1

High performance work systems and employee engagement: Empirical

evidence from China

Yufang Huang

School of Business
Jiangnan University, Wuxi, China

Zhenzhong Ma 1

School of Management Studies

Shanghai University of Engineering Science
Shanghai China

Odette School of Business

University of Windsor
Windsor, Ontario, Canada N9B 3P4
Tel.: 1-519-253-3000 ext 4251
Fax: 1-519-973-7073
maz@uwindsor.ca

Yong Meng

School of Management Studies

Shanghai University of Engineering Science
Shanghai, China

For Reference:

Huang, Y., Ma, Z., & Meng, Y. (2018). High performance work systems and employee
engagement: Empirical evidence from China. Asia Pacific Journal of Human Resources, 56(3),
341-359.

1
Corresponding author: Dr. Z. Ma, maz@uwindsor.ca
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Abstract

Employee engagement and commitment has been a very important issue in human resource

managers’ agenda. The present study adds to the literature by examining the impact of high

performance work systems (HPWS) on employee attitudes and further on employee

engagement in China in response to the increasing interest in the universalistic effects of

high performance work systems in the globalized world market. With the data from 782

employees working in China’s manufacturing and service sectors, this study shows that

HPWS are positively related to employees’ positive mood and job satisfaction, and job

satisfaction and positive mood further lead to high employee engagement. Moreover,

employee’s positive mood and job satisfaction also mediate the relationship between

HPWS and employee engagement. The result helps explore one mechanism via which

HPWS affect employee behaviors and provides empirical evidence for the applicability of

HPWS in an international context.

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Research has showed that an engaged workforce can lead to numerous benefits, such as high

organizational performance, high job satisfaction (e.g. Harrison, Newman, & Roth, 2006; Harter,

Schmidt, & Hayes, 2002; Whitman, Van Rooij, & Viswesvaran, 2010), and low turnover rates

(Allen, Shore, & Griffeth, 2003). Highly engaged employees have a passion for their work and

feel a deep connection to their company while disengaged employees put only time, not energy or

attention into their work (Bal, Kooij, & De Jong, 2013). Engaged employees are thus more

enthusiastic, working harder, and are more committed to their company (Kahn, 1990). They are

also more creative (Sahoo, & Mishra, 2012), more likely to perform better (Whitman, et al., 2010),

and can often help create and further maintain sustainable competitive advantage for their

companies (Rich, Lepine, & Crawford, 2010). Given the strong need for high engagement and

commitment among a changing and increasingly diversified workforce, an increasing amount of

research on human resource management has focused on exploring the universalistic effects of

high performance work systems on employee performance (Snape and Redman, 2010) and on the

mechanism through which the high performance work systems relate to employee outcomes (Bal,

et al., 2013; Jiang, Lepak, Hu, & Baer, 2012).

High performance work systems (HPWS) refer to a set of broadly defined human resource

management practices, including performance-related pay, various employee communication

programs, training and team-based work (Bill, 2002; Huselid, 1995; Jiang, et al., 2012), and when

used in combination, HPWS are said to be mutually reinforcing and able to generate superior

organizational performance (Bill, 2002; Combs, Liu, Hall, & Ketchen, 2006). While an impressive

array of research has explored HPWS and organizational performance in the West, relatively little

has been done to explore the effectiveness of HPWS in an international context (Ghebregiorgis &

Karsten, 2007), even though the universalistic effect of HPWS have been the focus for many
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studies in the HRM field. When multinational enterprises seek international expansion and

offshore outsourcing in the emerging markets where contemporary management practices have yet

to be validated, human resource management theories developed in the West are often subject to

criticism in that they are not sufficiently contextualized and thus may not be effective in a different

cultural context. This study is intended to help bridge the gap to explore the implications of HPWS

in the Chinese context by examining the impact of HPWS on Chinese employees’ affective mood

and their job satisfaction, and further on employees’ engagement in the workplace.

Studying HPWS practices and employee attitudes and behaviors in China also has important

practical implications (Fan, Cui, Zhang, Zhu, Härtel, & Nyland, 2014; Sun, Aryee, & Law, 2007;

Zhang, Zhu, Dowling, & Bartram, 2013). Although China has become the world’s manufacturing

center for the past years thanks to its large and relatively cheap labor force, employee engagement

in China is actually alarmingly low, if not the lowest among the world: according to a Gallup

survey, only 2% of Chinese employees were engaged in their work in the year 2009 (the number

increased to 6% in 2012, but still very low), compared with the global average of 11% (Yu &

Srinivasan, 2013). With such a large number of disengaged employees, China’s economic growth

and the competitive advantage brought by its cheap labor force will not sustain. It is thus

imperative to explore whether HPWS can improve Chinese employees’ engagement at the

workplace in order to find viable solutions to this alarming issue.

