i.e., service climate perception) that formulate the

collective service climate (Burke et al., 1992), it is more reasonable to postulate the association
12
 of service-oriented HPWS with employees service climate perception (Lepak et al., 2006;

Subramony and Pugh, 2015).

Further, when employees perceive a climate supporting high-quality service, they will be

more likely to deliver this to customers (Bowen and Schneider, 2014). One explanation is that

recognition of a strong service climate might better enable employees to perform well in service

delivery (Subramony and Pugh, 2015). First, the perception of a high value placed on service

signals that attitudes and behaviours which are conducive to the delivery of superior service are
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expected, encouraged, and rewarded by the service organisations (Schneider et al., 1998). Such

expectations, encouragement, and rewards might further be interpreted by employees as strong

organisational support for their exhibition of superior service. Second, a favourable perception of

the service climate will show employees that their workplace gives priority to the delivery of

excellent service and provides all kinds of assistance to enable them to do so. Taken together,

service-oriented HPWS favourably shapes employees perceptions of service climate, making

them feel supported in achieving high levels of service performance (Hong et al., 2013).

H3. Employees service climate perception mediates the relationship between

service-oriented HPWS and employee service performance.

2.6 The moderating effect of service-oriented HPWS consensus

Thus far, we have proposed how employees shared perception of service-oriented HPWS may

impact their provision of excellent service through service ability, customer orientation and

perceived service climate, with the idea that employees in the same group will reach a collective

perception of service-oriented HPWS which may further affect service-related outcomes (Liao et
13
 al., 2009). This idea is consistent with earlier research showing that there is variability in HPWS

perceptions at the group level within an organisation (Arthur and Boyles, 2007; Nishii and Wright,

2008). However, there is emerging evidence to suggest that HPWS might be perceived and

interpreted idiosyncratically by employees, and this will lead to variability in HPWS perceptions

even within the same group (Jiang et al., 2017; Lepak et al., 2006; Nishii and Wright, 2008). That

suggests that two groups, which have the same level of aggregated service-oriented HPWS

perceptions, might differ dramatically in the extent of variability in perceptions. Nishii and
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Wright (2008, p. 226) further noted that this variability should be taken into account when

examining the HRM-performance relationship and that it may operate as a moderator between the

two. Following this, it is conceivably possible to observe a moderating role of service-oriented

HPWS consensus (the obverse of variability) between service-oriented HPWS and employee

service excellence.

Indeed, consensus in employees HPWS perceptions is also one of the major concerns of the

process-based approach of HRM research (Russo et al., in press; Suess et al., 2014; Ostroff and

Bowen, 2016). In contrast to the traditional content-based approach, which concentrates solely on

the inherent virtues of HRM practices, the process-based approach emphasizes the variability in

(a) psychological processes through which employees attach meaning in HRM practices, and (b)

employees perceptions and reactions to the practice when it comes to explaining the effect of

HRM practices (Bowen and Ostroff, 2004). According to the literature, consensus among

employees views of HRM content can be seen as a key indicator that HRM systems are strong

and well implemented within the organisation (Aksoy and Bayazit, 2014; Sanders et al., 2014).
14
 When a high level of consensus is reached, HRM systems will create a stronger dynamic and

function more effectively. In contrast, great disparity in employees perception of HRM practices

will make it difficult for HRM practices to be effective (Jiang et al., 2017; Nishii and Wright,

2008; Wright and Nishii, 2013). To summarize, good content of HRM systems (content-based)

should be accompanied by a high level of consensus regarding the content (process-based) in

order to promote HRM effectiveness (Katou et al., 2014; Suess et al., 2014).

Based on this, we expect to observe a synergetic impact of service-oriented HPWS (content)

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and service-oriented HPWS consensus (process) on employees service ability, customer

orientation, and service climate perception. Specifically, when consensus regarding HPWS

perceptions is high, service-oriented HPWS is strong and well-implemented, enhancing its

positive effects on employees service ability, customer orientation, and perception of service

climate, whereas when the level of consensus regarding the perceptions of HPWS is low (i.e.,

with significant variability), service-oriented HPWS is weak and ill-implemented, thereby

making its effects weaker. Integrating this argument with H1, H2, and H3, we expect to observe

three moderated mediation effects.

