The Roles of Firm Strategies and Authentic Leadership on Employee HR Attribution

Abstract

This research was conducted to advance the Employee HR Attribution (EHRA) study, which is a fundamental perspective through which employees perceive the organization's HR system. EHRA explains why employees perceive the organization to be using current HR practices. EHRA consists of two perspectives: one views the organization as having introduced HR systems to enhance product quality and employee well-being (commitment-focused HRA), while the other sees the organization as having introduced HR systems to reduce costs and exploit employees (control-focused HRA). Existing studies consistently report that commitment- focused HRA has a positive impact on well-being and job performance, while control- focused HRA consistently impairs well-being and job performance. While EHRA research holds significant scholarly value in explaining employees' fundamental perceptions of the organization's HR system and its consequences, there are still limitations and gaps in the existing research. Firstly, exploration of variables as precursors to organizational-level EHRA is needed. Existing research has primarily focused on validating the outcomes of EHRA, with only a few studies exploring the precursors of EHRA. Some studies have proposed individual attitudes toward the organization as precursors resulting in opposite outcomes for commitment-focused and control-focused HRA. However, research on how organizations can positively shape employees' interpretation of HR practices is lacking. Secondly, there is a need for research on the role of line managers. Recent studies emphasize the importance of line managers in the interpretation of organizational systems between organizational-level systems and employees. These studies suggest that the role of line managers can lead employees to either better understand or misinterpret the organization's system. However, empirical research on the role of line managers in the relationship between precursors of EHRA and EHRA is scarce. To address these research gaps, this study aims to achieve the following objectives. Firstly, this study proposes organizational strategies as precursors to EHRA. Organizational strategies in this study is broadly categorized into quality enhancing strategy and cost reduction strategy, each connected to the organization's overall system. Organizational strategies are factors that decision-makers in the organization can control and change based on the situation and objectives faced by the organization. Moreover, it is an organizational-level variable not explored as a precursor to EHRA to date, contributing to the advancement of EHRA research. Secondly, this study argues that the authentic leadership of line managers will moderate the relationship between organizational strategies and the introduction purpose of the organization's HR practices perceived by employees. Existing research suggests that when line managers exhibit authentic leadership, the message intended by the organization's top management is more likely to be accurately conveyed to employees. According to the Job Demands-Resources (JD-R) theory, authentic leadership can play a role in moderating the negative impact of factors that could affect employees negatively. Therefore, authentic leadership of line managers can potentially reduce the risk of employees interpreting the organization's strategy negatively, leading to a decline in employee well-being and performance. This study aimed to validate these claims by analyzing data collected from 29 human resource managers and 382 employees in 29 companies between March and May 2022. Process macro models 4 and 7, loaded on SPSS 26.0, were used to test hypotheses. The results of the analysis are as follows: First, employees who perceived that the organization introduced current HR practices to enhance their well-being and capabilities experienced higher levels of well-being and job performance. In contrast, those who believed that the HR practices of their organization were implemented to exploit and control them experienced lower levels of well-being and job performance. Second, organizational strategies had some influence on EHRA. Strategies focusing on improving product quality indirectly impacted employees' well-being and job performance by leading them to perceive that the organization introduced current HR practices to enhance their capabilities and well-being. However, the effects were inconsistent when organizations pursued cost reduction strategy. Third, line managers' authentic leadership partially moderated the relationship between organizational strategies and employee HR attribution. When organizations pursued cost reduction strategy, employees were more likely to perceive that the organization introduced current HR practices to exploit and control them if their line managers had lower levels of authentic leadership. Conversely, when organizations focused on improving product quality, line managers' authentic leadership did not significantly influence how employees perceived the introduction purposes of HR practices of their organization. This study systematically examined the relationships between organizational strategies, line managers' authentic leadership, EHRA, well-being, and job performance based on the JD-R theory. The theoretical implications of this study for HR research are substantial. Additionally, the practical suggestions provided by this research on how to maximize their effectiveness through appropriate leadership are valuable.