In this study, we sampled across a range of workplaces in different sectors in China using

employees’ rating of HPWS practices to predict their attitudes and engagement behaviors. This

approach allows us to go beyond the study on HPWS practices and organizational performance at

the organizational level by focusing on individual employees and their behaviors in order to help

examine the black box of how HPWS practices affect work performance at individual level (Bal,
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et al., 2013; Ramsay, Scholarios, & Harley, 2000). In the following sections, we will first review

the studies of HPWS to develop hypotheses in order to test them in the Chinese context. We then

present our methodology, data collection, and the results, concluding the paper with a discussion

of the implications and limitations of the study for further research.

CONCEPTUAL FRAMEWORK AND HYPOTHESES

High Performance Work Systems and Employee Engagement

Over the past decades, a burgeoning body of literature has emerged on the ways in which

human resource practices affect organizational performance (Combs, et al., 2006), and prominent

among this literature is the concept of high performance work systems (HPWS), which claim to

have strong effects on employee work outcome and organizational performance (Snape & Redman,

2010). According to the social exchange theory (Blau, 1964; Bal, et al., 2013), individuals in a

social exchange relationship are normally viewed as emotional beings who obtain information,

cognitively process it, and then make decisions concerning the nature and pattern of exchange with

organizations. The exchange process thus produces emotions and feelings which lead individuals

to attribute these emotions to different social units such as their organizations. These attributions

of emotion, in turn, dictate how strongly individuals feel attached to their organizations, which

further drives engagement behavior and commitment to the relationship (Blau, 1964; Lawler,

2001). Based on the social exchange theory, HPWS scholars expect that since HPWS focus on

providing support to employee development by enriching job, enhancing employee job skills, and

encouraging participative decision making (Snape & Redman, 2010), they will be reciprocated by

employees through increased work engagement and commitment to the organizations, which

consequently leads to high organizational performance (Bal, et al., 2013; Shore & Shore, 1995).

In other words, when people engage in a social exchange relationship and they voluntarily act in
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favor of another party, they expect this favor will be reciprocated in the future (Bal, et al., 2013;

Blau, 1964). When an organization employs HPWS, there will be an expectation that employees

will return this investment through higher engagement and commitment. This is in line with

research demonstrating that work engagement mediates the relationships between job resources

(which result from human resource practices offered by the organization) and job performance

(Christian, et al., 2011), and thus forms a crucial positive link between what the organization offers

to employees and how the employees perform in return. This body of work on HPWS is now

extensive, with a recent meta-analysis of 92 studies on HPWS-organizational performance

relationship showing that HPWS indeed are impactful (Combs, et al, 2005, Snape & Redman,

2010).

At the same time, in contrasting to the notion that there exists a positive relationship between

HPWS practices and organizational performance, many scholars also contend that managers in

capitalism are constantly driven to find ways to make employees work longer and harder as a

means to maximize labor input (Braverman, 1974; Harley, 2002; Ramsay, et al., 2000), and thus

HPWS actually lead, directly or indirectly, to work intensification. Employees working under the

HPWS practices may suffer a higher level of stress, overload, burnout, and heightened pressure

than other workers, arising directly from HPWS work practices as well as indirectly from added

responsibility, enhanced discretion, and work intensification (Ramsay, et al., 2000). This dark side

of HPWS suggests that while HPWS are aimed to creating a competitive advantage for

organizations, they may bring benefits to organizations at the expense of employees and thus result

in negative consequences for individual workers (Jensen, et al., 2011).

In response to these contrasting views on the impact of HPWS practices on employee and

organizational performance, it is thus even more meaningful to explore whether HPWS is able to
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generate positive impact in an international context. It is argued in this study that the social-

exchange based relationship between HPWS and employee engagement still exists in an

international context. More specifically, it is argued that according to the social exchange theory,

HPWS can produces emotions and feelings which lead individuals to attribute these emotions to

their exchange partners or organizations even in an international context. For HPWS in the Chinese

context in particular, it is widely accepted that Chinese culture is a highly collectivistic culture

(Hofstede, 2001; Triandis, 1995) and the group-oriented Chinese employees are by nature

motivated to work harder for the collective good and for their company than for themselves. In

addition, the strong guanxi-oriented Chinese society relies heavily on reciprocity in their social

networks (Hofstede, 2001; Tsui & Farh, 1997; Xin & Pearce, 1996), an important element of social

exchange relationship. As a result, the Chinese are likely to reciprocate the favor they receive

either in their social lives or at the workplace (Tsui & Farh, 1997; Xin & Pearce, 1996; Yang,

1994). Therefore, it is proposed that a positive relationship also exists between HPWS practices

and employee engagement in China due to the strong favor-returning orientation embedded in the

Chinese guanxi society (Fan, et al., 2014; Sun, et al., 2007; Zhang, et al., 2013). In other words,

when HPWS practices are applied in Chinese companies as a favor to employees, management

cedes a degree of control to employees and introduces a set of employee-oriented progressive

methods such as teamwork, training and development, frequent open communication, performance

based compensation, participative decision making, and other employee involvement programs. It

is thus very likely that Chinese employees will return the favor by working hard and performing

well with highly engaged behaviors, resulting in high employee engagement. Therefore, it is

expected that

Hypothesis 1: High performance work systems will enhance employees’ engagement.

