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IX. LINKING SOCIAL CAPITAL TO OUTCOMES FOR CUSTOMERS, WORKERS, AND FIRMS
What Is It About Relationships?
A Behavioral Theory of
Social Capital and Performance
Timothy J. Vogus
Vanderbilt
University
Abstract
Researchers have consistently
found a positive relationship between bundles of high-performance human resource
(HPHR) practices and organizational performance, but, to date, the mechanisms
underlying this relationship have remained unclear. Recent work has suggested
"social capital" mediates the HPHR practiceøper-formance relationship. Building
upon this work I develop and test a behavioral theory of how this occurs.
Specifically, I argue that HPHR practices signal the importance of high-quality
relationships, and I find, using a sample of seventy-five hospital
nursing units, that HPHR practices foster higher-quality interactions and
capabilities for rapid error detection and correction, which, in turn, substantially
reduce the incidence of medication errors and patient falls.
Introduction
Research in strategic human resource management (SHRM) has consistently shown
a positive relationship between configurations of "highperformance" human
resource (HPHR) practices such as extensive formal training programs, employee
empowerment, and performance-based compensation and organizational performance
(see, for example, Ichniowski, Shaw, and Prennushi 1997). These findings have
been demonstrated to be robust in a number of industry-specific studies of
automobile assembly (MacDuffie 1995), banking (Bartel 2004), steel production
(Ichniowski et al. 1997), software development (Vogus and Welbourne 2003),
and textile production (Dunlop and Weil 1997) as well as multi-industry samples
(Huselid 1995). However, recent research has found that the effects of HPHR
practices on performance may be overstated (see Cappelli and Neumark 2001).
This suggests that there is a need for work that more clearly specifies and
tests exactly how HPHR practices affect (or fail to affect) organizational
outcomes.
Organizational social capital—the actual and potential resources
embedded within, available through, and derived from the social relations
within an organization (Leana and Van Buren 1999)—has been proposed as a primary
mechanism through which HPHR practices impact performance. Subsequent empirical
work has found that implementing HPHR practices affects organizational social
capital (that is, increases the "density" of connections between employees)
and, in turn, the performance of steel finishing lines (Gant, Ichniowski,
and Shaw 2002) and high-technology firms (Collins and Clark 2003). Exactly
how HPHR practices and the network of relationships within an organization
influence behavior and performance, however, remains unclear. Therefore,
I develop and test a behavioral theory of how HPHR practices beget performance.
Specifically, I argue
that HPHR practices create a supportive context for the development of social
capital by creating opportunities for relationships to emerge and signaling
their importance to the organization's work. Creating a context supportive
of such relationships leads to richer interactions between employees that
fuel capabilities for managing the unexpected and higher performance. I empirically
test these assertions by examining the effects of HPHR practices on the behavioral
underpinnings of social capital and their resulting effects on medication
errors and patient falls using a sample of seventy-five acute-care hospital
nursing units.
Hypotheses
At the most micro level, social capital manifests itself through
interactions grounded in trust, honesty, and mutual respect that enable the
development of a nuanced understanding of a situation and allow for real-time
synthesis of meaning when unforeseen situations arise. HPHR practices foster
such interactions when employees are selected for their interpersonal skills
as well as technical skills (Gittell 2000), employees are trained in interpersonal
skills, and peers provide developmental feedback. All of these practices signal
that effective interrelating is an essential component of one's everyday practice.
HPHR practices also make the emergence of high-quality relationships more
likely when they provide the opportunity to connect by intensive socialization
practices that allow new employees to engage in authentic communication with
"old-timers" such that they are better equipped with the resources (that is,
information, contacts) they need in order to do their job well. Widespread
participation in the selection process also increases motivation for high-quality
connecting as more current employees have a personal investment and greater
trust in the new employee (Baker and Dutton 2006). Together these practices
create a climate conducive to richer interactions. Thus, I hypothesize: H1:
HPHR practices will be positively associated with respectful interaction.
