The chapter reviews literatures for developing the framework and selecting variables.
Based on the Technology-Organization-Environment framework of technology adoption, e-HR is treated as the innovation technology for organization to adopt, while the independent variables are the antecedents for organization-level e-HR adoption from the TOE framework, namely competitive tension, strategic leadership, and IT capability.
The dependent variables are organizational outcomes after adopting e-HR. Indicators related to the usage of e-HR and possible organizational outcomes are reviewed.
Hypotheses are proposed according to existent researches and theories.
Technology-Organization-Environment Framework
The technology-organization-environment framework (TOE framework) was developed byTornatzky and Fleisher in 1990. The framework explains the process of company adopting and implementing technology innovations. They posited that the technology adopting process is affected by the technological context, organizational context, and the environmental context (Tornatzky & Fleisher, 1990).
In the TOE framework, the technological context includes both the internal and external technologies related to the company, while the organizational context refers to the resources or features of the company, company size, degree of centralization, degree of formalization, managerial structure, quality of human resources, available resources, and connection between employees. In addition, the environmental context is composed of the size and structure of the industry, competitors of company, the macroeconomic context, and the regulatory environment. TOE framework was suitable for investigating the information system adoption in organization-level research, and its framework is shown in Figure 2.1.
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Figure 2.1. Technology, organization, and environment framework. Adapted from “ The Processes of Technological Innovation,” by Tornatzky and Fleischer, 1990, Lexington, Massachusetts: Lexington Books.
TOE framework has been adopted in many researches as shown in the following Table 2.1. Based on the above description, the study adopted the TOE framework to select the possible antecedents of the e-HR adoption in organization level.
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Table 2.1.
Summary of researches based on TOE framework
IT Adoption Analyzed Variables Author(s)
EDI
(Electronic Data Interchange)
Technological context: perceived direct benefits;
perceived indirect benefits.
Organizational context: perceived financial cost;
perceived technical competence.
Organizational context: perceived benefits of electronic correspondence; IT training programs;
access to the IT system of the firm; internet and e-mail norms.
Environmental context: internet competitive pressure; web site competitive pressure;
e-commerce competitive pressure.
Controls: Services sector.
(Martins &
Oliveira, 2009)
ERP Technological context: IT infrastructure;
technology readiness.
Organizational context: size; perceived barriers.
Environmental context: production and
operations improvement; enhancement of products and services; competitive pressure; regulatory policy.
Technological context: support from technology;
human capital; potential support from technology.
Organizational context: management level for information; firm size.
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Table 2.1. (continued)
IT Adoption Analyzed Variables Author(s)
E-business Technology competence: IT infrastructure;
e-business know-how.
Organizational context: firm scope, firm size.
Environmental context: consumer readiness;
competitive pressure; lack of trading partner readiness.
Controls: industry and country effect
(Zhu et al., 2003) issues; lack of IT expertise and infrastructure; lack of interoperability.
Organizational inhibitors: difficulties in organizational change; problems in project management; lack of top management support;
lack of e-commerce strategy; difficulties in cost-benefit assessment.
Environmental inhibitors: unresolved legal issues; fear and uncertainty.
(Teo et al., 2006)
Note. Adapted from “Literature Review of Information Technology Adoption Models at Firm Level,” by T.Oliveira & M. F. Martins. 2011, The Electronic Journal Information Systems Evaluation, 14(1), p.110-121.
Tornatzky and Fleischer referred to the environment context as the macro-environment and the related factors surrounding the organizational. In the environment context, it was pointed out that company may adopt a technology due to influences of its business partners and/ or its competitors. Furthermore, it had been found that pressure from business partners or competitors was an important factor in EDI adoption. Thus, the external industry pressure was used to investigate the pressure from the industry, for example, business partners and competitors (Kuan & Chau, 2001).
While in the organization context, it was shown that these indicators were related to
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organizations’ features, such as the available financial resources, management emphasis on adoption, the competitive attitude of company (Matopoulos et al., 2009).
In addition, in the technology context, it described the new technologies relevant to the company (Oliveira and Martins, 2010), support from technology (Liu, 2008), IT infrastructure and technology readiness (Pan & Jang, 2008; Zhu et al., 2003).
Thus, taking previous studies as reference, in this study, the competitive tension stood for the environmental context, strategic leadership represents the organizational context, and IT capability serves as a substitute for the technological context.
Competitive Tension
Kuan and Chau (2001) posited that firm may feel the pressure to adopt technology because of its business partner’s suggestion or requisition. Besides, the fact that more and more companies in the industry adopted the technology also makes the company top-management team feel stressful, and lead the company to adopt technology to maintain its competitive status.
