Index

Abstract

The purpose of this study was to examine the influence of human resource management (HRM) practice variables on performance, with organizational citizenship behavior (OCB) as a mediating variable. This research specifically uses social enterprise as study material due to the different characteristics of social enterprise from other organizations in terms of organizational governance, where commercial logic and social logic are combined. This study uses a quantitative approach, involving 100 worker respondents in social enterprises in a survey, to see the influence of HRM practice variables on organizational performance with OCB as a mediator. Based on the results of data analysis using SEM-PLS, it was found that HRM practices have a significant effect on organizational performance. When the OCB mediates this influence, it is well known to be even stronger. The study's findings practically affect how human resource policies are decided since they suggest that practices should be created to encourage workers to perform to their highest potential.

Keywords: Commercial logic, HRM practice, OCB, Performance, Social enterprise, Social logic.

Received: 2 March 2023 / Revised: 8 May 2023/ Accepted: 15 August 2023/ Published: 28 August 2023

JEL Classification:

L310; L310;  L310; M1; M540.

Contribution/ Originality

This study strengthens the idea that HRM and OCB practices are crucial for enhancing performance, particularly in social companies, which have received little attention to date.

1. INTRODUCTION

Social entrepreneurship organisations typically emerge as a result of addressing social issues within the local context of society, which are anticipated to have broader implications for global concerns such as poverty, education, sanitation, and microbusiness development, among others, in the future. Social entrepreneurs may be required to alter the institutional environment and develop completely new business models to address the complex and systemic socioeconomic difficulties they face (Lepoutre, Justo, Terjesen, & Bosma, 2013). Social entrepreneurship organizations are also referred to as hybrid organizations, applying two logics in their operations, namely social logic and commercial logic. The goals to be achieved are consistent with these multiple logics. Hybrid organizations can be profit-oriented or non-profit organizations or grey forms between the two that are designed based on efforts to mitigate social or environmental issues (Alberti & Varon Garrido, 2017).

While socioeconomic organisations in general depend on factors like human resources, leadership, governance, marketing activities, and market competitiveness, social enterprises face a number of challenges along the way, particularly in the area of human resources (Helmig, Ingerfurth, & Pinz, 2014). Research revealed that Strategic Human Resource Management (SHRM) practices have a substantial impact on agility and integrity and improve the resilience of organizations (Bouaziz & Smaoui Hachicha, 2018). The issue of human capital is not only about intellectual skills but also about emotional and spiritual skills. So for Social enterprises, in the process of recruiting human resources, the compatibility of individual goals with organizational goals must be a concern (Haryanti, Hati, & Anggriyani, 2020). Therefore, it is critical to determine during the selection process if potential volunteers are aware of the organization's mission and whether their beliefs align with it. Making certain that the volunteers are assigned tasks that allow them to carry out some important activities is also essential (Roumpi, Magrizos, & Nicolopoulou, 2020). Employers with experience in both the commercial and social sectors are needed to be hired to fulfill the dual purposes of social enterprises, and effective employee relations strategies are needed to keep this personnel over time (Napathorn, 2018).

In the Indonesian context, the growth of social enterprises is a result of young people's increased awareness of the various social issues facing them and their desire to help solve these issues. Their excellent understanding of technology, a fairly extensive and strong network, and innovative and creative thinking are important factors that support their ability to take real action. According to data released publicly by the British Council, over 75% of social enterprise leaders in Indonesia are between the ages of 18 and 44, with 46% of them occurring between 25 and 34  (British Council, 2018).

This fact suggests that young people can play an important role in finding solutions to social problems. As a result, it becomes the responsibility of enterprises to create a place for employee growth and development through effective HRM implementation.

The organisation, however, faces challenges as a result of the growing participation of generation Z (those born between 1996 and 2010) and other generations in general in social activities. One such challenge is how to create the best HRM that can meet employees' needs for self-actualization and keep them motivated to work for the business while fusing the vision and mission for the long-term achievement of organisational goals. As informal organizations get more complicated and engage in a wider range of activities, they require individuals who meet specific criteria and fit their organizational structure. The processes of hiring, selecting, training and development, compensation, and human relations should ultimately be on the agenda of analytical analysis. Furthermore, it is necessary to talk about how to manage employees once they are hired to prevent a high turnover rate. The likelihood of consistently attaining organizational goals increases with this approach.

