Employee creativity: mediating & moderating role of psychological capital.

Gupta, Vishal

Introduction

Increasingly turbulent environments, heightened competition and unpredictable technological changes have brought to the forefront of management the recognition, development and sustenance of employee creativity. Creativity is defined as the production of novel and useful ideas by an individual or by a group of individuals working together and has been found to contribute to organizational innovation, effectiveness and survival (Amabile, 1983; 1996; Shalley, Zhou & Oldham, 2004). Surprisingly, the review of literature suggests that the impact of human resource management (HRM) practices on employee creativity has received scant attention from both academicians and practitioners (Shipton, West, Dawson, Birdi & Patterson, 2006; Gupta, 2013). Though there have been studies that tested the impact of specific practices on creativity (e.g., Baer, Oldham & Cummings, 2003; Huang & Lin, 2006; Manolopoulos, 2006; Shalley & Perry-Smith, 2001; Shipton et al., 2006), these studies have failed to provide a theoretical rationale for choosing the HR practices. Moreover, the studies have failed to provide a coherent validation of directionality of these relationships. Baer et al. (2003:570) observed that "Unfortunately, there is little agreement among scholars concerning the likely direction of the effects of such rewards on creativity". Fewer studies have considered the important role of employees' perceptions of HR practice used or examined the more proximal outcomes of high-performance HR practices that may play mediating roles in the HR practice--performance relationship (Guest, 2011; Kehoe & Wright, 2013).

If we are to improve our understanding of the impact of HRM on creativity, we need a theory about HRM, a theory about creativity and a theory about how they are linked. The present study develops a theory about the linkages between HRM practices and employee creativity. In doing so, support has been taken of the componential framework of creativity (Amabile, 1983) consisting of domain-relevant skills, creativity-relevant skills and task motivation. The second part of the study explores the 'black-box' linking HRM practices and employee creativity. Building on the ideas of positive psychology, we present positive psychological capital both as a mediating and a moderating variable for the HRM practice-creativity relationship. High-performance practices enhance the positive exchanges between the employee and employer, thereby enhancing employee psychological capital and creativity.

HRM Practices in the Indian Context

Nature of human resource management is culture specific (Budhwar & Khatri, 2001). The cultural and economic differences may hinder the acceptance and implementation of human resource practices (Schneider, 1988). North American and Western European organizations operate in a highly developed legal and regulatory environment. Organizations that operate in India do not have such a well-developed institutional infrastructure for free market transactions. The country had a system of state-controlled organizations until 1990s, when the economy of the country was finally liberalized. India is distinct from other countries in terms of its culture (low uncertainty avoidance, high power distance, medium collectivist orientation, medium masculinity, strong long-term orientation) (Hofstede, 2001). A sizeable Indian population has deep-seated belief in fatalism and as a result any significant change in attitudes as well as behaviors is relatively difficult to accomplish. Taking into account the dominant social norms and values, adopting HRM practices seen as appropriate in local context can be crucial for achieving desired performance (Bjorkman & Budhwar, 2007). Table 1 provides a listing of the HRM practices included in the present study along with their definitions and the India-specific research evidence. Due to the potential of the identified HRM practices to have an overall positive influence on employee performance, they are referred to as high-performance HRM practices in the present study.

High-Performance HRM Practices & Creativity

The componential framework of creativity (Amabile, 1983) includes three major components: domain-relevant skills, creativity-relevant skills and task motivation. Domain-relevant skills include factual knowledge, technical skills and special domain-relevant talents that may contribute to creative productivity. Creativity-relevant skills include a cognitive style characterized by the ability to break perceptual and cognitive sets, to understand complexity, to break out of performance 'scripts' and see things differently; knowledge of heuristics for generating novel ideas, and creative work style characterized by the ability to concentrate effort and attention for long periods of time, persistence and high energy levels. Task motivation can be broadly classified into intrinsic motivation--a motivational state generated by the individual's reaction to intrinsic properties of the task; and extrinsic motivation--motivation generated due to the extrinsic factors (e.g. rewards, job title etc.) associated with the task (Tremblay, Blanchard, Taylor, Pelletier & Villeneuve, 2009).

