Knowledge-based HRM and business process innovation in the hospitality industry

The study addresses how knowledge-based human resource management (HRM) practices—specifically knowledge-based compensation (KBC), performance assessment (KBPA), recruitment (KBR), and training and development (KBTD)—influence business process innovation (BPI) in the hospitality industry. It investigates absorptive capacity (AC) as a mediating mechanism and knowledge-centered organizational culture (KCOC) as a contextual moderator that can strengthen HRM–AC linkages. Set against the backdrop of increasingly knowledge-intensive and competitive hospitality markets, the paper emphasizes knowledge management and sharing as critical enablers of innovation. The research fills gaps in prior work that focused more on product innovation than process innovation and seldom empirically tested internal enablers and the combined roles of AC and organizational culture in driving BPI. The purpose is to empirically validate a model linking knowledge-based HRM to BPI via AC and under varying levels of KCOC, offering both theoretical and practical insights for hospitality management.

The paper synthesizes research on knowledge management (KM), HRM, and innovation to formulate hypotheses. Knowledge-based HR practices are posited to enhance BPI by optimizing organizational processes and motivating knowledge creation and sharing (H1a–H1d). Prior literature suggests that compensation, performance appraisal, recruitment, and training systems tailored to knowledge processes facilitate innovation and competitiveness. Absorptive capacity—defined as the ability to identify, acquire, assimilate, transform, and exploit external knowledge—is viewed as a strategic learning capability affected by HR practices and vital for innovation (H2a–H2d; H3). The study further argues AC mediates the effects of knowledge-based HR practices on BPI (H4a–H4d), consistent with evidence that knowledge-related capabilities often serve as key mediators of performance outcomes. Finally, KCOC—shared values and norms supporting knowledge creation and sharing—is theorized to moderate the relationship between knowledge-based HR practices and AC, strengthening how HR policies translate into learning capacity (H5a–H5d). Collectively, the framework integrates the resource-based view (RBV), linking internal resources (HRM, culture, AC) to innovation outcomes, and addresses a noted gap in empirical tests of internal enablers of process innovation in hospitality.

Design and setting: Quantitative, multi-wave (time-lagged) survey conducted from May to September 2022 among employees/managers of hospitality companies in Lahore, Islamabad, and Karachi (Pakistan). Sampling: Convenience, non-probability sampling. Data collection: Wave 1 (knowledge-based HRM predictors): ~880 distributed; 715 usable (81.25% response). Wave 2 (after 1–2 weeks; mediator AC and moderator KCOC): 649 usable (90.76%). Wave 3 (after 1–2 weeks; outcome BPI): 587 usable. Demographics: 54% male, 46% female; ages 21–30 (17.7%), 31–40 (29.1%), 41–50 (34.9%), >51 (18.2%); marital status married 50.6%, unmarried 49.4%; positions: managers 32.37%, assistant managers 42.50%, regular employees 25.13%; total/present experience 1–30 years. Measures: 5-point Likert scale (1=strongly disagree to 5=strongly agree). Knowledge-based HR practices (13 items) from Kianto et al. (2017); KCOC (7 items) from Donate & Guadamillas (2011); AC (21 items) from Jansen et al. (2005); BPI (4 items) from Wang & Ahmed (2004). Reliability/validity: All factor loadings positive and acceptable; Cronbach’s alpha and composite reliability exceeded 0.70 thresholds; AVE generally acceptable (as per Table 1). Harman’s single-factor (CMB) variance=37.632% (<50%), indicating no severe common method bias. Analysis: SPSS v21 used for descriptive statistics, reliability, correlations, and regressions. Mediation and moderation tested via Hayes PROCESS macro with bootstrapping; confidence intervals computed via resampling. Time-lagged design employed to mitigate CMB and strengthen causal inference. Model adequacy: R² and Q² values reported for AC and BPI met recommended cut-offs, indicating explanatory power and predictive relevance.