H4. Service-oriented HPWS consensus strengthens the positive indirect effect of

service-oriented HPWS on employee service performance via employees service ability (H4a),

customer orientation (H4b), and service climate perception (H4c).

3. Method

3.1 Sample and procedure

15
 We conducted our research in a large banking firm in China. The firm has 120 sub-branches and

976 frontline customer contact employees (e.g., front-desk clerks) in total, of which we

approached approximately 100 sub-branches. Each branch operates independently and consists of

a supervisor and a number of frontline service employees. To guarantee a high response rate, we

collected the data through alumni contacts and personal social network. For each sub-branch, the

research assistant communicated with the branch directors by phone and explained the purpose of

the survey in the hope of obtaining their support.

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To ensure the effectiveness of the survey, we distributed and collected the questionnaire in

person during working hours. To avoid common method bias, we administered two different sets

of pen-and-paper questionnaires to the supervisors and employees. Included with each

questionnaire was a cover letter that explained the purpose of the research, and assured

participants that individual responses would remain confidential and that they could withdraw at

any time. Supervisors reported employee service performance, while employees rated

service-oriented HPWS, service ability, customer orientation, and perceived service climate.

A total of 568 supervisor-employee matched surveys from 92 branches were ultimately

collected, with a response rate of 92.5% from employees, and 90.1% from supervisors. Among

supervisors, 52% were male, with an average age of 40.09 (SD = 5.90) and an average tenure as

supervisor of 2.64 years (SD = 1.19). Among employees, 39% were male, with an average age of

31.95 (SD = 6.65) and an average dyadic tenure with supervisors of 2.37 years (SD = 1.13).

3.2 Measures

16
 Unless otherwise indicated, all response scales for the measures were on a 1=strongly disagree to

7=strongly agree scale.

Service-oriented HPWS. We examined HPWS from an employee perspective rather than a

managerial perspective because recent literature indicates a disconnect between manager-reported

and employee-perceived HPWS and that it is the latter that matters to employees (e.g., Liao et al.,

2009). Specifically, employees assessed service-oriented HPWS according to the scale presented

by Chuang and Liao (2010). Since the original scale mixed general HPWS and service-oriented
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HPWS, we invited two outside experts to evaluate each item and choose those that best capture

the nature of service-oriented HPWS in a banking context. This procedure yielded nine items.

These items covered all of the original subscales including staffing, training, involvement and

participation, performance appraisals, compensation/rewards, and caring. Sample items include

Our branch selects the best all-around candidates when recruiting employees and Our branch

gives special rewards to employees who are excellent in serving customers. Before we

aggregated individual ratings of service-oriented HPWS to the branch level, we calculated

within-team agreement (rwg) (James et al., 1984) and two intra-class correlation coefficients: ICC

(1) and ICC (2) (Bliese, 2000). Mean rwg of the 92 teams was 0.90, surpassing the recommended

cutoff value of 0.70 (LeBreton and Senter, 2008). The ICC (1) and ICC (2) value were 0.38 and

0.79, surpassing the recommended cutoff value of 0.12 (Glick, 1985; James, 1982; Pak and Kim,

in press) and 0.70 (LeBreton and Senter, 2008) respectively; and service-oriented HPWS varied

significantly across branches (F = 4.72, p < 0.01), also supporting the aggregation of

17
 service-oriented HPWS (Bliese, 2000). The Cronbachs alpha of the scale after aggregation was

0.94.

Service-oriented HPWS consensus. We assessed service-oriented HPWS consensus based on

a within-branch standard deviation (SD) of service-oriented HPWS perception (Russo et al., in

press). We did not use rwg, an intuitively more direct index, because in light of several

methodological concerns, Schneider et al. (2002) suggested using the SD instead of rwg to assess

the consensus of perceptions. A recent simulation study by Roberson et al. (2007) also concluded
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that SD performs better than rwg when modeling and detecting the effects of interactions. Since

high SD values represent large variability, these values were multiplied by -1 so that high values

represent a high level of consensus (Bliese and Halverson, 1998).

