Expert Systems with Applications 38 (2011) 3777–3783

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Expert Systems with Applications

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An empirical study of the relationships among employee’s perceptions of HR

practice, human capital, and department performance: A case of AT & T Subordinate
telecoms company in Taiwan
Ming-Kuen Wang a,⇑, Kevin P. Hwang a, Shing-Ruei Lin b
a
Department of Transportation and Communication Management Science, National Cheng Kung University, Tainan, Taiwan, ROC
b
Department of Vibo Telecommunications Co. Ltd., Taipei, Taiwan, ROC

a r t i c l e i n f o a b s t r a c t

Keywords: The telecom industry in Taiwan began to enter a vigorous development stage after Taiwan’s Legislative
Human resource practice Yuan enacted the three major telecommunications laws in 1996. After 2003, the number of mobile phone
Human capital subscribers began to shrink after reaching a climax penetration rate of 111%. The problems which were
Department performance ignored during the high growth period began to appear. This research discusses which human practices
are effective in developing human capital and whether they will influence the performance of the tele-
com industry. Human capital is used as a mediate variable between human resources and department
performance. Through a questionnaire survey, an analysis by mean, standard deviation, and Pearson cor-
relation is performed. A causal multivariable analysis by structural equation modeling (SEM) is used to
test the causal relationship among these factors.
Ó 2010 Elsevier Ltd. All rights reserved.

1. Introduction advantage is cultivated from human resources inside organiza-

Taiwan’s telecommunication industry began to enter a vigorous
development stage after the Legislative Yuan passed laws of tele-
communication in 1996 and opened mobile telecommunication
service in 1997. The number of mobile customers increased fast
from 1998 to 2002, and many operators regarded the increase of
subscription numbers and market shares as the first priority of
their business goals. (Liu, 2002; Peng, 2001) Since the turn of
2002, the customer subscription rate has become saturated; the
penetration rate of 111% began to drop and operators began to
experience challenges in profit growth and market stability after
the growth period. The problems and the human resources issues
that had been ignored began to emerge. (Huang, Su, Hsu, & Lin,
2004; Hwang & Ray, 2005).
Under the impact of liberalization and internationalization,
telecommunications operators have to maintain business advanta-
ges to survive. The environment of telecommunication industry
continues to change significantly; it influences users’ attitudes
and behaviors, causing the same things to be perceived differently.
So the strategies and practices of human resources management
became more important. Ulrich (1997) points out, that when it is
easier to obtain funds and production technology, competition
⇑ Corresponding author. Address: International Business Group, Room 509, 5F,
31, Ai-Kuo East Rd, Taipei City 106, Taiwan, ROC.
E-mail address: wmk2582@cht.com.tw (M.-K. Wang).
tions, especially the strategic management of the human resources.
Although there are a lot of methods to create competitive advanta-
ges, some methods are easily imitated and substituted. Human re-
sources practices are less likely to be imitated. Therefore, to
maintain the competitive advantages that were created from
implementing human resources management practices is easier
than other methods (Kleiman, 1997). In addition, the human re-
sources management practices are important to accumulate and
develop human capital, and the human capital is the important fac-
tor to affect organization performance. What kind of management
practices can properly apply and use human capital to achieve
business goals would be an important issue for all modern
enterprises?
Under keen competition, human resources have played an
important role in the telecommunications industry. Besides effec-
tive allocation of entity resources, the appropriate application
and allocation of human resources have served competition advan-
tages when technology is available and competitiveness is fair.
Many scholars have considered the relationship of human
resources management and organization performance (Delery &
Doty, 1996; Huang, 2002; Huselid, 1995), but there is very little
research about the role of HRM in the telecommunications indus-
try. The main purposes of this research are to understand the pro-
file of human resource practices in the telecommunications
industry, to explore the relationship of human resource practice,
human capital, and to provide suggestions for telecommunication