For a social enterprise that aims to have a significant, measurable, and cumulative social impact, there aren't as many studies and research on the importance of HRM and incentive systems as there are for businesses as a whole (Iannaci, 2021). This study is intended to explore factors of much concern, discussed in various cross-sectoral studies but with very little discussion in more specific domains such as social enterprises operating in a hybrid manner where commercial and social logic are implemented simultaneously. This study is important because of the need for social enterprises to strengthen their understanding of employee behavior so that they can adopt strategic policies in the field of human resources that can support the achievement of organizational goals.

2. LITERATURE REVIEW

2.1. Social Enterprise, Hybrid Organization

Social enterprise organizations play a key role in creating both economic and social value by working to better society through innovative and beneficial social endeavors (Saraç, 2020). In today's economies and cultures, social enterprises either reflect or confirm a general trend towards new arrangements for allocating responsibility for the common good (Defourny & Nyssens, 2017).

Researchers consider the social enterprise to be a representative type of hybrid organization (Doherty, Haugh, & Lyon, 2014; Park & Bae, 2020). The number of social enterprises with hybrid identities has increased recently. They function as hybrid organizations, combining elements of both for-profit and nonprofit endeavors (Battilana & Lee, 2014; Ebrahim, Battilana, & Mair, 2014).

2.2. Human Resource Management (HRM) Practice

HRM may play a significant role in building a foundation for sustainable organizations, in addition to performing tasks that focus on specific sustainability dimensions or the needs of various stakeholders (Podgorodnichenko, Edgar, & McAndrew, 2020). Effective management of human resources can be used to gain a sustained competitive edge in the company; as a result, HRM has gained major significance for current scholarly research (Caligiuri, De Cieri, Minbaeva, Verbeke, & Zimmermann, 2020; Xu, Zhang, Yang, & Wu, 2020).

To achieve the dual mission, the hybrid form of SE can affect the implementation of HRM practices. The required psychometric standards (training, development, and education; work conditions; and compensations and rewards) can enhance the HRM's performance. Additionally, it can be used as a diagnosis to enhance workplace well-being and organizational results (Demo, Neiva, Nunes, & Rozzett, 2012).

2.3. Organizational Citizenship Behavior (OCB)

Organizational citizenship behavior (OCB) is a type of employee conduct and voluntary contribution that has no direct connection to particular job requirements (Organ, 2018). OCB is a type of conduct that promotes a cooperative system inside an organization, but it is not routinely recorded in the formal system of the organization and is not systematically linked to specific rewards (Organ, 2018).  OCB is defined as positive employee behavior that affects the efficient achievement of organizational goals but is not expressly stated in the contract (Yang, He, Cui, & Hsu, 2018) and contributes to the reduction of organizational needs to allocate scarce resources, maintain organizational attachment and unity, and allocate more time for effective planning and problem solving (Hemaloshinee & Nomahaza, 2017). Such behavior is usually oriented towards meeting workers' needs for autonomy and relatedness and improving competence and self-evaluation (Bono, Glomb, Shen, Kim, & Koch, 2013; Weinstein & Ryan, 2010; Williamson & Clark, 1989).

2.4. Organizational Performance (OP)

Human resources, leadership, governance, marketing initiatives, and market competitiveness are factors that, in general, determine the success or failure of socioeconomic organisations (Helmig et al., 2014). In measuring the performance of social entrepreneurship organizations, researchers will usually also depart from the characteristics of these multiple logics. The achievement of social missions is measured using indicators of attention to social goals, others regarding values, and normative identity, while economic missions are identified using indicators of attention to economic goals, self-regarding values, and utilitarian identity (Penpokai, Vuthisopon, & Saengnoree, 2023; Stevens, Moray, & Bruneel, 2015; Urban, 2015). Measuring the performance of social entrepreneurship organizations using four dimensions, namely: (1) social impact and reach as the main goal; (2) innovativeness of solution, which is the value created by the formulation of sustainable solutions through synergies between capabilities, products, processes, and technologies; and (3) Expandability and replicability refer to efforts to transfer and adapt solutions to the wider community. (4) The sustainability of the enterprise includes aspects of self-funding capability and social value creation.