Service ability. A self-developed four-item scale was use to assess employees service

ability. Items included I am able to deliver satisfactory services to customers, I know effective

ways to providing customers with satisfactory services, I am good at solving all kinds of

difficulties which customers encounter, and It is very easy for me to deliver satisfactory

services to customers. The Cronbachs alpha of the scale was 0.86. To check the construct

validity, we performed exploratory factor analysis using the principal component method with

the number of factors not specified. The results based on oblimin rotation revealed the emergence

of one dimension, with items loaded nicely on the factor. The factor explained 72.06 % of the

total variance in service ability.

Customer orientation. According to Stock and Hoyer (2005), customer orientation has two

distinct dimensions, comprising customer-oriented attitude (psychological dimension) and

18
 customer-oriented behavior (behavioral dimension). In the current study, given our research

purpose, we focus on the psychological dimension-i.e., customer-oriented attitude, which reflects

employees motivational propensity to customers. Employees assessed their customer-oriented

attitude with the five-item scale of Susskind et al. (2003). One sample item was I believe that

providing timely, efficient service to customers is a major function of my job. The Cronbachs

alpha of the scale was 0.83.

Service climate perception. Employees reported their perception of service climate

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according to the seven-item scale of Schneider et al. (1998). One sample item was The

leadership shown by management in our branch in supporting the service quality effort is

excellent. The Cronbachs alpha of the scale was 0.94.

Service performance. Service performance was assessed with five items from Liao and

Chuangs (2004) scale. Sample items included This employee asks good questions and listen

attentively to find out what a customer wants. The Cronbachs alpha of the scale was 0.92.

3.3 Control variables.

At level 1, we controlled for employee age, gender, and educational level. Age was measured in

years. Gender was coded as 1 = male and 2 = female. Educational level was coded into four

categories (1 = High school or lower, 2 = Associates degree, 3 = Bachelors degree, 4 = Masters

degree or higher). At level 2, we controlled for supervisor age, gender, educational level, and

servant leadership. We assessed servant leadership with the seven-item used by Liden et al.

(2014). One sample item was My leader puts my best interests ahead of his/her own. Mean rwg

(0.92), ICC1 (0.58), and ICC2 (0.89) values provided support to the aggregation from employees
19
 report of servant leadership at the branch level (James, 1982; LeBreton and Senter, 2008).

Cronbachs alpha for the scale after aggregation was 0.96.

3.4 Data Analysis

Given the nested nature of the data, to account for potential non-independence effects, we

conducted multilevel modeling to test the hypotheses. To test the cross-level mediation effects

(H1-H3), we followed the recommended method suggested in Zhang et al. (2009) and estimated

the indirect effects based on a 2-1-1 path-analytical model (2 refers to variables at level 2, while 1
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refers to variables at level 1) using Mplus 7.0 (Muthn and Muthn 1998-2012). Specifically, the

estimated path-analytical model with three cross-level paths linking service-oriented HPWS and

service ability (path a1), customer orientation (path a2), and service climate (path a3), and three

single-level paths linking service ability (path b1), customer orientation (path b2) as well as

service climate (path b3) and employee service performance (after controlling for the group-mean

centered service ability, customer orientation and service climate), respectively. The proposed

mediation effects were examined through estimating the three indirect effects linking

service-oriented HPWS and employee service performance: a1*b1, a2*b2, and a3*b3

respectively. To examine the significance of each indirect effect we estimated, we followed Selig

and Preachers (2008) method and conducted a Monte Carlo simulation (i.e., a form of parameter

bootstrapping) with 20,000 replications, which provided an estimate of the confidence interval

(CI) for each effect.

H4a-4c proposed three moderated mediation models. Following the methods as were

suggested in Preacher et al. (2007), we conducted three separate path-analytical models through
20
 Mplus 7.0 to estimate the conditional indirect effects we hypothesized. Specifically, we built

upon the 2-1-1 model as was used in testing H1, H2 and H3, and added the moderator (i.e.,

service-oriented HPWS consensus) in the three path-analytical models, respectively. In

examining the conditional indirect effects, we computed the indirect effects at higher (+1 SD) and

lower (-1 SD) levels of the moderator following the equations given in Preacher and coauthors

(2007) and compared the conditional indirect effects. Following the recommendations in

Hofmann and Gavin (1998), we centered the predictor (i.e., service-oriented HPWS) and the
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moderator (i.e., service-oriented HPWS consensus) according to its grand mean (i.e., grand mean

centering) in doing these analyses, which helps reduce potential problems associated with

multicollinearity.