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High Performance Work Systems and Employee Attitudes and Behaviors

Much of the early work evaluating the impact of HPWS practices on work performance

focused on the issues at the organizational level (Huselid, 1995), and examined the effect of HPWS

practices on organizational outcomes such as employee turnover rate, productivity, financial and

perceptual measure of organizational performance (Snape & Redman, 2010). More recent work

has turned to the effects of HPWS practices on individual employee attitudes and behaviors (Allen,

et al., 2003; Bal, et al., 2013; Kuvaas, 2008; Snape & Redman, 2010). For example, Allen and

colleagues (2003) show that a positive relationship exists between supportive HPWS and

organizational commitment, job satisfaction, and employee retention, and Snape and Redman

(2010) find that HPWS practices positively affect employee attitudes and behaviors including

helping behaviors and organizational citizenship behaviors.

Studies on human resource management practices have also shown a positive relationship

between HPWS practices and a range of employee gains, including positive psychological

implications and increased autonomy (Den Hartog, Boon, Verburg, & Croon, 2013). For instance,

Boxall and Macky (2009) have shown that opportunities in HPWS practices for skill development

and employee participation positively impact job satisfaction. Wood and de Menezes (2011) report

that the consultative elements of HPWS practices contribute to employee’s well-being and job

satisfaction by enhancing individual employee’s sense of value, worth, and confidence. The

consultative nature of HPWS fits in well with the Chinese context where everyone belongs to a

big family/company and managers are more likely, and often encouraged to, discuss with

employees before final decisions are made, and employees are also allowed to actively participate

in the process of everyday operations. Within such an environment, employees are likely to feel
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enthusiastic, active, and alert with high energy, full concentration, and pleasurable engagement,

and thus a positive affective state and high job satisfaction (Watson, Clark, & Tellegen, 1988).

In a similar vein, despite the potential negative result of work intensification as discussed in

the previous section, highly involvement human resource practices in HPWS are less likely to lead

the group-oriented Chinese employees to feel guilty, fearful, nervous, or distressful, and thus a

negative affective state (Watson, et al., 1988), simply because collectivistic Chinese employees

are expected by their cultural norms to get more involved in group activities, participate more in

group work, and contribute more to group interests rather than to individual interests (Hofstede,

2001; Triandis, 1995). It is therefore expected that the positive relationship between HPWS and

employee attitudes will apply to the collectivistic context in China when high involvement HPWS

practices are used on Chinese employees, which will lead to positive mood and high job

satisfaction, and at the same time, high involvement HPWS practices are also likely to reduce

negative mood in employees. Therefore, it is hypothesized that:

Hypothesis 2a: High performance work systems will be positively related to employees’

positive mood.

Hypothesis 2b: High performance work systems will be positively related to job

satisfaction.

Hypothesis 2c: High performance work systems will be negatively related to employees’

negative mood.

In addition, since individuals’ mood and attitudes are strongly associated with their behaviors,

it has long been found in the literature on HPWS practices and employee outcomes that employee’s

affective states and attitudes will influence employee behaviors such as behavioral commitment

and engagement (Bal, et al., 2013; Combs, et al., 2006). Employee engagement refers to an
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individual’s involvement with, satisfaction with, and enthusiastic for the work he or she does,

which includes physical engagement, emotional engagement, and cognitive engagement (Rich, et

al., 2010). It is expected that the more satisfied employees feel with various human resource

practices in the workplace, the more likely they will get engaged with their work with more energy,

enthusiasm, and concentration. Similarly, employees with positive affective state are also more

likely to exert high energy, full concentration, and pleasurable engagement with their work

(Watson, et al., 1988), while employees with negative affective state are more likely to feel

stressful and display a variety of aversive mood states including anger, contempt, fear, and

nervousness, and thus more likely to disengage with their work. Therefore, it is hypothesized that:

Hypothesis 3a: Employees’ job satisfaction will be positively related to their

engagement.

Hypothesis 3b: Employees’ positive mood will be positively related to their engagement.

Hypothesis 3c: Employees’ negative mood will be negatively related to their

engagement.

Furthermore, employee’s positive mood reflects the extent to which a person feels enthusiastic,

active, and alert, while negative mood is a general dimension of subjective distress and unpleasant

engagement that subsumes a variety of aversive mood states (Watson, et al., 1998). These two

mood factors represent affective states and are related to corresponding affective trait dimensions

in personality, which are more stable emotional responses to environmental stimuli. Emotional

responses can influence individuals’ perception and cognitive evaluation of their environment

(Watson, et al., 1998). In the context of HPWS studies, employees with positive mood are more

likely to retrieve positive information from their memory systems and perceive positive

information cues, and respond more positively to workplace events and environment, which thus
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forms positive evaluation that helps improve their job satisfaction. On the contrary, employees

with negative mood are more likely to focus on negative events and unpleasant incidents, with

negative perception of their work and environment, leading to low job satisfaction (Staw & Cohen-

Charash, 2005). As a result, it is expected in this study that:

Hypothesis 4a: Employees’ positive mood will be positively related to their job

satisfaction.