0957-4174/$ - see front matter Ó 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.eswa.2010.09.038
3778 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783
operators to improve their human resource practices and to raise
their organizational performances.
2. Theory background
2.1. Human resource practices
In the past, personnel departments have only administered the
employment and dismissal of organizational staff and carried out
wage policies and controls over the welfare plans of organizations
(Dessler, 2001). With the rising importance of manpower capital,
organization begins to face the role of resources management within
an organization and expand its business scope to recruitment, set-
tlement, training, and development. Even today, the role of human
resource management has been changing from the inspection of
trainees to the developing of competitive strategies; they cooperate
in the competitive strategy of the organization and become one of
the important factors to improve organization performance.
One of the most important functions in an enterprise is man-
power resource management; its importance is perceived in the
development of an organization. This is because the change in
the fast management environment faced by enterprises makes
the human resources become an important asset. The functions
of human resources management should include recruitment,
selection, transference, promotion, dispatch, training, develop-
ment, wages, welfare, labor-capital relationship, employment
assurance, and laborer security (Dessler, 2001). Noe, Hollenbeck,
Gerhart, and Wright (2003) define human resources management
as the policy, practices and system that influence the behavior,
attitude, and performance of staff; thus, all human resources prac-
tices must proceed on the basis of the strengthening tactics of the
entire organization’s performance.
Pfeffer (1994) has put forward the concept of ‘‘best practices” in
the human resources management tactics; these include: over-
arching philosophy, employment security, selectivity in recruiting,
high wages, incentive pay, employee ownership, information shar-
ing, participation and empowerment, teams and job redesign,
training and skill development, cross-utilization and cross training,
elimination of status symbols, promotion within, long-term per-
spective, wage compression, and measurement of practices. Such
16 items are the human resources management activities neces-
sary to create competitive advantages. Pfeffer (1995) goes one step
further to propose alternative selection, working guarantees, high-
level wages, rewarding wages, allotment of shares to staff, infor-
mation sharing, the participation of the staff, manage the group
oneself, training technical abilities. The job wheel can improve
the important human resources management practices which
organize the performance to adjust 13 items of to promote and
symbolize with the equal doctrine with the mutual training, wages
compressing, inside etc., and considered these 13 activities to
reach the characteristic possessed together of organization of com-
petition success through managing the staff.
2.2. Human capital
Human capital is defined as the personnel who possess the abil-
ity, experience, and knowledge to create the economical value of
an organization (Lepak & Snell, 1999; Snell & Dean, 1992; Van
Buren, 1999).
Snell and Dean (1992) maintain that a staff’s ability and knowl-
edge can promote productivity; so human capital refers to the per-
sonnel who own the ability, experience, and knowledge that have
economical value for organizations. Lepak and Snell (1999) empha-
size that human capital is the staff’s technological ability; it is the
result that the organization makes the investment sedulously;
hence, only on the premise of improving productivity, thus the
capital investment of manpower is worthy. Dzinkowski (2000)
thought that the human capital means the personnel’s know-
how, capabilities, skills and expertise in the organization.
Knight (1999) argues that human capital is personal specialty
and technical abilities of which enterprises cannot depose; when
enterprises employ, develop and keep the best talent, the value
of the human capital increases promptly. The human resources
manage the constant investment in the manpower capital (Lepak
& Snell, 1999). So, an organization makes the investment and accu-
mulates the manpower capital through various channels to im-
prove productivity and then raises remuneration.
The characteristics of promoting efficacy and efficiency, com-
petitive advantages, threat blocking, and all human resources are
the same as other resources, which posses value to enterprises; it
is, moreover, the key resource; enterprises should invest in devel-
oping and keeping it. In addition, its rareness is the source of com-
petitive advantage of the organization; therefore, the organization
should endeavor to preserve the existence of its resources (Barney,
1991). Furthermore human capital has uniqueness and is difficult