Measurement model: Reliability and validity supported; Cronbach’s alpha and CR between ~0.7–0.9; no item removal required; HTMT <0.90; discriminant validity adequate. Direct effects (Table 3): • H1a: KBC → BPI β=0.152, t=4.396, p<0.001 (supported). • H1b: KBPA → BPI β=0.124, t=3.441, p<0.01 (supported). • H1c: KBR → BPI β=0.115, t=3.236, p<0.01 (supported). • H1d: KBTD → BPI β=0.197, t=4.854, p<0.001 (supported). • H2a: KBC → AC β=0.231, t=5.600, p<0.001 (supported). • H2b: KBPA → AC β=0.223, t=4.900, p<0.001 (supported). • H2c: KBR → AC β=0.169, t=4.127, p<0.001 (supported). • H2d: KBTD → AC β=0.153, t=2.970, p<0.01 (supported). • H3: AC → BPI β=0.253, t=5.223, p<0.001 (supported). Mediation via AC (Table 4): • H4a: KBC → AC → BPI indirect effect=0.058, SE=0.016, t=3.615, p<0.001 (supported). • H4b: KBPA → AC → BPI indirect effect=0.056, SE=0.017, t=3.317, p<0.001 (supported). • H4c: KBR → AC → BPI indirect effect=0.043, SE=0.013, t=3.206, p<0.001 (supported). • H4d: KBTD → AC → BPI indirect effect=0.039, SE=0.017, t=2.284, p<0.01 (supported). Moderation by KCOC (Table 5): Interaction effects on AC were significant: • H5a: KCOC×KBC → AC β=0.170, SE=0.054, t=3.114, p<0.01 (supported). • H5b: KCOC×KBPA → AC β=0.164, SE=0.048, t=3.385, p<0.01 (supported). • H5c: KCOC×KBR → AC β=0.142, SE=0.049, t=2.889, p<0.01 (supported). • H5d: KCOC×KBTD → AC β=0.112, SE=0.049, t=2.882, p<0.01 (supported). Conditional effects showed stronger positive slopes at higher KCOC levels across all HRM–AC paths. Model fit and explanatory power (Table 6): • R²: AC=0.645; BPI=0.468. • Q²: AC=0.640; BPI=0.463. All hypothesized relationships (H1–H5) were supported, indicating that knowledge-based HRM practices enhance BPI directly and indirectly through AC, and that KCOC strengthens the translation of HR practices into AC.

Findings corroborate the central thesis that knowledge-based HRM practices are pivotal drivers of business process innovation in hospitality organizations. Compensation, performance assessment, recruitment, and training practices that are explicitly aligned with knowledge creation, sharing, and application not only bolster BPI directly but also cultivate absorptive capacity, a dynamic learning capability essential for translating knowledge into process improvements. The mediation results validate AC as a mechanism through which HR practices impact BPI, aligning with RBV arguments that firm-specific knowledge capabilities underpin competitive advantage. The moderating effects indicate that a knowledge-centered organizational culture amplifies how HR policies translate into AC, underscoring culture’s role as an enabling context for learning and innovation. Collectively, the results provide a comprehensive empirical account of how internal enablers (HR practices, culture, AC) interlock to improve process innovation, addressing prior gaps that emphasized product innovation or lacked empirical tests of such internal mechanisms in hospitality.

The study demonstrates that formal and informal knowledge-based HR practices significantly enhance business process innovation, both directly and via the mediating influence of absorptive capacity. Moreover, a knowledge-centered organizational culture strengthens the link between knowledge-based HR practices and absorptive capacity. By integrating the resource-based view with empirical evidence from Pakistan’s hospitality sector, the research highlights knowledge assets and culture as foundational to building core competencies and sustaining competitive advantage through improved processes. The work advances theory on KM–HRM–innovation linkages and provides actionable insights for designing HR systems and cultivating culture to foster learning and innovation.

The study examines overall absorptive capacity rather than its distinct dimensions; future work should test the model across acquisition, assimilation, transformation, and exploitation facets. Data were drawn solely from the hospitality sector in Pakistan, limiting generalizability; replication in other industries (e.g., banking, manufacturing, telecommunications) and contexts is recommended. The model focuses on BPI as the outcome; future research could incorporate multiple outcomes (e.g., product innovation, performance metrics) and longitudinal designs to further strengthen causal claims.