2.5. Hypothesis Development

2.5.1. HRM Practice on OCB

The practices in hiring and selecting personnel have an impact on their extra-role behavior (Begum, Zehou, & Sarker, 2014). All facets of HRM practise, such as recruiting and selection, training and development procedures, compensation and reward systems, and performance and appraisal systems, have a positive impact on OCB (Ahmed, 2016). The Positive effects of good HRM practices on OCB indicate that increasing good HRM practices will raise OCB (Harsasi, Muzammil, & Radeswandri, 2017). Also, research revealed that the usage of HRM techniques significantly affected employee OCB as well as organizational performance and that OCB partially mediates the relationship between HRM techniques and organizational performance (Taamneh, Alsaad, & Elrehail, 2018). Both OCB and the intention to remain are positively impacted by the HRM system's reputation (de la Rosa-Navarro, Díaz-Fernández, & Lopez-Cabrales, 2020). OCB is positively impacted by all HRM procedures. While some practices have a stronger link with OCB than others, others have a weaker overall effect on OCB (Ahmed, 2016). So to increase the OCB of the employees in the workplace for long-term employment relationships, the employers must assure an efficient and fair hiring process, followed by rewards and incentives, career progression, training and development, and job design (Begum et al., 2014).
ypothesis 1: HRM Practice has a positive impact on OCB

2.5.2. OCB on Performance

The magnitude of OCB's influence on management and business shows how much employee conduct and welfare affect an organization's ability to succeed (Ocampo et al., 2018). These results support prior research's claim that corporate citizenship activity and performance are strongly correlated (Sadeghi, Ahmadi, & Yazdi, 2016). Research has also revealed that organizational citizenship behavior (OCB) has a positive and substantial impact on the sub-criteria of enterprise performance (i.e., financial, customer, learning and growth, and internal processes) (Shahin, Naftchali, & Pool, 2014). According to the results, organizational success and organizational citizenship conduct are substantially connected, with benevolence, sportsmanship, and civic virtue having the strongest and most significant correlations (Patiraj Kumaria, 2017).

Hypothesis 2: OCB influences organizational performance

2.5.3. HRM on Organizational Performance

HRM practice has a positive and significant effect on organizational performance, specifically in the context of organizational industry, size, and societal context (Tzabbar, Tzafrir, & Baruch, 2017). HRM and creativity are vital points since they develop and strengthen other abilities (Rothenberg, Hull, & Tang, 2017).
Hypothesis 3: HRM influences organizational performance

2.5.4. HRM, OCB, and Performance

One of the more recent managerial ideas produced by modern management philosophy that has drawn the attention of both researchers and practitioners is the idea of organizational citizenship behavior. OCB serves as a partial mediator between HRM practices and organizational performance. The relationships between high-performance human resource practices and both performance indicators were largely controlled by service-oriented organizational citizenship behavior OCB (Taamneh et al., 2018) and Sun, Aryee, and Law (2007).

Hypothesis 4: HRM influences organizational performance with OCB as a mediator

Figure 1. Conceptual framework.

Figure 1 shows the conceptual framework of the relationship between HRM practice and organizational performance, with OCB acting as a mediator.

3. METHOD

This explanatory research study uses a quantitative approach, which verifies theories or hypotheses by measuring variables metrically or numerically and carrying out data analysis processes using statistical tools by following the topic and research objectives. This study's pattern of influence focuses on the relationship between HRM practices and organizational performance, with OCB providing a mediator. The participants in this study totaled 773 social enterprises from non-Government Organization (NGOs) in Indonesia. The sample size for this study was 100 respondents since there were 773 social enterprises (SE) in the population and a 10% margin of error. The information for this study was gathered through online surveys. A Likert scale was used to rate the variables under investigation, with 1 being a strong disagreement and 5 representing a strong agreement.

3.1. Measurement

HRM Practice measurement includes recruitment and selection activities, training and development, compensation, performance management, and employee relations (Demo et al., 2012; Watty-Benjamin & Udechukwu, 2014).

OCB measurement using indicators according to Organ (2018) (1) Altruism refers to the willingness to assist without being asked for and is not a form of response to a request for help. (2) Conscientiousness is the willingness to voluntarily engage in an organization's program or project that impacts the organization's reputation beyond working hours. (3) Sportsmanship: in this context, workers seek to pay attention and build perceptions of positive things in the organization. (4) Courtesy is a willingness to do more and act proactively to solve problems. (5) Voice: workers have the willingness to voice issues related to clients, communities, and competitors and voice the expectations of members of the organization to measure the performance of social entrepreneurship organizations, which departs from the characteristics of multiple logic social enterprises. The achievement of social missions is measured using indicators of attention to social goals, other-regarding values, and normative identity, while economic missions are identified using indicators of attention to economic goals, self-regarding values, and utilitarian identity (Stevens et al., 2015). The following is a table of variable measurements.

