Bulletin of Business and Economics, 13(1), 521-526

https://bbejournal.com
https://doi.org/10.61506/01.00236
Role of High-Performance Human Resource Practices and Employee Innovative Behavior in the Implementation of Digital
Transformation: A Case of Pakistan’s IT Sector

Zargham Ullah Khan1, Muhammad Bilal Ahmad2, Fatima Shaukat3, Munawar Kashif4
Abstract
The purpose of this study is to determine how high-performance human resource initiatives and creative employee behavior affect
the adoption of digital transformation. There hasn't been much study done on how to employ human resources in digital
transformation. The primary goal of this study is to determine which high performance human resource practices have the greatest
impact on employee innovation and how those practices affect both employee creativity and company digital transformation. The
study's focus is first-hand information. In this examination, a quantitative research design is employed. All IT professionals working
in Lahore, Punjab, Pakistan, make up the population used in this study. Data collection is done using a convenience sampling
strategy. IT staff members were given a total of 350 questionnaires; 310 of them were returned, and 300 of them were chosen for
analysis. The research might benefit from multilevel and longitudinal studies that incorporate companies from different industries.
The current study found extensive training, selective staffing, and rewards are essential steps in the digital transformation process to
encourage employee innovative behavior.
Keywords: Extensive Training, Selective Staffing, Rewards, Employee Innovative Behavior, Digital Transformation

1. Introduction
The act of employing technology to develop new corporate cultures, business processes, and customer experiences in response to
changing consumer and market demands. Digital technology has many distinct effects on human resource management (HRM), and
these effects are becoming more detrimental to employee work life (Parry & Strohmeier, 2014). This study seeks to understand how
the digital transformation of Pakistan's information technology industry is influenced by innovative employee behavior and efficient
human resource management techniques. Staff employees are chosen, developed, and rewarded as part of "HRM" processes. The
HR department of a corporation may be significantly impacted by technological advancement. Due to people's constant connection
to electronic devices, one of the biggest challenges that businesses now confront is integrating and utilizing new digital technology
(Hess et al., 2016). To successfully undertake digital transformation (DT), businesses need a combination of tangible (IT
infrastructure), intangible (knowledge, customer focus, and synergy), and human (technical and management skills) resources
(Bharadwaj, 2000). Artificial intelligence and the Internet of Things, two technological breakthroughs associated with Industry 4.0,
have transformed the need for employment by automating a variety of tasks (Bag et al., 2021; Sivakumar & Kumar, 2017).
Companies need to adopt modern human resource management techniques and understand how this management fits into their
overall operations, according to the industry 4.0 revolution.
Therefore, our research question is: Which high performance HR practices promote employee innovative behavior for digital
transformation of a company? Thus, our objective is to ascertain how the interaction between high performance human resource
practices digital transformation is impacted by employee innovative behavior. Therefore, this paper fills this gap by finding that
extensive training, selective staffing, and rewards influence employee innovative behavior for digital transformation of a company.
Previous empirical study has not adequately addressed the function of HPHRP and employee inventive behavior in the DT, thus
this paper examines how this function becomes crucial. An essential contribution is to analyze the partial mediating role of employee
innovative behavior in the relationship between high-performance human resource practices and digital transformation. This is in
line with the contingent approach, which holds that an organization will create practices and procedures that result in the behaviors
it requires from its personnel if it is aware of what those behaviors are (Woodward, 1958).

2. Literature Review and hypotheses development

2.1. High Performance HRM Practices and Employee Innovative Behavior
The ability of a worker to innovate is significantly influenced by their human capital and work habits, both of those are necessary
components in the process of value generation (Rashee, 2018; Morteza et al., 2020). The modern, knowledge-based economy places
an increasing emphasis on the strategic utilization of human resources. Business examples for small enterprises have highlighted
noteworthy effects of HR policies to reward and motivate staff to adopt pro-innovative attitudes and behaviors (Lewicka, 2013;
Ismail & Ali, 2017). Employee invention, modification, and application of novel ideas results in the innovation process. Problem-
solving, concept development, idea acceptance, idea implementation, idea enlargement, and idea systematization are among the
processes that are required (Scott and Bruce, 1994; Bibi, 2016). As the HPWS may provide beneficial tailored training and individual
learning theory asserts that "the updating of information can optimize learning," it may encourage employee innovation (Miao et al.,
2020). With assessments, fair paying procedures, adequate work arrangements, and chances for decision-making, employee
creativity would be supported and empowered (Wright and Kehoe, 2008; Hasan & Sadat, 2023). Recent research by Miao et al.
(2018) showed a correlation between HPWS and employee creativity. According to (Farrukh et al., 2022), innovative employee
behavior and efficient HRM practices are significantly correlated.
As stated in earlier arguments,
H1: High-Performance HRM Practices and employee innovative behavior are positively correlated.