for organizations to acquire them from the market (Lepak & Snell,
1999). The uniqueness of human capital should be internalized.
To conclude, the indexes of human capital are divided into
quantization and quality indexes, because the scholars who advo-
cate human capital have different opinions and objective data are
difficult to collect. Therefore, this research constructs the surface
with two items of human capital which are developed by Lepak
and Snell (1999).
2.3. Performances
The assessment of department performance may adopt the
three indexes used in general engineering: efficiency, effectiveness
and timeliness. Efficiency is the ratio of output to input, that is to
say ‘‘do things right.” Effectiveness is the quality of the output, that
is to say ‘‘do the right things.”
Efficiency refers to the subjective intuition of the group opera-
tion efficiency (output, productivity and cost). Hackman (1991)
points out the measurement of team efficiency can depend on
three indexes, (1) team performance can accord with the requests
on the quantity, quality and timeliness; (2) the technical ability of
team members can improve the working experiences of the team
in the future; (3) team experiences can be contributed to the satis-
faction of individual. The above three indexes are used as the basis
to weigh the team performance.
Synthesizing the statements of the above scholars, this research
regards case company of telecommunications as the target and the
measurement is adopted as the non-financial entirety performance
and subjective self-judgment. The performance of each department
is based on proposal of Lawless (1979) which focuses on the items
which are productivity, and working morale (flexibility, team mor-
ale). Members assess their own performance relative to others in
the organization.
3. Assumption
Cascio (1991) points out that human resource practices are
basically the main method that an organization carries on its cap-
ital investment of manpower. The differences of human resource
management activities among organizations can reflect the level
of the capital investment level of manpower. The organization in-
vests in the human resources practices in order to increase staff’s
technical ability, knowledge and ability, and it expects that the
staff can increase productivity through these activities in order to
increase contributions to the organization in the future. Thus, the
 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783
management activities of human resource bring out the activities
which can increase the activities of human capital (Huang, 2003).
Enterprises make use of extensive training to invest in unique tech-
nology to increase the value of the enterprise. Since the enterprise
requires more valuable and unique staff, the organization uses
more formal, extensive, persistent, and long-term training and
more structural programs to ensure the knowledge and techniques
can be acquired and transferred after training. Moreover, valuable
contributions are obtained by making use of training to arouse the
creativity of the staff, improve the ability of production, and the
ability of service. It can be used to distinguish the techniques
and specialty which could not catch up with other competitors in
a short time or the unique techniques and specialties which are dif-
ficult to be imitated and copied (Becker, Husield, & Ulrich, 2001).
Human resources practices have a great influence on the estab-
lishment and application of human capital, and an organization ob-
tains human capital through the activities of recruiting, selecting,
and training. That is to say, the measure of human resource manage-
ment possesses the meaning of human capital investment respect-
ably, and the human resources practices has the most direct
influence on the construction of human capital in the organization
(Becker et al., 2001; Huang, 2002; Lepak & Snell, 1999; Snell & Dean,
1992). Therefore, the following assumptions are taken to inspect the
relation between the human resources practices and human capital.
Assumption 1. The relation between the human resources prac-
tices and human capital is significant.
An investigation into the enterprises of North America was car-
ried out by Wyatt (2000), and he discovered that either the human
capital management or the thirty major practices of human re-
source management practices would raise the shareholder value
enterprise by 30%. Thus, it can be seen that the relation between
the efficacy of human capital and shareholder value. LeBlanc, Rich,
and Mulvey (2000) point out three kinds of human resource invest-
ments to structure human capital; thus, investing in knowledge
can enhance the growth of staff and increase the acquirements of
enterprises in techniques, knowledge and endowments simulta-
neously. The investment in motive can provide the protection of
diseases, suddenness and long-term insurance to create the posi-
tive enhancement of valuable contributions. The investment in