Table 1. Variable measurement.
Variable Indicator Source
Human resource management practice (HRM) Recruitment Watty-Benjamin and Udechukwu (2014) and Demo et al. (2012)
Selection
Training and development
Performance appraisal
Compensation
Human relation
Organizational citizenship behavior (OCB) Altruism Organ (2018)
Conscientiousness
Sportsmanship
Courtesy
Voice
Organizational performance (OP) Attention to social goals Stevens et al. (2015)
Other regarding values
Normative identity
Attention to economic goals
Self-regarding values
Utilitarian  identity

Table 1 describes the variable descriptions along with measurement indicators extracted from various sources.

4. RESULT

4.1. Model Analysis and Hypothesis Testing

In this study, two evaluation assessment models—the inner model, also known as the structural model, and the outer model, also known as the measurement model—are used to conduct model analysis. using the composite reliability, discriminant validity, and outer model or measurement model tests.

The validity of any correlation between the indicator and its latent construct or variable is evaluated using the convergent validity test. Loading factor values can be used to determine convergence validity. If the study's loading factor is greater than 0.700, convergent validity testing is regarded as having been successful. A table of test outcomes dependent on the loading factor is provided below:

Table 2. Loading factor validity test results.
Variable Indicator
Original sample (O)
Critical point
 Result
HRM HRM1
0.744
0.7
 Valid
HRM2
0.784
0.7
 Valid
HRM3
0.776
0.7
 Valid
HRM4
0.901
0.7
 Valid
HRM5
0.909
0.7
 Valid
HRM6
0.898
0.7
 Valid
OCB OCB1
0.775
0.7
 Valid
OCB2
0.796
0.7
 Valid
OCB3
0.850
0.7
 Valid
OCB4
0.902
0.7
 Valid
OCB5
0.834
0.7
 Valid
OP OP1
0.853
0.7
 Valid
OP2
0.814
0.7
 Valid
OP3
0.834
0.7
 Valid
OP4
0.784
0.7
 Valid
OP5
0.911
0.7
 Valid
OP6
0.773
0.7
 Valid

Based on Table 2, it can be concluded that all indicators are valid because they all have loading factor values higher than 0.7. The indicator with the highest loading factor value is the OP5 indicator in the OP variable, while the indicator with the lowest loading factor value is the HRM1 indicator in the HRM variable. The variables can be regarded as valid for further analysis, as all indicators can be used to explain each variable that is present.

Cronbach's alpha and composite reliability can be used to conduct reliability testing. According to the test criteria, the construct is deemed reliable if the composite reliability is better than 0.7 and Cronbach's alpha is greater than 0.6.

The following is a summary table of reliability test results.

Table 3. Reliability test results.
Variable
Cronbach's alpha
Composite reliability
 Result
HRM
0.914
0.934
 Reliable
OCB
0.888
0.919
 Reliable
OP
0.909
0.929
 Reliable

According to Table 3, each variable results in a Cronbach's alpha value greater than 0.6 and a composite reliability value higher than 0.7. Therefore, all indicators are deemed reliable for measuring their variables based on the calculation of Cronbach's alpha value and composite reliability value.

Tests of Hypothesis: A stage for assessing the goodness of fit that involves R2 and hypothesis testing is the evaluation of the inner model, also known as the structural model. To determine if exogenous variables have any effect on endogenous variables, hypothesis testing is utilized. According to the test criteria, a significant difference is declared if the P-Value value or T-Table value is greater than significant alpha 5% or 0.05. Significance and model test results can be known through the following figures and tables.

Figure 2. Inner model.

Figure 2 illustrates the results of hypothesis testing, where based on the criteria of p value and t table, it can be concluded that all research hypotheses are accepted.

Table 4. Model significance test results.
Variable
Original sample (O)
T statistics (|O/STDEV|)
P values
 Hypothesis result
HRM -> OCB
0.790
16.468
0.000
 Accepted
HRM -> OP
0.281
2.403
0.017
 Accepted
OCB -> OP
0.594
3.542
0.000
 Accepted
HRM -> OCB -> OP
0.470
3.395
0.001
 Accepted

The next inference can be made from the test results shown in Table 4: H1 is accepted, indicating that, with a P-value of 0.000 to 0.5, HRM significantly affects OCB.