Hypothesis 4b: Employees’ negative mood will be negatively related to their job

satisfaction.

The Mediating Effect of Employee Attitudes on HPWS Practices

A growing body of literature has empirically established a relationship between HPWS and a

variety of organizational outcomes, including organizational performance, productivity, employee

turnover (Huselid, 1995; Jensen, et al., 2013; Jiang, et al., 2012), in support of the notion that

HPWS are an important contributor to organizational success. However, there are still concerns

about HPWS research on its lack of theoretical articulation of what explains the black box

phenomenon or how and why a particular HPWS practice can enhance firm performance (Boselie,

Dietz, and Boon, 2005). Although research that integrates employee attitudes and behaviors is

surprisingly limited, what is known is that improved organizational performance can only be

achieved through employees who exert greater efforts and more committed behaviors to help the

firm succeed, For example, out of the more than 100 studies on HPWS examined by Boselie and

colleagues (2005), only 11 used employee survey data to test attitudes and employee behaviors

such as commitment and engagement. Few studies have properly tested the mechanism between

HPWS and employee outcomes at the individual level (Wood & de Menezes, 2011).
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This study argues that employee mood and job satisfaction mediate the relationship between

HPWS and employee engagement. HPWS can generate organizational performance because

HPWS practices enhance employee discretion which in turn flows into improved attitudes and

behaviors at work (Harley, 2002). Employee mood states refer to an individual’s affective states

that last relatively long and fluctuate as a function of individual experiences and can have an

important influence on an individual’s thinking and acting (Watson, et al., 1998). Job

satisfaction refers to how content an individual is with his or her job, and employee

engagement refers to an individual’s behaviors including involvement with, satisfaction with, and

enthusiastic for his or her work (Rich, et al, 2010). Employee moods states as one type of general

affect and job satisfaction as an evaluative attitude towards one’s job are expected to mediate the

impact of HPWS on employee engagement behaviors because established HPWS practices

influences workplace atmosphere, which changes employee mood and attitudes, with increased

satisfaction and with consequent effect on employee behaviors and engagement, which in turn feed

through to the performance of the work group and eventually the company (Edwards & Wright,

2001). That is, HPWS practices can improve employees’ mood and their attitudes/orientation to

their work which in turn makes them more productive. Previous research has also shown that

HPWS influence organizational performance and this relationship is mediated by employee

perception and attitudes (Combs, et al., 2006). In other words, HPWS practices help generate

employees with positive mood who are more likely to retrieve positive information from their

memory systems and perceive positive information cues, and respond more positively to

workplace events and environment, such as HPWS practices, which thus form positive evaluation

that helps improve their engagement behaviors. Therefore, it is hypothesized that (with the

integrated research model in Figure 1):

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Hypothesis 5: Employee mood (employee affective states) and job satisfaction will

mediate the relationship between high performance work systems and employee

engagement.

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Please insert Figure 1 about here
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METHODS

Data and Sample

The data for this study were collected from four different cities in South China from three

different sectors, including manufacturing sector, hotel service sector, and health care sector. The

sample was identified through the government bureau that is in charge of business development.

We used their provided contact list to approach the key HR officers of all the companies on the

list. Once the consent was obtained, senior managers and their HR officers accompanied the

investigators and their assistants to call for volunteer employees to participate in this study.

Questionnaires were distributed by the research assistants to these volunteer participants who were

allowed to complete the questionnaires on their own time and then return the questionnaires in

self-addressed envelopes. In order to reduce the common method bias, we collected the data at two

different times: the second wave of data collection was lagged by two months. We distributed 1000

copies of questionnaires and a pseudo ID to each participant for the first wave of data collection

which measured employees’ perceived HPWS practices in their companies, with 864 copies of

questionnaires returned. The second wave of data collection was to measure employee mood and

attitudes and the engagement behaviors for those employees who returned the questionnaires in

the first round, resulting in 782 usable questionnaires after the deletion of those with missing

information or incomplete. The two waves of data collected were matched based on employees’
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assigned pseudo IDs and employees were debriefed on the purpose and potential implications of

the research project after the second wave of data collection was completed.

Among the 782 employee participants, 66% of them were from service sectors, 42% from hotel

sector, 24% from health care sector, and 34% were from manufacturing sector, with 57.5% male

respondents, with all companies from the public sector. The age of the participants was ranged

from 24 years old or younger (15.4%), 25 to 34 years old (39.7%), 35 to 44 years old (25.3%), to

45 years old or older (19.6%). The average tenure at current company was 1 to 3 years (27.1%),

followed by 1 year or less (26.1%), 3 to 5 years (12%), and 5 years or longer (34.8%). The

education level was ranged from high school or below (51.4%), college/vocational school (42.8%),

to university or above (5.8%).