Organizations set the tone of social exchange relationships by providing employees with a multitude of resources such as appreciation, prestige, growth, recognition and empowerment through their HRM practices. In return, employees may expand their definitions of job responsibilities and be motivated to engage in creative behaviors. Researchers have conceptualized that the HRM practices impact employee performance through a 'cognitive path', where an employee takes greater advantage of the skills and abilities, and a 'motivational path', in which HRM practices increase employees' motivation to succeed at work (Bates, Cox, Robertson-Smith, & Garrett, 2009; Gong & Chang, 2008; Vandenberg, Richardson & Eastman, 1999).

High-Performance HRM Practices, Task Motivation &Creativity

The mentoring relationships lead to development of positive interpersonal relationships, better employee morale, better career management, and greater commitment (Allen, Eby, Poteet, Lentz, & Lima, 2004; Allen & O'Brien, 2006; Horvath, Wasko & Bradley, 2008). Empowerment maximizes employee's involvement thereby fostering positive work attitudes (Konrad, 2006). Conflict resolution mechanisms help alleviate situations of perceived injustice or conflicts in the company and are likely to maintain a high level of motivation (Fey, Bjorkman & Pavlovskaya, 2000; Morrison & Robinson, 1997). Information sharing conveys to employees that they are trusted and valued by the organization (Pfeffer & Veiga, 1999). Though extrinsic motivation has been said to be detrimental to creativity (Amabile, 1983), in a scarcity-ridden economy like India extrinsic rewards can be strong motivators of innovative behaviors for roles that demand creativity as a part of employee's job description (e.g., Research and Development work). Paul and Anantharaman (2003) found that compensation practices positively affect commitment of skilled professional in Indian IT firms. Performance-based compensation and merit-based promotions have been found to influence extrinsic motivation (e.g., Guest, 1997; Manolopoulos, 2006).

India is a collectivist society. Strong missions that appeal to emotion or logic can generate enthusiasm for the work, task significance, commitment to task objectives and compliance with requests for cooperation and assistance (Cappelli et al., 2010). Stringent selection practices (e.g., followed in Google) influence the employee-job fit and the quality of the workforce (Godard, 2004; Guest, 1997; MacDuffie, 1995). Moreover, a selective organization conveys status and prestige to those being selected (Gong & Chang, 2008). New-comer socialization and selective staffing practices signal an organization's intent to establish a long-term exchange relationship with its employees. Based on the above arguments, we posit:

P1: High-performance HRM practices (coaching & mentoring, empowerment, selective staffing, conflict resolution mechanisms, new comer socialization, competency development practices, merit-based promotions, social missions, flexible job designs) are likely to be positively related to employee task motivation.

P2: Task motivation will mediate the relationship between HRM practices and employee creativity.

High-Performance HRM Practices &Creativity

Mentors provide access into social networks that include repositories of knowledge not available through formal communication channels (Dreher & Ash, 1990). Entry into these social networks also provides the protege with the opportunity to develop knowledge and skills required for being creative at work (Allen et al., 2004). Coaches can also influence employee's cognitive and work styles (creativity-relevant skills) by role modeling, evaluation and mastery experiences (Shalley & Perry-Smith, 2001). Narrow and rigid job descriptions make employees think very narrowly and reduce their sense of empowerment. Job rotation improves domain-relevant knowledge by allowing employees to see the company from multiple roles and perspectives, forging of strong personal ties among organizational members and by enhancing cohesion and teamwork.

Selective staffing can be used to choose employees who are higher on domain-relevant and creativity-relevant skills (Guest, 1997). Organizations can focus on screening prior to selection to hire employees based on the task expertise and cognitive skills that are essential for creativity. Training can be used to provide educational opportunities that can enhance task domain expertise. Offering training opportunities that can increase individuals' knowledge base and/or their creativity-relevant skills should help employees in becoming more creative at their work (Shalley & Gilson, 2004). Research on training for creative problem solving has shown that it can help in enhancing employees' divergent thinking (Basudur, Wakabayashi & Graen, 1990). Effective performance-based appraisal can help in identifying the training needs and thus aid in improving the domain and creativity-relevant skills. Socialization with highly creative people can train employees in creativity related skills (Guest, 1997; Shalley & Perry-Smith, 2001). Socialization programs can create an 'esprit de corps,' a shared experience, an interpersonal or informal network, a company language or jargon, as well as develop technical competencies (Schneider, 1988). Thus, we posit:

P3: High-performance HRM practices (competency development practices, new-comer socialization, selective staffing, coaching and mentoring) will be positively related to employee domain-relevant skills.