opportunity is investing in working environment and working sat-
isfaction, especially the manifold and meaningful task, the time of
completing tasks perfectly, the essential supports and instruments,
sufficient independence and judgment. These investments may
make a staffs’ performance reach a peak.
This shows that the influence of human resources practices on
human capital in organization is most direct. The organization
can acquire quality knowledge and technique by development of
its own or purchase it to improve its competitive advantage. Nev-
ertheless, knowledge and techniques need applications by well-
trained staff to bring the benefits into full play.
Human capital is the important source of profits in the internal
organization, because the profit created by the staff is the key fac-
tor of success. The knowledge, techniques, educations, and experi-
ences are the important factors for earning profits in the
organization; thus, the investments of human capital positively
help the productivity of individuals and the performance of organi-
zations. The sufficient construction of human capital may make the
performance of the staff reach a peak (LeBlanc et al., 2000; Sveiby,
1997; Wyatt, 2000). Therefore, the following assumption is taken
to inspect the relation between human capital and department
performance in telecommunications industry.
Assumption 2. The relation between human capital and depart-
ment performance is significant.
3779
Huang (2003) adopted the concept of human capital investment
and promoted eleven human resources practices, which included:
recruit strictly, training extensively, performance evaluation of
behavior orient, competitive wages, wage based on skills, perfor-
mance evaluation of development, employee participation, team
work, broad job definition, job rotation and career planning. These
are called human resources management systems of human capital
investment practices. Some scholars think that improved skill and
knowledge of employees will cause additional expense and cost,
but employees’ skill and knowledge could contribute for productivity
and performance (Huang, 2003; Youndt, Snell, Dean, & Lepak, 1996).
Mak and Akhtar (2003) use job description, internal promotion
chance, job security, bonus sharing, training and performance eval-
uation to observe the relationship between human resource prac-
tices and ROE. The results show that only the job description and
bonus share relate with ROE.
Wright, Gardner, and Moynihan (2003) discuss the relationship
between human resources practices and operation profitability.
The results find human resources and organizational commitment
were related with operation performance and before-tax benefit.
In fact, much research has demonstrated that human resources
practices were related to productivity and financial performance
(Delery & Doty, 1996; Huselid, 1995;Youndt et al., 1996). Other
research also demonstrates the relationship between human re-
sources and profitability (Bae, Chen, Wan, Lawler, & Walumbwa,
2003; Delaney and Huselid, 1996). This shows that organizations
could build and sustain the competitive advantage through
implementing human resources practices to further improve
performance.
It can be discovered by making a comprehensive survey of the
relation of the human resources practices and performance,
whether the management practices from individual prospect or
from an integrated management system prospect have influence
on different constructs of the organization performance and
whether the organization can improve the organization perfor-
mance by certain human resources practices. In the management
activities of human resources, there are many activities related to
organization performance, financial performance or human re-
source performance (Bae et al., 2003; Delery & Doty, 1996; Mak
& Akhtar, 2003; Wright et al., 2003). Therefore, the following
assumption is taken to inspect the relation between human re-
sources practices and performance of department in the telecom-
munications industry.
Assumption 3. The relation between human resources practices
and the performance of department is significant.
Finally, the relation of human capital to human resources prac-
tices and the performance of departments are discussed to investi-
gate whether they have a mediate effect.
Assumption 4. There is a mediate effect of human capital between
human resources practices and the performances of departments.
4. Methodology
4.1. Data collection
This research applies a questionnaire survey from the employ-
ees of a telecom company as participants. The mean, standard
deviation, Pearson correlation, and SEM were used to analyze the
data. A total of 210 questionnaires were sent, 139 were retrieved.
Six questionnaires were rejected due to incomplete data, thus
resulting in an effective response rate of 63.3%. The sample charac-
teristics were summarized in Table 1.
3780 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783