Measures

The measures of perceived HPWS practices, employee’s positive and negative mood, job

satisfaction, employee engagement, and the control variables were included in the employee

questionnaire. All the measures were adopted from widely used standardized scales often

employed in HPWS studies. Questionnaires were administered in Chinese mandarin, and all the

questionnaires were translated into Chinese and back-translated into English to ensure reliability

and equivalency by bilingual colleagues of the authors, following the recommended procedures

(Brislin, 1976).

High performance work systems were measured with ten items adopted from the study by Den

Hartog and colleagues (2013), with participants responding on a five-point Likert scale from “1 =

strongly disagree” to “5 = strongly agree”, which covers skills-, motivation-, and empowerment-

enhancing practices including training, development, promotion, performance management,

teamwork, autonomy, and job design. Example items include “Training is provided to me
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regularly”, “Managers take my career ambitions and goals into account here”, and “I can

determine and make changes in the way in which I perform my work”. We conducted a set of

confirmative factor analyses and the results showed an acceptable fit for the three-factor structure

(χ2 = 3.947, p < .01, GFI = .987, CFI = .986, RMSEA = .061). Because of high inter-correlations

among these three factors, we then performed another CFA to test a model including one second-

order factor representing the whole set of HPWS practices. This model was found to fit the data

significantly better than the three-factor model (χ2 = 2.042, p < .001; GFI = .995, CFI = .996,

RMSEA = .037). Therefore, we combined the full set of HPWS items into three subsystems scores

and then combined these in one aggregate HPWS score. Cronbach’s alpha of this measure was

0.83.

Employee mood and attitudes were assessed in three aspects: employee’s positive mood,

negative mood, and job satisfaction. The overall job satisfaction was measured with the Michigan

Organizational Satisfaction Scale (Cammann, Fichman, Jenkins, & Klkesh, 1979), with sample

items including “In general, I am very satisfied with my job”. The Cronbach alpha of this measure

was 0.79. Employee’s positive mood and negative mood were measured using the widely used

PANAS scale (Watson, et al., 1988) to ask an employee to indicate his or her affective state in the

past two months. The Positive and Negative Affect Schedule (PANAS) comprises two mood scales,

one that measures positive mood state and the other measures negative mood state. Used as a

psychometric scale, the PANAS is a widely accepted scale for assessing employee mood states

(Wason, et al., 1988). Sample items for positive mood include “I am interested” (excited,

enthusiastic, proud), and for negative mood include “I am irritable” (nervous, jittery, afraid), with

1 = “strong disagree” and 5 = “strongly agree”. The Cronbach alpha’s for these two scales were

0.81 and 0.91, respectively.

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Employee engagement refers to an individual’s involvement with, satisfaction with, and

enthusiastic for the work he or she does. Employee engagement was measured in this study using

the scale developed by Rich and colleagues (2010), which assesses employee engagement from

three aspects, including physical engagement, emotional engagement, and cognitive engagement.

This scale has 18 items, on a five-point Likert scale (1 = “strong disagree” and 5 = ‘strongly agree”),

with sample items including “I work with intensity on my job”, “I am enthusiastic in my job”, and

“At work, my mind is focused on my job”. A set of confirmative factor analyses supported a model

with one second-order factor representing overall employee engagement (χ2 = 2.909, p < .001;

GFI = .981, CFI = .986, RMSEA = .049). Similarly, we combined three sub-scores into one

aggregate employee engagement score. Cronbach’s alpha of this measure was 0.86.

RESULTS

The research model and the hypotheses previously developed were empirically tested using

structural equation modeling (SEM) with the AMOS 17.0 program with age, gender, education

level, tenure in the current company, and industry as control variables. The impact of age, gender,

tenure in the current company, and the education level were controlled for in this study because

older employees, female employees, and senior employees are more likely to show higher level of

commitment, while employees with a higher level of education are more likely to change jobs and

thus less committed (Bal, et al., 2013). Industry was also included as another control variable in

order to control the impact of different mobility level of employees in various industrial sectors.

SEM is a widely used statistical tool in academic research and there are two basic advantages of

using SEM as opposed to more traditional regression analysis techniques. First, it can represent

interrelated latent concepts and to account for measurement error in the estimation process. Second,

SEM allows estimating multiple and interrelated relationships simultaneously. In contrast to

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multiple regression analysis, SEM can assess several equations at once and these equations can be

interrelated, implying that the dependent variable in one equation can simultaneously be an

independent variable in one or more other equations. This allows modeling of complex causal

relationships and mediating effects which is not possible with any other multivariate techniques

available. SEM is appropriate here because the study is to test the mediating effect of employee

mood and job satisfaction on the relationship between HPWS and employee engagement.

Therefore, SEM is an appropriate technique for testing the research hypotheses in this study.

Given that the SEM approach has no single statistical test of significance for model fit, several

goodness-of-fit measures were used to assess the fit of the model. The chi-square (χ2), the Bentler–

Bonett normed fit index (NFI), the comparative fit index (CFI), the Goodness of Fit Index (GFI),

and the root mean-square error of approximation (RMSEA) were used as the measures for

goodness-of-fit. Among these indexes, NFI and CFI should exceed 0.90 and a RMSEA should be

0.08 or below to be acceptable.