4. Results

4.1 Confirmatory factor analysis

We conducted confirmatory factor analyses (CFAs) to compare the measurement model and to

examine the distinctiveness of the six variables (service-oriented HPWS, servant leadership,

service ability, customer orientation, service climate perception, and service performance). The

results indicated that the theorised six-factor model provided a good fit with the data (2 =

2570.85, df = 614, CFI = 0.97, TLI = 0.97, RMSEA = 0.08, SRMR = 0.05) and showed a

significantly better fit than the five-factor model (2(5) = 927.16, p < 0.01), four-factor model

(2(9) = 1930.69, p < 0.01), three-factor model (2(12) = 2897.72, p < 0.01), two-factor model

(2(14) = 3764.04, p < 0.01), and single factor model (2(15) = 4985.77, p < 0.01). Given these

21
 results, the theorised six-factor model was superior in fit to all the alternative models, and

therefore, we could continue to examine these variables as distinct constructs.

-------------------------------------------------------------
Insert Table I about here
-------------------------------------------------------------

4.2 Descriptive statistics and hypothesis tests

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The means, standard deviations, and correlations among variables are presented in Table II.

Overall, the results provided a basis for our hypothesis testing.

-------------------------------------------------------------
Insert Table II about here
-------------------------------------------------------------

Before testing our hypotheses, we examined whether there was significant between-group

variance in employee service performance. Results revealed significant between-group variance

(2 = 0.20,00 = 0.13, 2 = 431.24, p < 0.01; ICC1 = 0.39, indicating that 39% of the variance

can be attributed to the group level), justifying the appropriateness of using hierarchical linear

modeling. We first tested the effect of service-oriented HPWS on employee service performance

with an intercepts-as-outcomes model in which we used service-oriented HPWS (level 2

predictor) to predict the intercepts of employees service performance (level 1 outcomes). As

with previous studies (e.g., Aryee et al., 2016; Liao et al., 2009), service-oriented HPWS

significantly predicted frontline employees service performance (B = 0.37, p < 0.01, Model 1 in

Table III), even after controlling for the variables at both the individual level (employee age,

22
 gender, education) and the group level (supervisor age, gender, education, and servant

leadership).

-------------------------------------------------------------
Insert Table III about here
-------------------------------------------------------------

H1H3 proposed that employees service ability, customer orientation, and service climate
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perception (level 1) would mediate the relationship between service-oriented HPWS (level 2) and

service performance (level 1). Results indicated that the indirect effect of service-oriented HPWS

on service performance through service ability (estimate = 0.08, 95% Monte Carlo CI = [0.03,

0.14]), customer orientation (estimate = 0.06, 95% Monte Carlo CI = [0.02, 0.11]), and service

climate (estimate = 0.17, 95% Monte Carlo CI = [0.10, 0.25]) were significant, respectively

supporting H1, H2 and H3. Further, we compared the indirect effects of the three mediating

effects. The results showed that the indirect effect through service climate perception was

significantly higher than that through service ability (difference = 0.09, 95% CI = [0.00, 0.19])

and customer orientation (difference = 0.11, 95% CI = [0.02, 0.21]); the indirect effect through

service ability and that through customer orientation were not significantly different (difference =

0.02, 95% CI = [-0.08, 0.04]). That suggested, the indirect effect of service oriented HPWS was

more likely to occur through shaping emplpoyees perceived service climate.