Table 1 Table 3
Sample characteristics. Cronbach a of each construct.

Item Group Numbers Percentage Constructs Cronbach a

Sex Male 60 45.1 Human resources practices HPWS 0.9370
Female 73 54.9 ER 0.9219
Age 20–25 14 10.5 Human capital Value 0.8970
26–30 56 42.1 Uniqueness 0.8374
31–35 39 29.3
Department performance Productivity 0.8510
36–40 15 11.3
Work morale 0.7691
41–45 7 5.3
46–50 2 1.6
Education Graduate school 24 18.0 The measure items of this construct were selected and modified
University 78 58.6
from previous research. It includes productivity and work morale
to represent department performance. There are six items to mea-
sure department performance and use the subjective perception of
4.2. Definition and measure of constructs each department employee to answer the questions.

4.2.1. Human resources practices

This research explores the relationship of human resource prac-
tices, human capital, and the performances of departments. Human
resources practices are management practices that relate perfor-
mances were collected from previous literature. Five major prac-
tices are included: recruitment, training and development,
performance evaluation, wages and employee relationships. The
major human resources practices were selected and summarized
from previous research (Huang, 2003; Huselid, 1995; Pfeffer,
1995; Youndt et al., 1996), which included recruit strictly, training
extensively, performance evaluation, competitive wages, objective
wages, employee relationship, communication, career planning,
employee participant and appeal procedure. The measure items
of each practice are referred and modified from the literature
(Delaney and Huselid, 1996; Delery & Doty, 1996; Huang, 2003;
Snell & Dean, 1992).
4.2.2. Human capital
This research refers to the theories of resources management
and human capital to develop human resources structure. The hu-
man capital constructs were referred to the categorization in the
researches of Lepak and Snell (1999). This research uses the
uniqueness and value of human capital to describe the characteris-
tics of human capital in organizations. The value of human capital
means employees’ contribution to organizations. The uniqueness
of human capital means employees’ knowledge and ability, which
cannot be imitated.
The measure items of this construct were selected and modified
from previous research (Barney, 1991; Lepak & Snell, 1999). There
were six items to measure value and five items to measure
uniqueness.
4.2.3. Department performance
This research refers to previous research (Lawless, 1979) and
defines the department performance as the percent of people
who achieve specific objectives, adaptable flexible, and efficiency.
5. Results
Huselid (1995) argues that these practices are not independent;
thus, this research standardizes each practice, followed by factor
analysis. Then this research extracts two human resources prac-
tices as High Performance Work System (HPWS) and employee
relationship (ER) to represent the concept of ten human resources
practices. The result of factors analysis is show in Table 2.
Ten factors are combined to two new factors. The first factor of
human resources practices includes recruitment, training, perfor-
mance evaluation, competitive wages and objective wages. The
nature of human resource practices is close to some practices,
which could raise organizational performance (Appelabum & Batt,
1995; Huselid, 1995). Therefore, factor one is named High Perfor-
mance Work System (HPWS); because factor two is used to under-
stand the subjects of labor-capital relations, it is named employee
relationship human resources practices (ER).
The reliability test of this questionnaire is shown in Table 3,
which is very good. Table 4 provides a statement statistics and
Pearson correlation matrix of the research constructs.
According to the reviewed literature, this research develops the
structure as Fig. 1.
In order to verify the fitness of the proposed model, v2(Chi-
square) is used as a major index as well as some correlation fitness
indices (Chen, 2004). As Table 5 shows, all indices are higher than
base value. The v2 is 5.511. The P-value (0.480 > 0.05), GFI
(0.986 > 0.9), AGFI (0.952 > 0.9) and RMR (0.01 < 0.05) all meet
the requirement.
Besides the fitness indices, there are also structure reliability and
variance extracted to test the reliability and validity of this model. In
general, the construct reliability should be more than 0.7 and the
variance extracted should be more than 0.5 (Chen, 2004).
As Table 6 shows, the construct reliability of the human
resources practices is 0.8, human capital is 0.7, and department
performance is 0.7. In the test of variance extracted, the variable

Table 2
Factors analysis results for human resources practices.