SEM analysis involves two major steps: the measurement model assessment and the structural

model assessment. There is no meaning in proceeding to the structural model until the

measurement model is convinced to be valid. Kline (2005) has suggested that SEM researchers

should always test the full measurement model underlying the full structural model first, and if the

fit of the measurement model is found acceptable, then proceed to the second step of testing the

structural model by examining its various fit indexes. Based on this recommendation a two-step

analysis was carried out to explore the relationship between HPWS, employee attitudes (including

job satisfaction, positive affect, and negative affect), and employee engagement.

Measurement Model To estimate the measurement model with the latent factors as specified,

covariance between each pair latent variables was allowed, that is, each latent variable with every
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other latent variable in the model. The statistical test of this measurement model is equivalent to a

confirmatory factor analysis of all study variables. The descriptive statistics are reported in Table

1, and the output of the robust maximum likelihood analysis on the full-measurement model

provides a robust chi-square statistic and a set of model fit index, which clearly showed that a five-

factor measurement model (HPWS practices, positive mood, negative mood, job satisfaction, and

employee engagement) fits the data very well (Please see Table 2), with χ2= 1218.44; NFI = .907;

GFI = .901; CFI = .924; RMSEA = .057, and thus this five-factor measurement model was used

in the testing of the structure model discussed next.

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Please insert Table 1 & 2 about here
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Structural Model The hypotheses predicted that employee mood and attitude mediate the

positive relationship between HPWS and employee engagement. Using the aforementioned

measurement model, a structural model was constructed and tested which incorporated every path

based on all the hypotheses developed for this study. After removing the path of HPWS to negative

mood and negative mooed to employee engagement because of their insignificance, the revised

structural model showed a good fit to the data (χ2 = 616.208; GFI = .916; CFI = .918; NFI = .882;

RMSEA = .065; Please see Model 1 in Table 3). In order to test the mediating effect of employee

mood and attitude on the relationship between HPWS and employee engagement, six other models

were built and assessed by adding/removing different paths to fit the data, and the Akaike

Information Criterion (AIC) was used for model comparison. The relative size of AIC provides

valuable information for model comparison: for the two models from the same data set, the model

with a smaller AIC is to be preferred. Among all models in Table 3, Model 2 has the best fit indexes

with smallest AIC (χ2 = 512.922; GFI = .930; CFI = .928; NFI = .902; RMSEA = .058; AIC =
 19

632.923). In this study, Model 2 was thus chosen as the final model for hypothesis testing and

analysis. Figure 2 displays the final structural model and estimates of its parameters. The numbers

along the path represent standardized path coefficients.

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Please insert Table 3 & Figure 2 about here
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The SEM results indicate that HPWS are positively related to employees’ job satisfaction and

positive mood (β = 0.68, p < 0.001; β = 0.52, p< 0.001, respectively), which supports H2b and

H2a. Job satisfaction and positive mood further lead to high employee engagement (β = 0.39, p <

0.001; β = 0.33, p < 0.001, respectively), which supports H3a and H3b. Furthermore, positive

mood is also positively related to job satisfaction (β = 0.16, p < 0.01), which supports H4a, and

negative mood is negatively related to job satisfaction (β = -0.15, p < 0.01), which supports H4b.

The indirect total effects of HPWS on employee engagement are also significant (β = 0.46, p

< .001), which supports H1. The SEM results thus support all our hypotheses except H2c and H3c

which predict that HPWS will be negatively related to employee negative mood and employee

negative mood will be negatively related to employee engagement, respectively. In addition, the

final revised model clearly indicates that employee mood and job satisfaction fully mediate the

relationship between HPWS and employee engagement, in support of H5, which thus provides

another approach to explain the mechanism how HPWS influence employee outcomes and further

organizational performance.

DISCUSSION AND CONCLUSION

The increasingly globalized world economy has created a strong need to understand different

human resource management practices across the globe, in particular on how to manage employees

from Eastern cultures. This study began with the fact that tremendous intercultural differences
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across the globe had made it essential for a better understanding of human resources management

practices in different national settings. High performance work systems in an international context,

in particular about Chinese culture and its impact on employees’ response to HPWS practices,

deserved more research efforts. Then this study used the data from different sectors in China to

explore the impact of HPWS on employee mood and job satisfaction and further on employee

engagement in the Chinese cultural context. The results of this study provided empirical support

for previous research findings and evidence is founded for the universalistic impact of HPWS

practices on employee behaviors in an international context. The findings will enrich our

knowledge on HPWS practices as well as on human resources management in general in a global

context, which is able to advance contemporary human resources management and employee

engagement studies.