The organizational ecology theory which was developed by Hannah and Freeman (1977) could be used to explain the competitive tension in an industry, and one of the research themes of this theory is density dependence model. Hannan and Freeeman (1988) reported a strong relationship between density and deaths of social organizations. This theory was proved in these three populations, American labor unions, newspapers, and semi-conductor firms by Carroll and Hannan (1992). And they later posited that in the low density condition, which meant low competitive tension, each increment of company lessens the probability of failing, while each increment of company in high density situation raises the death rate.
Hence, it is known that new company is hard to survive in industry with lots of existing companies, and the company number has negative influence on the establishment of new company (Carroll & Hannan, 1992).
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In conclusion, this research adopted the density dependence model to measure the degree of competition in industry, and it was assumed that the competitive tension could be investigated by the number of company.
Strategic Leadership
Child (1972) addressed that the top managers could make decision flexibility and their decision-making results affect the organization outcome. While reviewing the theory of leadership, lots of studies have been researched with various approaches in this field. The trait approach and the charismatic/transformational leadership approach were thought to be the two main roads for discussing leadership concept (Yukl, 1994).
In terms of strategic leadership, the upper echelon theory was seen as the antecedent and the main concept is that the executives have to take responsibility for the entire organization outcomes (Hambrick & Mason, 1984). Moreover, Finkelstein and Hambrick (1996) stated the importance of top managers to organization outcomes. After that, researches based on the perspective of top management are generally called strategic leadership theory.
According to the definition of strategic leadership from Ireland and Hitt (2005), the strategic leadership meant a person who has the ability to anticipate, envision, maintain flexibility, strategic thinking, and be able to work with others to create a better future for the organization. The definition was adopted in Crossan, Vera, and Nanjad’s research (2008) as well.
While discussing the influences of strategic leadership, Chen and Wu (2008) pointed out that many empirical studies focused on and showed evidences that leadership affects every aspect of organization variables. Furthermore, the strategic leadership was treated as the predictor to investigate the technology acceptance, and it was shown that leader’s behavior influences individual’s perception of using technology (Schepers, Wetzels, & Ruyter, 2005).
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IT Capability
IT capability referred to the firm’s ability to mobilize and display IT-based resources in combination with other resources and capabilities (Bharadwaj, 2000). Bharadwaj (2000) also proposed the IT-based resources are classified into three parts: IT infrastructure, human IT, and IT-enabled intangibles.
From the definition of Tippins and Sohi (2003), the IT capability was seen to be “the extent to which a firm is knowledgeable about and effectively utilizes IT to information within the firm”. Based on these two definitions, the IT capability referred to how the IT department processes and manages the information. Moreover, Tippins and Sohi (2003) also grouped IT capability into three dimensions: IT knowledge, IT operations, and IT objects.
Ross, Beath, and Goodhue (1996) defined IT capability as “the ability to control IT-related costs, deliver systems when needed, and affect business objectives through IT implementations”. Furthermore, three dimensions of IT assets were proposed to measure IT capability: IT human asset, IT technology asset and IT relationship asset to investigate the strategic merits contributed by IT construction.
To sum up, the IT capability denoted the abilities in a company to manage information technological related abilities, for instance, assets, competencies, knowledge, processes and the human relationship that lead the company to acquire, display and management the services and products that provided by IT which helped to form innovation and business strategies (Feeny & Willcocks, 1998).
Goodhue and Thompson (1995) developed the task-technology fit theory and they posited that IT was more likely to have a positive impact on individual performance and be used if the capabilities of the IT match the tasks that the user must perform. Measures of task-technology fit may include quality, locatability, authorization, compatibility, ease of use/training, production timeliness, systems reliability, and relationship with users (Goodhue
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& Thompson, 1995).
Moreover, Goodhue and Thompson (1995) found that task-technology fit measures could be applied to predict the improvement of job effectiveness through investigating on how employees use the system.
Since the technology-organization-environment model is the main conceptual framework of this study, according to the research conducted by Lai (2008), the TOE framework was used as the conceptual structure to design its framework then researched on the information system strategies of MNC affiliates. The results indicated that IT maturity, parent source dependency, cultural distance, restrictive regulations, and local competition are significant decisive factors of global information system (GIS) strategy. It was also found that the integration-responsiveness model could be applied to explain the strategies and implementation.