P4: High-performance HRM practices (competency development practices, new-comer socialization, selective staffing, coaching and mentoring) will be positively related to employee creativity-relevant skills.

P5: Employee domain-relevant skills will mediate the relationship between high-performance HRM practices and employee creativity.

P6: Employee creativity-relevant skills will mediate the relationship between high-performance HRM practices and employee creativity.

Mediating Role of Positive Psychological Capital

The composite construct of Psychological Capital has been defined as "an individual's positive psychological state of development characterized by: (1) having confidence (self-efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resilience) to attain success" (Luthans, Youssef, & Avolio, 2007: 3). The four positive psychological capacities of confidence, hope, optimism, and resilience are measurable, open to development and can be managed through focused interventions for more effective work performance (Luthans et al., 2007; Caza, McCarter, Hargrove & Wad, 2009).

High Performance HRM practices enhance positive exchanges between the employee and the employer. High-performance HRM practices signal to the employees that the organization views them as a strategic resource, invests in their development, recognizes their contribution, and cares for their well-being (Chuang & Liao, 2010). This can help in creating a positive unit-level climate where employees start to feel hopeful about their future, optimistic about their careers, resilient and efficacious about their potential and their ability to do well in their jobs. Moreover, selectively staffing employees based on their levels of positive psychological capacities is more likely to develop a workforce high on these capacities (Caza et al., 2009).

Self-efficacy can be enhanced through empowerment, communication (i.e., sharing useful information and positive feedback), training aimed at enhancing mastery experiences, vicarious positive experiences, positively oriented persuasion, physiological and psychological arousal (Bandura, 1997; Luthans et al., 2007). Use of flexible job designs provide more responsibility, challenge, and empowered personal control over the work thereby enhancing employee's self-efficacy (Luthans, 2002). Optimism has been shown to be amenable to development through Schneider's (2001) three-step process: leniency for the past, appreciation for the present and opportunity-seeing for the future. Coaching and mentoring, information-sharing, empowerment, training and development and socialization practices can be useful in developing optimism as they tap the three steps of Schneider's optimism development process. Resilience can be enhanced using positive emotions, altering the perceived level of risk (through coaching & mentoring) and fostering self-enhancement and development (through competency development practices) (Avey, Luthans & Jensen, 2009).

Hope can be enhanced by focusing on goal-design acceptance and commitment (possible through empowerment), pathways generation (through information-sharing, mentoring and empowerment), developing alternate pathways and skill of re-goaling (through training interventions) and overcoming obstacles (through coaching and mentoring) (Luthans, 2002; Luthans, Avey, Avolio, Norman & Combs, 2006). Including employees in the goal-setting processes can also lead to high-hope employees (Lopez, 2007). Based on the above arguments, We posit:

P7: High Performance HRM Practices (coaching & mentoring, empowerment, selective staffing, conflict resolution mechanisms, new comer socialization, competency development practices, merit-based promotions, social missions, flexible job designs) will be positively related to employee psychological capital (self-efficacy, optimism, resilience, hope).