This study has important implications both in theory and in practice. In theory, the findings of

this study are very similar to the ones found in the West, which provides empirical evidence for

the universalistic impact of HPWS in the international context. This is an important addition to the

literature, in particular when more multinationals are expanding into emerging markets where

contemporary management practices have yet to be validated in order to improve their

competitiveness. Human resource management theories developed in the West are often subject to

criticism in that they are not sufficiently contextualized and thus may not be generalizable to other

cultural contexts. This study seems to support a set of universally accepted management practices,

at least the HPWS practices that may be common across cultures. More studies are called on to

validate the effectiveness of HPWS in other cultural contexts (Bal, et al., 2013; Harley, 2002; Jiang,

et al., 2012).
 21

In addition, while it has been argued that HPWS practices could provide employees with more

discretion and support in exchange for more employee compliances and creative capability as well

as engaged behaviors, it has also been argued that HPWS practices could lead to work

intensification (Ramsay, et al., 2000) and HPWS practices may create competitive advantage for

organizations at the expense of employees’ well-beings (Danford, et al., 2008). Employees

subjected to HPWS practices may also suffer higher level of stress as a result of the added

responsibility associated with enhanced discretion, insecurity, and job anxiety (Danford, et al.,

2008; Jensen, et al., 2013; Ramsay, et al., 2008). However, despite such a debate, this study seems

to provide indirect support for the positive effect of HPWS practices in that HPWS practices in the

Chinese context will not lead to employee’s negative mood, which is often associated with high

pressure and job anxiety resulting from work intensification. The findings thus may indicate that

researchers need to re-examine the notion about the negative impact of HPWS, if any, in a

collectivistic context where people are often motivated to work hard for group interests, and thus

the often-debated work intensification might not be an issue in such a context. This could be a new

perspective for contemporary research on HPWS in the global market. Moreover, the findings

about the important role of positive mood in the underlying mediation process help answer the

question of how HPWS affect employee engagement and demystify the black box of how HPWS

impact individual attitudes and behaviors (Ramsay, et al., 2000). The findings of the mediating

impact of positive mood states enable us to better understand the mechanism through which HPWS

practices influence workplace atmosphere and further create positive employee mood and attitudes,

which results in increased satisfaction and engaged employee behaviors, and then feeds through

to the performance of the work group and eventually the company (Edwards & Wright, 2001).
 22

The study also adds value to the literature on HPWS in that it examines the impact of HPWS

on employee attitudes and behaviors at the individual level, thus overcoming the problems

associated with traditional HPWS research which often examines the relationship between high

involvement human resource practices and organizational performance at a unit or company level.

The question of why and how HPWS affect employee engagement often remains a black box as it

is not very clear how HPWS impact individual attitudes and behaviors (Ramsay, et al., 2000).

Examining HPWS and their impact on variables at the individual level will contribute to a better

understanding on the mechanism through which HPWS practices create reciprocity power in the

receiving employees so that employees will work harder and longer with enhanced engagement in

return.

This study can have important practical implications as well. Human resource management

practitioners can use the findings of this study to improve their practices and further employee

engagement in China. For example, with China as a newly emerged industrialized economy, many

Chinese managers, including human resource managers, are still following the principles of

scientific management theories, and thus are largely ignoring employees’ attitudes or well-beings

in motivating Chinese employees. Consequently, they have increasingly constrained the

improvement of work engagement and work performance in China. Recent job actions happened

in several manufacturing companies in China and the low Gallup survey result on employee

engagement in China (Yu & Srinivasan, 2013) have indicated that human resource managers in

China need to pay more attention to employees’ feelings and attitudes and other labor relation

related factors in order to achieve sustainable development. HPWS seem to be one viable solution

to creating high employee commitment and better employee relations in the Chinese context.
 23

Second, as an increasingly important emerging market, China has proven to be a very tough

place to apply Western management theories due to its complex collectivistic cultural traditions

and strong interpersonal guanxi-oriented practices. Yet the findings of this study suggest that

HPWS practices can improve employee’s positive mood and increase job satisfaction which

further leads to engaged employees, similar to what is found in the West. Considering the nature

of HPWS, which is to create the incentive and motivation for employee to become highly

committed and involved, this study points out a new perspective in exporting management theories

developed in the West to China and other collectivistic cultures: team or group-based management

practices that can involve employees, together with constant open communication may work well

in collectivistic cultures and thus have better generalizability across the globe. Future research is

also called upon to explore other cultural aspects in China, such as the impact of guanxi and the

impact of in-group favoritism (Ma, 2010; Triandis, 1995) on the relationship between HPWS and

employee engagement. International managers can pick these types of practices/theories in

practicing management across the global market for more effective human resources management.

More studies can also explore industrial characteristics and the impact of HPWS as well as the

potential interaction impact between HPWS and firm ownership in helping human resource

management practitioner identify more appropriate human resource practices.

Caution has to be exercised, however, in applying the findings of this study to other contexts.