H4 suggested that service-oriented HPWS consensus would moderate the indirect effects

proposed in H1H3. The results showed (Table IV) that the indirect effect of service-oriented

23
 HPWS on service performance via service ability was significant when HPWS consensus was

higher (estimate = 0.10, 95% CI = [0.04, 0.16]) and insignificant when HPWS consensus was

lower (estimate = 0.05, 95% CI = [-0.002, 0.10]). Similarly, the indirect effect via customer

orientation was significant when HPWS consensus was higher (estimate = 0.07, 95% CI = [0.02,

0.12]) and insignificant when HPWS consensus was lower (estimate = 0.05, 95% CI = [-0.01,

0.10]). In contrast, the indirect effect via service climate perception was significant when HPWS

consensus was either higher (estimate = 0.18, 95% CI = [0.10, 0.26]) or lower (estimate = 0.18,
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95% CI = [0.09, 0.27]), and the difference was not significant (estimate = -0.02, 95% CI = [-0.25,

0.21]). Therefore, H4a and H4b were supported, whereas H4c was not. Overall, the findings

suggested that service-oriented HPWS consensus was an important boundary condition of the

indirect effects of service-oriented HPWS on employee service performance through roles of

service ability and customer orientation.

-------------------------------------------------------------
Insert Table IV about here
-------------------------------------------------------------

5. Discussion

Relying on divergent theoretical underpinnings, prior studies have given some insight into how

service-oriented HPWS relates to employee service performance. However, this stream of

research is still far from mature because of its failure to present a complete understanding of the

underlying mediating mechanisms as well as the boundary conditions that shape the relationship.

To address this gap, we drew on AMO theoretical framework and integrated both content-based

24
 and process-based approach of HRM research to propose and test a integrated moderated

meidation model wherein service ability, customer orientation and service cliamte as the

mediators and service-oriented HPWS consensus as the moderator. Our results based on the

sample of 568 frontline service employees across 92 branches of a large bank showed that

service-oriented HPWS affected employees service performance via its simultaneous impacts on

employees service ability, customer orientation and service climate perception. Further, the

indirect effects via employees service ability and customer orientation were significant only
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when service-oriented HPWS consensus was high. We discuss the implications, limitations, and

future directions of our study as follows.

5.1 Theoretical implications

First, through a simultaneous examination of the three AMO mediating paths, this study provides

a more holistic insight into the question of how service-oriented HPWS fosters employee service

performance. Notwithstanding recent research efforts to unravel the mechanisms behind this

relationship, a complete understanding of how service-oriented HPWS is associated with

employees service performance is still unknown due to the lack of an integrated theoretical

framework. The current study synthesised the fragmented theoretical explanations into AMO

theory and found that service-oriented HPWS affects employee service performance through its

simultaneous impact on employees service ability, customer orientation, and service climate

perception. Specifically, service-oriented HPWS provides employees with service-specific ability,

motivation, and opportunity, making them able to, willing to, and having the chance to perform

high-quality service performance. By finding these, this study is the first to demonstrate the
25
 critical roles of all service-specific ability, motivation, and opportunity in translating

service-oriented HPWS into service performance. In addition, we found that service climate

(opportunity) is the most important intermediate process. This concurs with the views held by a

large body of service management researchers that service climate is one of the most pivotal

linkages in translating internal management philosophy into service performance (Bowen and

Schneider, 2014; Schneider et al., 1998; Hong et al., 2013).

Second, the study identifies an important boundary condition that shapes the impact of
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service-oriented HPWS on employee service performance. Although a fair number of efforts have

been devoted to this relationship, few studies have explored its boundary conditions, and

consequently, we still know little about when service-oriented HPWS is more or less likely to

affect employee service performance (Hong et al., 2013). Indeed, HRM researchers have pleaded

for more insight into the boundary conditions of HRM practices along with their connection to

HR-related outcomes (Jackson et al., 2014). The current study is a timely response to these calls.

Based on the integration of content-based and process-based approaches of HRM research

(Bowen and Ostroff, 2004; Ostroff and Bowen, 2016), we illustrated a situational dynamic that

shapes the indirect impact of service-oriented HPWS on service performance through service

ability and customer orientation. Specifically, service-oriented HPWS level and service-oriented

HPWS consensus synergistically influence service performance- that is, service-oriented HPWS

exerts a positive influence on service performance via service ability and customer orientation

when employees have a higher level of consensus on this HPWS, and has no significant impact

when the consensus is lower. This echoed the recent contention that HRM practices are likely to
26
 have desired consequences on employees attitudes and behaviours only to the extent that they

are consistently experienced and perceived by employees (Bowen and Ostroff, 2004; Kehoe and

Wright, 2013, p. 367). Also, since the service-oriented HPWS level and service-oriented HPWS

consensus represent the HRM content and HRM process respectively, the findings demonstrate

again the necessity and validity of integrating content-based and process-based approaches of

HRM research. It should be mentioned that we did not find support for the contingent effect of

service-oriented HPWS consensus on the indirect effect via service climate perception. The
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strong, close association between HRM and climate perception might be a reason for this finding.