Constructs Factor loadings Factors’ name Eigen-value Cumulative (%) Cronbach a

Recruit strictly 0.194 0.767 HPWS 5.462613 49.66012 0.9370
Training extensively 0.355 0.610
Performance evaluation 0.489 0.697
Competitive wages 0.196 0.531
Objective wages 0.196 0.771
Employee relationship 0.729 0.310 ER 1.067534 64.04107 0.9296
Communication 0.767 0.364
Career planning 0.669 0.361
Employee participant 0.792 0.217
Appeal procedure 0.847 0.114
 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783 3781

Table 4
Statement statistics and correlation matrix.

Constructs Mean S.E. 1 2 3 4 5 6

1. HPWS 3.33 0.51 1.000
2. ER 2.88 0.63 0.688** 1.000
3. Value 3.51 0.66 0.309** 0.335** 1.000
4. Uniqueness 3.19 0.70 0.369** 0.352** 0.537** 1.000
5. Perception productivity 3.59 0.72 0.457** 0.548** 0.467** 0.429** 1.000
6. Perception work morale 3.87 0.78 0.335** 0.466** 0.275** 0.333** 0.508 1.000
*
: p < 0.05.
**
p < 0.01.

Productivity Work morale

Human H3
Resources Department
Practices performance

H1 H2
Human Capital

Value Uniquenes

Fig. 1. The SEM path.