Respectful interactions are essential because they nurture a collective
capability for rapidly detecting and correcting unexpected events (that is,
mindful organizing; see Weick, Sutcliffe, and Obstfeld 1999). Such interactions
enable mindful organizing by equipping actors with a rich basis for action.
Respectful interactions provide a rich basis for action because they are more
likely to account for the nuances of, in the case of nursing, patient and
unit conditions such that there is a greater awareness of vulnerabilities
that could be the harbinger of complications and errors. Thus, I hypothesize:
H2: Respectful interaction will be positively associated with mindful organizing.
Achieving high (that is, nearly
error free) performance in a high-risk setting like an acute-care hospital
nursing unit requires the rapid detection and correction of anomalous or unexpected
events often when the anomaly to be detected is ambiguous, equivocal, and
a "weak signal." Therefore, performance relies upon processes of collective
sensemaking that facilitate the detection of anomalous events and fit
them into a framework for action and processes of coordination that translate
sensemaking into a coordinated response. A number of case studies of organizations
that experience nearly error-free performance under extremely hazardous operating
conditions where one would expect many errors have demonstrated that mindful
organizing is responsible for their ability to detect dangerous anomalies
as they emerge and for rapidly reconfiguring resources so as to coordinate
a strong response in the face of the unexpected (Weick et al. 1999). Thus,
I hypothesize: H3: Mindful organizing is associated with fewer medication
errors and patient falls.
Method
I utilized mailed questionnaires
to assess all the independent variables of interest as well as several control
variables. Specifically, I collected data through two surveys: (1) a
nurse manager survey assessing the HPHR practices implemented on the unit,
organizational citizenship behavior, and unitlevel control variables, and
(2) a RN survey to assess respectful interaction, the processes of mindful
organizing, and additional control variables. Data were collected from inpatient
units in eleven acute-care hospitals throughout the midwest United States
that were all members of the same Catholic health system. Overall, I sent
surveys to 2,566 RNs and 108 nurse managers, resulting in 1,251 (48.8 percent
response rate) and 97 (89.8 percent response rate) usable surveys, respectively.
A series of t-tests were done to ensure that there was no systematic difference
between respondents and nonrespondents in terms of age, tenure, and educational
background.
Variables
I utilized two archival measures of performance derived from hospital
incident report data: the number of medication errors and patient falls occurring
in a unit in a given month. These data were collected for the month after
all surveys were returned. That is, if all surveys were returned by January
31, the corresponding dependent variable would be for the following month
(February). I also conducted analyses at three and six months (not reported)
after the surveys were returned, and the results reported below are substantively
similar. As a result of missing or otherwise incomplete data, the final
sample used in the regression analyses was reduced to seventy-five units.
As recommended by prior research in strategic human resource management
(for example, MacDuffie 1995), I measure HPHR practices as an additive
index of six clusters of HR practices including selective staffing,
extensive training, developmental performance appraisal, performance-based
rewards, employee empowerment, and job security (alpha = 0.76). The survey
items comprising each of these clusters were adapted from previous research
(Snell and Dean 1992). To capture respectful interaction and mindful organizing,
I developed two new measures. I used four survey items to measure respectful
interaction (for example, "We demonstrate a great deal of mutual respect for
each other," alpha = 0.84) and nine survey items to measure mindful organizing
(for example, "We regularly discuss alternatives as to how to go about our
normal work activities," alpha = 0.88). The measures of respectful interaction
and mindful organizing have been shown to demonstrate adequate psychometric
properties and individual-level survey items acceptably aggregated to the
unit level (Vogus 2004; Vogus and Sutcliffe 2006). Due to space constraints,
I refer interested readers to these papers for a fuller discussion.