1
Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
2
Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
3
Division of Management and Administrative Sciences, UE Business School, University of Education, Lahore, Pakistan
4
Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
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 2.2. Employee Innovative Behavior and Digital Transformation
Zhou and Velamuri (2018) presented the success factors for employees' creative work practices as one of the main boosters of
competitiveness. Zhou and Velamuri (2018) suggest that the best way to successfully integrate these components into the information
technology organization is to increase cross-functional communication and set shared goals across various units. According to Pham
et al. (2020), there are high correlations between innovative behavior and organizational success at work. Hee and Jing (2018)
examined the connections between compensation and benefits, work-life policy, performance reviews, and training and
development. They found that performance reviews came in second place in training and development when it comes to factors that
positively affect employee performance. It is projected that the introduction of Industrial 4.0 technologies would significantly alter
how workers engage with businesses and work processes, as well as how they might participate in their design, execution, and even
the corporate definition of involvement of labor processes. Direct involvement in work processes is related to the idea of "employee
inventive behavior," Employees that actively look for methods to enhance their work and the profitability of the company achieve
this (De Spiegelaere et al., 2014; Zaden, 2023). Previous justifications shown a favorable connection between employee innovation
and digital transformation.
H2: Positive correlation between employee innovative behavior and digital transformation.
2.3. Mediation of Employee Innovative Behavior
HPHRM practices have the power to support a variety of employee behaviors that they create the activities the business need (Kooij
and Boon, 2018). The primary engine behind industry innovation is the workforce (Li & Zheng, 2014). For continuous innovation
and improvement, where innovation has been shown to be one of the key determinants for the organizational financial outcome and
economic sustainability, it is essential to recognize individual characteristics inside a company (Monteiro, et al., 2017). (D. Bowersox
et al., 2005), define digital transformation as a method of modernizing a firm so that it can create wider supply chains and digitize
operations. Employee innovative behavior (EIB) is the intentional creation, adoption, and application of novel ideas inside a job
function, a group, or an organization to increase the effectiveness of the group, the business, or the position (Janssen, 2000; Namadi,
2023). Even though HRM can aid in defining various employee behaviors (Schuler and Jackson, 1987), our study focuses on High
Performance HRM Practices (Extensive training, Selective Staffing and Rewards) that can speed up the processes of technological
innovation. Also, by embracing innovative mindsets, individuals may use contingency theory to influence change and boost
productivity inside the firm (Woodward, 1958).
By rewarding and managing employee behavior through their organizational commitment and creative activity, High Performance
HRM methods can improve workplace morale. So, engaging in creative behavior among employees requires considering a range of
opportunities for improving the operation of the company. Beginning with the capacity to progress new concepts inside the company
before integrating them there. Several studies have also revealed a correlation between certain High Performance HRM practices
employed throughout the EIB (Bos-Nehles and Veenendaal, 2019; Prieto and Perez-Santana, 2014). Furthermore, organizational
innovation and High Performance HRM practices are strongly correlated, according to studies (Lee et al., 2019). Even though there
have been few real studies on the link between DT and EIB, the literature has established a favorable association between EIB and
business innovation (Noopur and Dhar, 2019). Despite the popular acceptance of this notion, the role of creative behavior as a
mediator in the link between High Performance HRM practices and innovation has been the subject of much empirical investigation
(Sanz-Valle and Jimenez-Jimenez, 2018). As a result, this paper suggests a favorable link between both variables considering the
prior justifications.
H3: Employee Innovative Behavior mediates the relationship between High Performance HRM Practices and Digital
Transformation.
2.4. Theoretical Framework Model

High
Performance Digital
HRM Transformation
Practices

Employee
Innovative
Behavior

3. Methodology
3.1. Data Collection and Sample
The inquiry employs a quantitative design. The proposed hypotheses were investigated using quantitative approaches. The
conceptual model and the relationships between the variables may be statistically validated using this technique, which is why it
was chosen. A questionnaire study was conducted to learn more about the creative employee behavior and high-performance human
resource strategies in Lahore, Punjab, Pakistan's IT sector. A digital questionnaire was distributed in December 2022. The collection
process ended in February 2023. The population used for the study was all employees of information technology companies and few
are HR employees from IT companies. Select them because they are currently working in Information Technology companies and
get a deeper understanding of how innovative employee behavior and digital transformation are influenced by high-performance
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human resource approaches. Employees in information technology are chosen as an example. To obtain replies from the respondents
who were currently employed by information technology organizations, convenience sampling was used in this study. This method
of surveying makes it clear how samples are created. The researcher has quick access to the necessary materials, making it simple
to assemble the sample's participants. IT staff members were given a total of 350 questionnaires; 310 of them were returned, and
300 of them were chosen for analysis, which represents a response rate of 85%. This study makes use of primary data. A
questionnaire was used to gather information. An online survey is conducted for collecting data. Questionnaires were distributed to
information technology employees through email and what’s app.
3.2. Measures
All measurements were conducted using Likert scales with seven points. All scales were modified from earlier research. The
questionnaire included following scales: HPHRP were measured on adapting scale developed by (Farrukh, Ansari, Raza, Meng,
and Wang, 2021). It had a total of 15 components, including 6 for extensive training in dimensions, 4 for hiring only the best
candidates, and 5 for rewards. This instrument has been used and verified in the past. The six-item scale used to test EIB was taken
from (Wang, Cui, Cai, and Ren 2021). This instrument has been tested and utilized in the past. Digital Transformation is measured
with 10 items from (Agustın & Jimenez, 2021). This instrument has been tested and utilized in the past.
3.3. Data Analysis
The relationships between the variables were anticipated using the social sciences statistical program SPSS. The ability to explore
causal relationships between the components using a range of measurement items led to the selection of this technique. For testing
hypothesis regression analysis is used. To ensure the validity and dependability of composites and to validate the measurement
methodology, numerous tests were developed. The demographic information of the respondents is displayed first. The data were
examined for skewness, kurtosis. Validity and reliability are all discussed in this article. This chapter calculates and presents the
direct and indirect effects of mediation.