Table 5
Table 6
Fitness indices of SEM.
Evaluation of test model.
Fit indices Principle
Constructs Construct reliability Variance extracted
v2(Chi-square) Smaller was better 5.511
Human resources practices 0.8 0.70
v2(Chi-square)/DF <2 0.919
Human capital 0.7 0.54
P-value >0.05 0.480
Department performance 0.7 0.53
Goodness of fit index (GFI) >0.9 0.986
Adjusted for goodness of >0.9 0.952
fit index (AGFI)
Root mean square of <0.05 0.01 The human resources practices and department performance
standardized residual (RMR) have significantly positive correlations which means a company
that emphasizes human resource practices could improve the
of human resources practices has a value of 0.70, human capital is department performance (including productivity and morale).
0.54, and department performance is 0.53. That shows the model Fig. 2 shows the significant path coefficients of human resources
of this research has good reliability and validity. practices to human capital and department performance. That
As Table 7 shows, the un-standardized and standardized coeffi- means that human resources practices have a direct effect on human
cients of each path. We could find that each path is significant from capital and department performance. A company could emphasize
its T-value. This means the human resources practices and human human resource practices to improve both human capital and
capital have significantly positive correlations. The human capital department performance. The path coefficient of human capital to
and department performance have significant positive correla- department is also significant, which means the human resources
tions. The human resources practices and department performance practices has the indirect effect on department performance. So
have significant positive correlations. we could improve the performance directly through human re-
Human resource practices and human capital have significant sources practices and improve the performance indirectly through
positive correlations. The human resources practices of HPWS the effect of human resources practices influencing human capital.
and ER also have a positive correlation with value and uniqueness
of human capital. This means a company that emphasizes human 6. Conclusion
resource practices could improve the human capital (including va-
lue and uniqueness) of employees. 6.1. The relation between human resources practices and human
Human capital and department performance have significant capital
positive correlations. This means employees have higher human
capital (including value and uniqueness) and could improve This research shows that there is a positive relationship be-
department performance (including productivity and morale). tween human resources practices and human capital; namely, a
3782 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783
Table 7
Coefficient estimation of model.
Path
(Human Resources Practices) ? [HPWS]
(Human Resources Practices) ? [ER]
(Human Capital) ? [Value]
(Human Capital) ? [Uniqueness]
(Department Performance) ? [Productivity]
(Department Performance) ? [Work morale]
(Human Resources Practices) ? (Human Capital)
(Human Capital) ? (Department Performance)
(Human Resources Practices) ? (Department Performance)
Note: jT-valuej > 1.96, that means the path was significant.
Fig. 2. SEM path analysis.
corporation that respects and carries out human resource practices
would help to increase its human capital. HPWS has significant po-
sitive relationship to the uniqueness of human capital, and ER has
significant positive relationship to the value of human capital. It
implies that higher HPWS would help to increase the uniqueness
of human capital.
6.2. The relationship between human capital and department
performance
This paper shows that there is a positive relationship between
human capital and department performance; namely, the higher
human capital of the organizational staff, the higher the depart-
ment performance would be. Both the uniqueness of human capi-
tal and its value have a significant positive relationship to the
performance of department. If a corporation can improve the
uniqueness and value of human capital, it would promote the per-
formance of department by promoting the innovation of the staff,
improving the internal process, and providing the training.They are
professional and difficult to imitate.
6.3. The relation between human resources practices and department
performance
The SEM model shows that human resource practices have a
significant positive relationship to the department performance;
Standardized estimate Unstandardized estimate S.E. T-value
0.76 0.69 0.090 7.699
0.91 1.00
0.73 0.94 0.168 5.606
0.73 1.00
0.81 1.21 0.193 6.237
0.62 1.00
0.54 0.48 0.109 4.406
0.46 0.44 0.139 3.144
0.51 0.44 0.119 3.687
this means a company that emphasizes human resource practices
would improve its department performance (including productiv-
ity and morale). HPWS has significant positive relationship to the
department performance, and ER has significant positive relation-
ship to the department performance. A company that emphasizes
human resource practices (HPWS and ER) would improve its
department performance (including productivity and work mor-
ale), especially the ER human resources practices.
6.4. Human capital has a mediate effect between human resources
practices and department performance
The SEM model shows that the human resource practices not
only have the direct effect to the performance of department but
also have a mediate effect through human capital to affect
department performance. A corporation may raise its human
capital of the staff by carrying out human resource practices reg-
ularly to raise the performance of various departments in the
corporation. A corporation can directly influence the perfor-
mance of department by implementing human resources prac-
tices. In addition, the corporation can influence the
performance of a department indirectly by the influence of hu-
man resources practices to human capital. A corporation can fo-
cus on human resources practices, which have a significant
positive effect on human capital and department performance.
In addition, a corporation may raise its department performance
by virtue of direct and indirect effects. An organization could fo-
cus on some human resources practices which are related to hu-
man capital and department performance. For example,
extensive training, performance evaluation, competitive wages,
objective wages, employee relationship, communication, career
planning, employee participant, appeal procedure should receive
focus. If an organization focuses on these practices, it would im-
prove department performance and further improve the organi-
zational performance.
7. Implication and suggestion
7.1. The importance of human resources practices
In this research, the HPWS has a positive influence on the per-
formance of departments. Many scholars advocate different con-
tent of HPWS, but for the most part, content includes selecting,
education, training, performance wages, and promoting. These
activities can help an organization to improve its ability and in-
crease its performance. From the viewpoint of resource basis, own-
ing quality staff in a corporation is the source of competitive
advantage; therefore, the HPWS can foster quality staff. In enter-
prises of today, the competitive advantages on which organizations
depend are gradually changing from tangible assets to intangible
assets. It is important for every corporation to develop and main-
 M.-K. Wang et al. / Expert Systems with Applications 38 (2011) 3777–3783
tain its quality staff. On the other hand, enterprises should respect
more the ER of human resources practices, because employees that
care more about these practices would ensure the employees’ abil-
ity and improve the department performance.
7.2. Human resources practices should be implemented
Both human resources practices and human capital could im-
prove department performance. The source of competition advan-
tage is to accumulate internal human capital and resources, then to
improve performance after promoting internal efficiency. So the
human resources practices should indeed be implemented. There-
fore, when organizations implement human resources practices,
they should understand and track the response as well as gather
the feedback of employees. They should supervise at the right mo-
ment, which could improve human capital (internal efficiency) and
performance.
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