In the eyes of employees, both service-oriented HPWS and service climate convey a direct

message about service and highlight the service policies and culture in their working groups

(Bowen and Ostroff, 2014). This overlap encourages employees to perceive a favourable service

climate once their working groups formulate a shared HPWS perception for service. By and large,

our investigation of the moderating effect of HPWS consensus helps fill the void in current

research and enriches our understanding of the situation in which service-oriented HPWS works.

Finally, by considering both the level and the consensus of HPWS perceptions, we extend

the growing but still limited body of group-level HRM research. Since employees within the

same group are more likely to develop a shared experience with HRM, thus making employees

HRM perceptions differ across groups (e.g., jobs, teams, branches, stores, units) within an

organisation (Nishii and Wright, 2008), recent years have witnessed an increasing number of

studies on group-level HRM (see Lepak et al., 2012; Pak and Kim, in press). However, earlier

research often assumes no variation in HRM perceptions within a group, and hence only uses the
27
 level of aggregated HRM perceptions to represent group-level HRM quality. This assumption and

method leads to an incomplete understanding of how group-level HRM operates because by

failing to examine the potential role of variability in SHRM research, we miss a very interesting

and important part of the picture (Nishii and Wright, 2008, p. 226). Indeed, in their seminal work,

Nishii and Wright (2008) contended that there is variability of HRM at all relevant levels of

analysis, but particularly within organisations (i.e., individual and group levels) (p. 226). From

this perspective, recent group-level research that investigates the effect of group members
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collective HRM experiences addresses only the variability at group level within an organisation,

paying no attention to the variability at individual level within a group. By examining both the

group-level (HPWS level) and the individual-level (HPWS consensus) variability of HRM and

illustrating their synergistic effect, our study presents a more integrated model through which to

evaluate the effectiveness of group-level HRM, thus contributing to this emerging stream of

research (Jiang et al., 2013; Lepak et al., 2012).

5.2 Practical implications

Our study has several practical implications for service organisations. First, our findings about

the multiple mediation effects indicate that enhancing all of the three domain-specific AMO

components-i.e., employees service ability (ability), customer orientation (motivation) and

service climate perception (opportunity) via implementing service oriented HPWS would be

associated with increased employee service performance. Therefore, organisations should invest

in all of the service-oriented skill-, motivation-, and opportunity- enhancing HRM practices (e.g.,

service training, performance feedback on service behaviours, and service-based compensation)

28
 to improve employees service ability, customer orientation, and service climate perception.

Second, our findings about the contingent effect of service-oriented HPWS consensus suggest

that when applying HRM practices to enhance employees service ability, customer orientation

and subsequently service performance, organisations should not only highlight the importance of

the content of HRM practices, but also their implementation. A strong consensus among

employees regarding their perception of the content of HRM practices must be achieved in order

to allow service-oriented HPWS to exert its desirable effects. To arrive at such a consensus,
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agreement among principal HRM decision-makers and fairness of the HRM system are required

(Bowen and Ostroff, 2004).

5.3 Limitations and future directions

The current research has several limitations. First, although we have delineated the causal

relationships among variables from theoretical perspective, the cross-sectional nature of the data

still limited us in establishing causal relations. Future research should consider using multi-phase

data to examine the causal relationship. Second, although it is reasonable to use HPWS consensus

to represent the HRM process (e.g., Russo et al., in press; Suess et al., 2014), the process of

HRM can be better captured by HRM strength, which is characterised by distinctiveness,

consistency, and consensus (Bowen and Ostroff, 2004). Future study can assess all these

elements to reflect the HRM process in a more comprehensive manner. The last limitation

concerns the generalisability of our findings to other industries, as we only collected data from a

single industry. However, the findings are largely consistent with previous theoretical and

29
 empirical work, suggesting our results are not sample-specific. Future research can address these

questions in other service industries.