The variable path coefficient HRM to OCB has a positive value of 0.790. H2 is accepted, and the P-value of 0.017 indicates that HRM significantly improves OP. The HRM variable path coefficient against OP has a value of 0.281.  H3 is accepted, indicating that OCB significantly improves OP with a P-value between 0.000 and 0.5.

The variable route coefficient from OCB to OP has a value of 0.594. H4 accepted indicates that, with a P-value, OCB mediates the link between HRM and OP.

5. DISCUSSION

The purpose of this study is to find a relationship between HRM practice and social enterprise performance, either directly or indirectly, with OCB as a mediation variable. As the results of the data analysis in the previous section showed, HRM practice has a direct and significant effect on OCB. These findings correspond to those of Ahmed (2016) and Bartram, Cavanagh, and Hoye (2017). Human resource practices such as recruitment and selection are carried out to find candidates who match the required qualifications. Especially for an organization that uses commercial and social logic simultaneously, finding the right candidate through the recruitment and selection process becomes such an urgent process. The selected candidates should at least have the same passion and calling heart as the organization, namely to contribute to formulating and implementing problem-solving programs sustainably. Training and Development is a stage of strengthening knowledge and skills in formulating problems, finding alternative solutions, making the best solution decisions, and executing these solutions in the field. This encompasses developing capabilities and expertise in the process of raising funds and managing them. One of the characteristics of social enterprises is the involvement of more stakeholders. The involvement of many stakeholders makes the responsibility of workers heavier because they have to satisfy more parties than traditional organizations. Therefore, it requires established knowledge and qualified skills, both of which can be obtained through training and development.

Organizational citizenship is also found to affect organizational performance. This finding is in line with the results of the research proposed (Ocampo et al., 2018; Patiraj Kumaria, 2017). OCB behavior is defined as positive employee behavior that has an impact on the effective achievement of organizational goals, but such behavior is not explicitly stated in the contract (Yang et al., 2018). Altruism refers to the willingness to assist without being asked for it and not as a form of response to a request for help. Conscientiousness is the willingness to voluntarily engage in an organization's program or project, which impacts the organization's reputation beyond working hours. Sportsmanship is the context in which workers seek to pay attention to and build perceptions of positive things in the organization. Courtesy is a willingness to do more and act proactively to solve problems. Voice: workers have the willingness to voice issues related to clients, communities, and competitors and the expectations of members of the organization. OCB contributes to reducing the need for organizations to allocate scarce resources, maintaining organizational engagement and unity, and allocating more time for effective planning and problem solving (Hemaloshinee & Nomahaza, 2017).

By implementing HRM practices properly and correctly, organizations have a great opportunity to improve their performance. By mediating extra-role behavior, organizations can increase these opportunities. Workers with extra-role behavior become an important resource for the organization. OCB shown by employees is an indication of employee loyalty and an indication of employee understanding regarding the vision and mission of the organization. These two things will be the driving factors for employees to show the best performance, which in turn will have an impact on the overall performance of the organization as a whole.

6. CONCLUSION

HRM practice is a crucial factor for the organization because of which the best performance of the organization can be achieved, and each activity in HRM has a role in achieving it. OCB becomes a driving and reinforcing variable after HRM practice is implemented correctly. The accuracy of the recruitment and selection process, the training and development program's suitability with organisational needs, the fairness of reward determination, and the development of interpersonal relationships will give rise to employee behaviour that goes beyond what is specified in the employment contract and encourage employees to consider the performance and sustainability of the company.

Funding: This study received no specific financial support.  
Institutional Review Board Statement: The Ethical Committee of the Universitas Negeri Malang, Indonesia has granted approval for this study on 18 December 2022 (Ref. No. 12.12.50/UN.32.4.1/EP/2022).
Transparency: The authors state that the manuscript is honest, truthful, and transparent, that no key aspects of the investigation have been omitted, and that any differences from the study as planned have been clarified. This study followed all writing ethics.
Data Availability Statement: The corresponding author may provide study data upon reasonable request.

Competing Interests: The authors declare that they have no competing interests.

Authors’ Contributions: Participated in the design of the study, performed the statistical analysis and drafted the manuscript, T.N.R.; helped to design of the study and participated in the sequence alignment of manuscript, H.P.; participated in the sequence alignment and drafted the manuscript, C.W.; participated in its design, coordination and helped to drafted the manuscript. All authors approved the final manuscript, A.H. All authors have read and agreed to the published version of the manuscript.

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