Psychological Capital & Creativity

Creativity is a high-risk activity as creative pursuits are fretted with risks of failure and ridicule (Janssen, 2004). Individuals higher in self-efficacy are more likely to undertake risky and challenging activities such as creative task engagement (Gupta & Singh, in press; Sweetman, Luthans, Avey & Luthans, 2011). Self-efficacious people believe in their abilities to mobilize the motivation necessary to successfully perform a specific task (Tierney & Farmer, 2002; Gong, Huang & Farh, 2009). Individuals with higher levels of hope have the agentic capacity to set and pursue goals in such a way that they stay motivated throughout the pursuant process (Luthans et al., 2007; Snyder, 2002; Snyder & Lopez, 2005). With high willpower (i.e., taking motivated action) and high way-power (i.e., generating alternative pathways), those with high hope tend to incorporate a more motivated effort and generate pathways into the mental strategies of creative problem solving (Sweetman et al., 2011). Hopeful people deal with everyday obstacles with greater ease and may even become energized when they hit a sticky patch to get unstuck. Optimistic individuals expect good things to happen to them leading to significant cognitive and behavioral implications (Carver & Scheier, 2003; Avey, Patera & West, 2006). Due to an optimistic explanatory style, optimists distance themselves from unfavorable life events and are less likely to be perturbed by feelings of depression, guilt, self-blame and despair (Youssef & Luthans, 2007; Rego, Sousa, Marques & e Cunha, 2012). Resilient individuals are emotionally stable, have a firm acceptance of reality, a deep belief often buttressed by strongly held values that life is meaningful and an astounding ability to improvise and adapt to significant change (Masten, 2001; Masten & Reed, 2005; Gupta & Singh, in press).

There are likely to be synergistic interactions between the four psychological capacities. Employees who embody high levels of overall psychological capital may be stronger performers because of the four psychological capacities manifested through their cognitions, motivation and ultimately their behaviors than those who only exhibit hope, or resilience, or optimism, or self-efficacy in a given situation (Gupta & Singh, in press). For example, employees high on self-efficacy are likely to be much more creative because they also have high hope (i.e., they not only are confident about succeeding at their tasks but also identify alternate pathways to achieve their goals should the current one get blocked). Thus, we posit:

P8: Employee psychological capital will be positively related to employee creativity.

P9: Employee psychological capital will mediate the relationship between high-performance work practices and employee creativity.

Moderating Role of Psychological Capital

High-performance work practices have been found to be associated with job strain and lower pay satisfaction (Ramsay, Scholarios & Harley, 2000), low job satisfaction and self-esteem (Godard, 2001), increased concertive control (Barker, 1993), and greater work demands, feelings of constant pressure, and stress and negative spillovers (White et al, 2003). Psychological capital is introduced here as a possible moderating variable that has the potential to mitigate the negative effects of these high-performance work practices on employee task motivation.

Higher psychological capital is significantly related to higher employee well-being, healthier attitudes toward work and greater productivity (Cole, Daly & Mak, 2009). Avey et al. (2009) found that psychological capital may lead to lower perceived stress, as well as lower intentions to quit. Avey, Luthans, Smith & Palmer (2010) found that employees' psychological capital was related to psychological well-being and, importantly, that psychological capital explained additional variance in well-being measures over time. Individuals with higher levels of efficacy are more likely to perceive challenges as surmountable given sufficient competencies and effort. Individuals with high hope are more likely to perform better and survive, are less likely to be emotionally exhausted, and thus are more likely to stay on. Resilient individuals are better equipped to deal with the stressors as they show greater emotional stability when faced with adversity. (Avey et al., 2009). We, thus, posit:

P10: Psychological capital will moderate the relationship between HRM practices and employee task motivation such that the relationship will be stronger when psychological capital is higher than when it is low.

Fig. 1 presents the conceptualized model.

Discussion

Impact of HRM practices on employee creativity has received scant attention from both academicians and practitioners. Research studies failed to provide a coherent theory that links HRM practices to creativity and a conclusive empirical validation of the directionality of these relationships. If we are to improve our understanding of the impact of HRM on creativity, we need a theory about HRM, a theory about creativity and a theory about how they are linked. The present study makes multiple contributions to the HRM, organizational behavior and creativity literature. Synthesizing the ideas of high-performance HRM, positive psychological capital and componential theory of creativity, the present study develops a conceptual framework linking HRM practices, positive psychological capital and employee creativity. The paper develops propositions about the mediating and moderating roles of psychological capital for the HRM-creativity relationship. The existing literature on HRM, creativity and psychological capital are reviewed and directions for future research are provided. The conceptualized model, when tested, can provide a number of insights for both managers and researchers alike. The model presented in Fig. 1 could be generalized across levels of analysis and can be tested at individual, group and organizational levels of analysis. Future work should concentrate on hypotheses generation from the propositions presented here and their empirical testing.