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Service-oriented HPWS
consensus
Service-oriented
HPWS
Branch Level

(Ability) Individual Level

Service ability

(Motivation) Service
Customer orientation performance

(Opportunity)
Service climate perception

Figure I. Research model.

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Table I. Results of confirmatory factor analyses

Model Factors 2 df 2 SRMR RMSEA CFI TLI

Model 0 Theorized six factors. 2570.85 614 0.05 0.08 0.97 0.97
**
Model 1 Five factors: Service-oriented HPWS and service climate 3498.01 619 927.16 0.06 0.11 0.95 0.94
were merged as one factor.
Model 2 Four factors: Service-oriented HPWS, servant leadership, 4501.54 623 1930.69** 0.07 0.13 0.92 0.92
and service climate were merged as one factor.
Model 3 Three factors: Service-oriented HPWS, servant leadership, 5468.57 626 2897.72** 0.09 0.14 0.91 0.90
service climate and service ability were merged as one
factor.
Model 4 Two factors: Service-oriented HPWS, servant leadership, 6334.89 628 3764.04** 0.10 0.16 0.88 0.88
service climate, service ability, and customer orientation
were merged as one factor.
Model 5 One factor: all variables were merged as a single factor 7556.62 629 4985.77** 0.10 0.18 0.86 0.85

Note. ** p < 0.01.

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Table II. Means, standard deviations, and correlations among variables.

M SD 1 2 3 4 5 6
Branch level
1. Supervisor age 40.09 5.90
2. Supervisor gender 1.48 0.50 -0.17
3. Supervisor education 2.93 0.44 -0.29** 0.04
4. Servant leadership 3.82 0.60 -0.30** 0.19 0.07
5. Service-oriented HPWS 3.95 0.47 -0.31** 0.17 0.12 0.68**
6. Service-oriented HPWS consensus -0.47 0.27 -0.08 0.02 -0.13 0.07 0.09
Individual level
1. Employee age 31.95 6.65
2. Employee gender 1.61 0.49 0.01
3. Employee education 2.96 0.53 -0.29** -0.04
4. Service ability 4.03 0.67 -0.12** -0.10* -0.02
5. Customer orientation 4.27 0.57 -0.07 -0.03 0.01 0.60**
6. Service climate perception 4.02 0.68 -0.25** -0.03 0.00 0.49** 0.52**
7. Service performance 4.28 0.56 -0.07 -0.03 -0.01 0.52** 0.57** 0.59**
Note: ** p0.01 * p0.05.

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Table III. Results of cross-level mediating effects.

Mediators and Dependent Variables

Variables Model 1 Model 2 Model 3 Model 4 Model 5

Service Service Customer Service climate Service
performance ability orientation perception performance
Branch level
Supervisor age 0.01 0.00 0.01 0.00 0.01
Supervisor gender -0.08 0.15 -0.01 0.05 -0.08
Supervisor education 0.03 -0.08 0.02 -0.03 0.04
Servant leadership 0.24** 0.14* 0.28** 0.31** 0.01
Service-oriented HPWS 0.37** 0.52** 0.30** 0.61** -0.02
Individual level
Employee age 0.00 -0.01 0.00 -0.01 0.00
Employee gender -0.01 -0.09* -0.01 -0.02 0.02
Employee education -0.05 -0.01 0.03 0.02 -0.03
Service ability 0.15**
Customer orientation 0.19**
Service climate perception 0.28**
Within-branch variance 0.20 0.27 0.22 0.25 0.15
Between-branch
variance 0.05 0.10 0.04 0.001 0.03
R2total 0.22 0.20 0.22 0.45 0.46
Model deviance 810.10 988.02 856.16 846.32 640.46
**
Note: p < 0.01; * p < 0.05.

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Table IV. Results of cross-level moderated mediating effects.

Moderator 95%
Independent Indirect
Mediator Service-oriented Confidence
variable effect
HPWS consensus interval
Higher 0.10 [0.04, 0.16]
Service ability
Lower 0.05 [-0.002, 0.10]
Service-oriented Higher 0.07 [0.02, .012]
Customer orientation
HPWS Lower 0.05 [-0.01, 0.10]
Higher 0.18 [0.10, 0.26]
Service climate perception
Lower 0.18 [0.09, 0.27]