While this is a longitudinal study, we don’t have a much longer time period to measure the same

variables and thus the causal effect of HPWS on employee mood and attitude and engagement

needs further validation. More studies are required to replicate and validate the findings of this

study. Future studies could replicate this study to validate the results and to further explore the

cultural differences in the impact of HPWS on employee attitudes including job satisfaction and
 24

positive and negative mood in the international context. Moreover, this study uses employees as

participants, which is a strength comparing with other studies that often use company reports for

HPWS studies on employee outcomes, and thus increases the external validity in generalizing the

findings of this study to other populations, yet the samples used are not perfectly representative

samples, which is the issue often associated with the survey method. While we collected the data

at different times, the common method bias could still affect the relationship, which should be

addressed in future studies. In addition, this study examines individual employee’s perception of

HPWS and behavioral outcomes at the individual level. Next step in this line of research is to

explore the relationship between HPWS and individual and organizational performance using a

multi-level approach in order to fully capture the essence of HPWS and the associated impact on

performance outcomes.
 25

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 30

Table 1: Means, Standard Deviations, and Correlations of Variables

Variables Mean s. d. 1 2 3 4 5 6 7 8 9 10

1. Gender 1.57 0.50 -

2. Age 2.20 0.95 -.18** -

3. Tenure 2.72 1.44 -.21** .60*** -

4. Education 1.48 0.71 -.11* .14* -.14* -

5. Industry 0.54 0.50 -.00 -.07 .22** -.42*** -

6. HPWS 3.49 1.06 .16** -.23** -.34*** -.20** .16** (.83)

7. Positive Mood 3.39 0.87 .11* -.12* -.17* -.07 .04 .44*** (.91)

8. Negative Mood 2.38 1.05 .06 -.14* -.12* -.23** -.04 -.03 -.08* (.81)

9. Job Satisfaction 3.63 0.91 .08* -.09* -.21** -.08* .10* .64*** .46*** -.11* (.79)

10. Employee Engagement 3.78 0.83 .14* .01 -.03 .05 .07 .36*** .41*** -.03 .41*** (.86)

Note: N = 782, * p <.05, ** p < .01, *** p < .001; Variables were coded as follows: gender, 1 = male, 2 = female; Age: 1 = 24 or younger, 2 = 25-34, 3 = 35-44, 4 = 45-54,
5 = 55 or older; tenure: 1 = one year or less, 2 = 1-3 years, 3 = 4-5 years, 4 = 6-8 years, 5 = 8 years or more; education: 1 = high school diploma or lower, 2 = college, 3 =
university, 4 = master or above; industry: 0 = service (hotels or health care), 1 = manufacturing; The bold numbers in brackets along the diagonal line are Cronbach alphas.
 31

Table 2: Assessment of the measurement model on HPWS and employee engagement

Models χ2 df χ2/df Δχ2 RMSEA CFI GFI NFI

One factor model 7390.08 377 19.60 - .154 .388 .492 .377
(HPWS + PM + NM +JS + EE)
Two factor model 4699.13 371 12.67 2690.95*** .122 .627 .652 .609
(HPWS; PM + NM +JS + EE)
Three factor model 3501.44 367 9.54 1197.69*** .105 .726 .741 .705
(HPWS; PM + NM +JS; EE)
Four factor model 2295.60 357 6.43 1205.84*** .083 .831 .829 .806
(HPWS; PM + NM; JS; EE)
Five factor model 1218.24 345 3.53 1077.36*** .057 .924 .901 .907
(HPWS; PM; NM; JS; EE)
Note: *** P < 0.001; HPWS = high performance work systems; PM = positive mood; NM = negative mood; JS = job satisfaction; EE = employee engagement.
 32

Table 3: Assessment of the structural models on HPWS and employee engagement

The Model tested χ2 Df. χ2/df RMSEA AIC CFI GFI NFI TLI
Model 1 (Partial Mediation)
HPWS  EE;
HPWS  PM  EE; 616.208 154 4.001 0.065 728.208 0.918 0.916 0.882 0.887
HPWS  JS  EE;
HPWS  PM  JS  EE
Model 2: (Full Mediation 1)
HPWS  PM  EE; 512.922 155 3.309 0.058 632.923 0.928 0.930 0.902 0.909
HPWS  JS  EE;
HPWS  PM JS  EE
Model 3: (Full Mediation 2)
HPWS  PM  EE; 632.956 156 4.057 0.066 740.956 0.905 0.913 0.879 0.885
HPWS  JS  EE;
Model 4: (No Mediation)
HPWS  EE; 667.573 157 4.252 0.068 773.573 0.899 0.910 0.872 0.877
HPWS  PM
HPWS JS
Note: HPWS = high performance work systems; PM = positive mood; JS = job satisfaction; EE = employee engagement; negative mood was removed during the assessment
of alternative paths because negative mood was not found significantly related to the criterion variable or the predictor variable.
 33

Figure 1: The research model of the impact of HPWS on employee engagement

Positive Mood

H2a (+) H3b (+)

H4a (+)

H2b (+) Job H3a (+) Employee

HPWS Satisfaction Engagement

H2c (-)
H4b (-)
H3c (-)

H1 (+) Negative Mood

Figure 2: The revised structural model of HPWS and employee engagement

Positive Mood

0.52*** 0.33***
0.16**

Job 0.39*** Employee

0.68***
HPWS Satisfaction Engagement

-0.15**
n.s. n.s.

Negative Mood