To ensure that the effects
of HPHR practices and mindful organizing were robust, I controlled for RN
behavior as well as RN and unit characteristics. First, I controlled for three
unit characteristics in my regression analyses—unit size (natural logarithm
of the number of beds), task interdependence (a fiveitem measure adapted
from Pearce and Gregerson [1991], alpha = 0.81), and the complexity of the
work processes on the unit (three survey items adapted from Preuss [2003],
alpha = 0.70). Second, I controlled for organizational citizenship behavior
(six items adapted from Podsakoff et al. 2000, alpha = 0.89) in the models
of medication errors and patient falls to ensure that my measure of mindful
organizing was not merely capturing the effects of RN effort and willingness
to go above and beyond the call of duty. To ensure that HPHR practices and
mindful organizing were influencing future performance and not merely
the artifact of prior performance, I controlled for prior performance (the
number of errors or falls from the prior month). In additional models not
reported I also controlled for unit type (dummy variables for if the unit
was an intensive care unit, surgical unit, or medical unit), the average patient
load per nurse (as reported by the nurses), the use of clinical pathways (dummy
variable), and the presence of a no-fault error reporting system (dummy variable);
the results were substantively identical.
Results
Table 1 shows the correlations between all the variables used in
this study. Most notable is the fact that respectful interaction and mindful
organizing are very highly correlated (r = 0.80). While these two variables
should be closely related given their theorized relationship, it could pose
a problem to the extent that it creates multicollinearity. Multicollinearity
is not a concern here because these variables do not appear simultaneously
in the same models, and even if they were to appear in the same model additional
analyses (not reported) revealed that variance inflation factors, which
quantify how much the variance of the estimated regression coefficient
is inflated by the existence of multicollinearity, were well within
acceptable levels (Chatterjee and Price 1991).
I utilized negative binomial for analysis of the count variables
(medication errors and patient falls; Long [1997]), regression equations,
and ordinary least squares for the models of respectful interaction and mindful
organizing to test my hypotheses. Given that my unit of analysis (the nursing
unit) is nested within a hospital and, as such, shares hospital-level properties
that may affect the variables of interest, units within the same hospital
cannot be considered independent. To correct for this, I use robust standard
errors with clustering by hospital in all models. Table 2 reports the results
of these analyses. In Model 1 I find that HPHR practices are positively
associated with respectful interaction (B = 0.10, p < .05) supporting hypothesis
1. Model 2 reveals respectful interaction is strongly associated with mindful
organizing (B = 0.57, p < .001) supporting hypothesis 2, and in Models
3 and 4


I
find that mindful organizing is associated with lower incidence of medication
errors (B = -.48, p < .05; a 16 percent decrease in errors for a standard
deviation increase in mindful organizing) and patient falls (B = -0.95, p
< .001; a 29 percent decrease in falls for a standard deviation increase
in mindful organizing), supporting hypothesis 3. Interestingly, HPHR practices
have no direct effect on the processes of mindful organizing (p > 0.56)
or the incidence of medication errors (p > 0.65) but have a strong negative
association with the occurrence of patient falls. Lastly, and surprisingly,
organizational citizenship behavior was positively associated with medication
errors and falls (both p < .02). This suggests that in dynamic and interdependent
work like acute-care nursing, typically performance-enhancing behaviors can
actually have negative unintended consequences.
Conclusion
In this paper I developed
a behavioral approach to understanding how HPHR practices generate social
capital and performance. My analyses revealed that implementing HPHR practices
creates the opportunities for and signals the importance of respectful interaction.
In turn, these respectful interactions create the relational infrastructure
upon which the unit-level capabilities for rapid error detection and correction
(that is, mindful organizing) can be built, which results in substantially
lower levels of medication errors and patient falls. These findings
are consistent with my hypotheses as well as an emerging body of research
demonstrating the importance of relationships and relational processes on
performance (see Gittell 2000) and provide evidence that the behaviors occurring
within networks are also an essential mechanism for understanding the multifaceted
effects of HPHR practices and organizational performance. Although my results
suggest that respectful interaction and mindful organizing underlie social
capital, future research needs to directly examine the relationship among
network structure (for example, density), respectful interaction, mindful
organizing, and performance. Such research could help further understand the
complex ways in which HPHR practices affect performance as well as how network
structure influences individual and collective action.
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