An Empirical Examination of Knowledge Management and Organizational Learning as Mediating Variables between HRM and Sustainable Organizational Performance

Abstract

Despite increasing competition, the construction industry is still lagging behind other industries in several aspects such as productivity growth, technology adoption, and human resource management. Although the causal link between human resource management (HRM) and organizational performance (OP) is well established and reinforced by several studies, the mediating mechanisms through which HRM practices impact organizational performance remain areas lacking consensus. This article, therefore, aims at examining the mediating roles of knowledge management (KM) and organizational learning (OL) in the established relationship between HRM and the long-term or sustainable peformance of Thai construction firms. Confirmatory factor analysis and partial least square structural equation modeling (PLS-SEM) were employed as the methods of analysis. Based on the dataset of 194 responses, the empirical results of the study strongly supported the three hypotheses that assumed positive relationships between (1) HRM and OP, (2) HRM and knowledge management, and (3) organizational learning and the OP of the firms under study. These findings thus provide empirical evidence for the three relationships. However, empirical results testing the roles of KM or OL or both as mediating variables behind the link between HRM and sustainable OP were not confirmed by the dataset. Therefore, one of the practical implications provided by this study is that Thai construction firms should be better aligned and integrated their HRM practices, knowledge management, and organizational learning to enhance the firms’ competitive advantage and to help lead the firms towards a more sustainable pathway of business operations. However, since the fragmented activities of construction make it hard to apply human resource management effectively, such good alignment and integration of HRM, KM, and OL for improving performance may, in practice, be quite challenging for most construction firms.