Furthermore, Leidner, Preston, and Chen (2010) developed and tested an integrated model to understand why certain hospitals administrators are IT innovators. The IT innovation theory was used to be the theoretical foundation and three antecedents including the chief information officer (CIO) strategic leadership, the top management team's (TMT) attitude toward IT, and the hospital's climate were examined. Moreover, they examine the effects of IT innovation on the IT in the hospital and the hospital's financial performance. The results pointed out that the CIO strategic leadership and the top management team’s attitude toward IT were critical factors to influence IT innovation. The study also mentioned about if the hospitals are IT innovators, they can generate better effects from IT, and achieve better performance for the hospitals. However, a hospital’s climate on organizational IT innovation was influenced by the level of CIO’s strategic leadership.
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Electronic Human Resource Practices
Follow up on previous discussion of the TOE framework, the electronic human resource practices are treated as the technology innovation of companies in this study. Definition and miscellaneous functions are introduced in this section.
Definition and of e-HR
Strohmeier (2007) defined that “e-HRM is the (planning, implementation and) application of information technology for both networking and supporting at least two individual or collective actors in their shared performing of HR activities.” (p.20). Also, Bell, Lee and Yeung (2006) posited that the e-HR allows managers to timely access information and data for analyses and to make decisions.
The use of e-HR benefits both employees and HR professionals. Employees can better manage and control their personal information anytime anywhere. Moreover, the HR professionals can be free from the administrative tasks, and focus on more strategic-oriented decisions for companies.
Previous Studies of e-HR
The issue of HR innovation adoption has been a research interest in the academic society. Johnson and Gueuta (2011) urged that human resource should keep up with the current trend to become a more technology-based profession. Technology provides human resource practitioners advantages such as releasing them from administrative burdens, simplifying work processes, reducing administrative costs, attracting worldwide talents, increasing accessibility to employees and managers in organization, and providing timely information for decision makers, all of which allow HR professionals to focus on more strategic-oriented businesses.
The related literature of HR innovation adoption can be traced to Jenkins and Lloyd
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(1985), who explained that corporate philosophy and strategy affected the company use of HR information systems. Besides, Wolfe (1995) developed a model of HRMI implementation and tried to describe and define HRM innovations (HRMIs) after reviewing three related studies. Lin (1997) conducted a study to investigate the human resource information system (HRIS) implementation in Taiwan to figure out the successful factors to adopt HRIS; these factors were support of top management, support of IT department, involvement of human resource heads, support of HR staff, computer literacy of the HR staff, and training of HRIS.
Some studies attempted to find new factors or confirm factors that people know, for instance, the key success factors in Greece were organizational culture and employees’ IT skill (Panayoutopoulou, Vakola, & Galanaki, 2007). But, they also mentioned that the e-HR adoption in Greece was lagging behind other European countries.
Another research theme in e-HR was cross-national influences, Strohmeier and Kabst (2009) conducted a large-scale research in Europe to investigate the driving factors for organization to adopt e-HR, and the result showed that the major general determinants were company size, work organization, and configuration of HRM. Furthermore, Panayotopoulou, Galanaki, and Papalexandris (2010) found the national background of the firms was related to the adoption of electronic systems in HRM. This research included 13 European countries, and they found the e-HRM adoption was region-specific and affected by multiple factors.
Also, they supported the two separate sets of HRM technological systems which included back-end and front-end ones.
Some researches in 2010 continued to discuss the international issues. Wickramasinghe (2010) conducted a study on employee perceptions towards web-based human resource management systems in Sri Lanka. The 30 firms were surveyed in the service and manufacturing sectors with web-based HRM systems as a stand-alone automation to serve employees' HRM needs. The findings revealed that system usage was high in Sri Lanka,
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while the user satisfaction was medium. In addition, the web-based HRM system was medium complexity; and it was highly correlated to system usage, meaning the younger the system the more users were satisfied with the system. It also concluded that users did not perceive HR department transfer HRM tasks to them by using web-based electronic HRM system.
Advantages and Usage of e-HR
Strohmeier and Kabst (2009) summarized three major advantages of e-HR adoption, automation, information, and collaboration. Automation means to transfer entire or part of HR tasks to technology systems, thus making more efficient HR processes. The advantages include saving cost, time, and raising quality of HR processes. Information refers to providing HR-related knowledge, which benefits the planning and controlling HR processes, thus make HRM become more strategic-oriented. Collaboration refers to building network for HR professionals, line managers, employees, applicants, or consultants. Then, these separated roles are coordinated together to take more innovative ways to organize HRM.