[FIGURE 1 OMITTED]

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Vishal Gupta is Assistant Professor in Organizational Behavior at the Indian Institute of Management Ahmedabad. E-mail: vishal@iimahd.ernet.in

Table 1 High-Performance HRM Practices Identified for the
Indian Context

HR Practice      Definition and             Relevance in the
Evidence         Characteristics            Indian Context & India
                                            Specific

Coaching &       Providing coaching,        Develops relationship-
  Mentoring        helpful career advice      rich environment;
                   and doing things to        prefer ence for
                   facilitate a person's      superior-subordinate
                   skill acquisition.         relationship
                   professional               (Cappelli, Singh,
                   development and career     Singh & Useem, 2010;
                   advancement.               Ramaswami & Dreher,
                                              2010)
Empowerment      Providing employees        Enables participation
                   substantial                in decision-making pro
                   responsibility and         cesses (Cappelli et
                   discretion in carrying     al., 2010; Chand &
                   out work activities,       Khatou, 2007; Paul &
                   handling problems and      Anatharaman, 2003;
                   making important           Singh, 2004)
                   decisions.
Information      Providing information      Helps reduce the power
  Sharing          on financial,              differential (Bjorkman
                   performance.               & Budhwar, 2007;
                   operational                Cappelli et al., 2010;
                   strategies.                Dhiman & Maheshwari,
                                              2013)
Conflict         Flag product-quality       Keeps 'power' &
  Resolution       problems or even           politics' within
  Mechanisms       personal issues            limits, em powers
                   related to management.     employees (Cappelli,
                                              et al., 2010)
Merit Based      Promotions based           Collectivist society,
  Promotion;       solely on merit. Pay       highly power and
  Performance      and rewards linked to      status con scious.
  Based            performance that is        Status and pay signify
  Pay              measured objectively       superiority to oth ers
                                              (Bjorkman & Budhwar,
                                              2007; Chand & Khatou,
                                              2007; Gupta & Kumar,
                                              2013; Paul &
                                              Anantharaman, 2003)
Social           Creating strong            Need for social
  Missions         missions that appeal       achievement;
                   to emotion or logic to     collectivist society;
                   generate enthusiasm        service to society
                   for the work, task         (Cappelli et al 2010;
                   significance and           Mehta, 1994)
                   commitment to task
                   objectives.
Selective        Stringent selection of     Promotes corporate
  Staffing         individuals based on       culture, ensures team
                   person-job fit.            syn ergy (Chand &
                                              Khatou, 2007; Nazir,
                                              2005; Paul &
                                              Anantharaman, 2003;
                                              Singh, 2004)
Socialization    Induction trainings,       Bridges power distance
                   association with           (Nazir; 2005; Paul &
                   high-performing            Anantharaman, 2003)
                   individuals
Competency       Need based training,       Equips individuals
  Development      exhaustive, accurate       with necessary skills;
  (Training,       and extensive training     behaviour-based rather
  Performance-     needs identification;      than reward-based ap
  Appraisal,       improvement oriented       praisals; perceptible
  Career           appraisals leading to      growth in the
  Management)      identification of          organisation (Bjorkman
                   training needs.            & Budhwar, 2007;
                   delinked from rewards;     Cappelli et ah. 2010;
                   career planning linked     Chand & Katou, 2007;
                   to business plans;         Dhiman & Maheshwari,
                   growth of employee in      2013; Gupta & Kumar,
                   his profession             2013; Paul
                   (technically and
                   financially) &
                   Anantharaman, 2003;
                   Singh, 2004)
Flexible Job     Job rotation,              Work enrichment,
  Designs          team-based working,        higher skill levels,
                   participation in group     provides greater
                   activities (e.g.           understanding of
                   quality circles)           different departments
                                              (Chand & Khatou, 2007;
                                              Garg & Rastogi, 2006;
                                              Paul & Anatharaman,
                                              2003; Singh, 2004)