With the current development of technology, the possible capabilities of electronic functions may include e-recruiting and selection, e-training/e-learning, e-performance management, e-compensation, HR portal and employee self-service (ESS), and other functions (Yeh, Lu, & Tan, 2011). In addition, based on the literature review by Haines and Lafleur (2008), they developed a list with 78 e-HR application within nine human resource functions from vendor package and business solution package, and these nine functions are: 1.
HR audits and survey, 2. Employee benefits, 3. Compensation and rewards, 4. Health and safety, 5. Performance management, 6. HR planning and career development, 7. Staffing, 8.
Training and development, and 9. Employee relations.
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Organization Outcomes
There are various possible consequences after companies adopt technology innovation.
The e-HR is treated as a technology innovation tool for the company in this study, meaning the organizational outcome of e-HR adoption can be analyzed in various ways. In this study, the human resource efficiency, return on assessment (ROA), and earning per share (EPS) were designed as the outcome variables to examine consequences after using e-HR practices.
Human Resource Efficiency
The operational consequences was one of the research concerns of e-HRM adoption and it was composed of both efficiency and effectiveness related macro-level consequences of e-HRM (Strohmeier, 2007). Some studies supported the proposition that the efficiency of e-HRM was raised because e-HRM increased productivity; besides, these studies indicated the reduction of HR staffs, faster processes, and relief from administrative tasks by automation (Hawking et al., 2004; Ruël et al., 2004; Ruta, 2005). According to these researches, the adoption of e-HRM may lead to various operational results.
In another perspective, efficiency was also one of the consequences of e-HR adoption, a number of literatures supported that the HR efficiency can be improved by adopting e-HR, because e-HR helps company reduce cost and accelerate working processes. For example, Lepak and Snell (1998) and Hendrickson (2003) advised that using e-HRM can simplified transaction processes and raise efficiency of HR department. Ruel et al. (2006) also found that the main purposes to adopt e-HRM were increasing production efficiency or decreasing cost by cutting down the headcount or diminishing administration tasks. Some researchers supported that e-HR can improve HR efficiency (Enshur, Nielson, & Grant-Vallone, 2002;
Lengnick-Hall & Moritz, 2003; Martin et al., 2008).
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According to the research report which was published by Watson Wyatt Consulting Firm in 2002 (http://www.watsonwyatt.com/research/printable.asp?id=W-524), two variables are used to test human resource effectiveness, one is cost efficiency and the other is staffing efficiency. Cost efficiency means the proportion of human resource operating budget to total company revenue. Similarly, the staffing efficiency is represented by the employee to HR personnel ratio. Furthermore, Parry (2011) used ratio of HR to employees as the measure to examine whether electronic human resource management make human resource department become more efficient.
Financial Performances
When analyzing the organizational outcomes, lots of studies use financial performance as the indicator of firm performance. It is also appropriate to examine whether technology help organizations increase profits. In fact, there is a wide range of financial measures.
Nevertheless, two broad categories contain the most measures of financial performance:
investor returns and accounting returns (Cochran & Wood, 1984). The basic idea of investor returns is to measure the returns according to shareholders’ perspective, while the accounting returns focus on company earnings of different managerial policies. The earnings per share (EPS) or price/earnings (P/E) ratios are the most commonly used indicators (Cochran &
Wood, 1984). The financial performance is also examined by indicators such as return on assets (ROA) and return on sales (ROS). These two ratios have been widely adopted to measure the profitability of company (Cron & Sobol, 1983; Hitt & Brynjolfsson, 1996; Weill, 1992). Others like earnings per share (EPS) are also used as the measure of financial performance of company (Vance, 1975).
In addition, Griffin and Mahon (1997) listed all the financial measure in 51 studies, and six categories remained after classification process; these are profitability, asset utilization, growth, liquidity, risk/market measures, and other. The following table summarizes indicators
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which were used in past researches to investigate the financial performance.
Table 2.2.
Variables Used to Measure Financial Performance
Variables Number of
Occurrences Variables Number of
Occurrences
Net income/unit sales
Operating profit/ unit sales
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Table 2.2. (continued)
Variables Number of
Occurrences Variables Number of
Occurrences
Growth Other
Size
Return on assets- 2,3,4,or 5 years average
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Table 2.2. (continued)
Variables Number of
Occurrences Variables Number of
Occurrences
Note. Adapted from “The Corporate Social performance and Corporate Financial Performance Debate,” by J. J. Griffin & J. F. Mahon. 1997, Business and Society, 36(1), p.5-31.
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Competitive Tension and Usage of e-HR Practices
According to the research which was conducted in Greece, the key success factors of
According to the research which was conducted in Greece, the key success factors of