4. Results
Participants in the research were asked to indicate their gender, age, marital status, educational background, and job tenure. 214
(71.3%) respondents were male while 86 (28.7%) were female. 188 (62.7%) respondents age were between 18-25 years, 97 (32.3%)
respondents age were between 26-35 years and 15 (5%) respondents age were 36-50 years. 76 respondents (25.3%) were married,
compared to 224 respondents (74.7%) who were single. 184 (61.3%) of the respondents had graduated, followed by 96 (32%) with
a master’s or MPhil, 5 (1.7%) with a PhD, and 15 (5%) with a certificate in another field. 119 (39 respondents job tenure was less
than 1 year, 165 (55%) respondents job tenure were 1-5 years, 11 (3.7%) respondents job tenure were 6-10 years, and 5 (1.7%)
respondents job tenure were above 10 years. Distribution of gender, age, marital status, qualification, and job tenure of respondents
were presented in Table 1.

Table 1: Demographics Characteristics of Respondents

Demographics N %
Gender Male 214 71.3
Female 86 28.7
Age 18-25 188 62.7
26-35 97 32.3
35-50 15 5.0
Marital Status Married 76 25.3
Single 224 74.7
Qualification Graduation 184 61.3
Master/MPhil 96 32.0
PhD 5 1.7
Other 15 5.0
Stay in Organization Less than 1 year 119 39.7
1-5 years 165 55.0
6-10 years 11 3.7
Above 10 years 5 1.7

As can be seen in Table 2, several tests were developed to check the normality of data. First data check through skewness & kurtosis
which shows data is normally distributed. To establish a normal univariate distribution, skewness, and kurtosis values between -2

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and +2 are deemed acceptable (George & Mallery, 2010). And the value of mean standard deviation shows to some extent
respondents are in this view that the high-performance human resource practices, employee innovative behavior and digital
transformation concept is prevailing in their organization.
As can be seen in Table 3, the reliability of data was measured through Cronbach's Alpha test. The findings showed that the 15-item
High Performance HRM Practices scale (a =.931), Employee Innovative Behavior with 6 items (a = .886) and Digital Transformation
with 10 items (a = .860) were found reliable. A construct is considered reliable (Hair et al., 2013) if its Alpha (a) value is higher than
0.70.

Table 2: Skewness, Kurtosis, Mean, SD

Skewness Kurtosis
Variables N Statistic Std. Error Statistic Std. Mean Std. Deviation
Statistic Error
HPHRP 300 -1.119 .141 1.613 .281 5.3924 1.03359
EIB 300 -1.040 .141 1.213 .281 5.3161 1.06269
DT 300 -.829 .141 .039 .281 5.4740 .76599
Valid N (listwise) 300

Table 3: Reliability Analysis

Construct No. of items Alpha (a)
HPHRP 15 .931
EIB 6 .886
DT 10 .860
Note: HPHRP= High Performance human resource practices, EIB= Employee Innovative Behavior, DT= Digital Transformation.

Table 4: Correlation Analysis

Variables 1 2 3
1- HPHRP 1
2- EIB 0.67** 1
3- DT 0.75** 0.69** 1
Note: HPHRP= High Performance human resource practices, EIB= Employee Innovative Behavior, DT= Digital Transformation, **P<0.01.

Table 5: Hypotheses testing through Regression.

Hypothesis B R² P Results
HPHRP-->EIB .669 .438 <.001 Accepted
EIB-->DT .497 .476 <.001 Accepted

Table 6: Mediation Analysis Summary

Relationship Total Effect Direct Effect Indirect Effect Confidence Interval t-statistics Conclusion
Lower Bound Upper bound

HPHRP→EIB→DT 0.5422 0.3722 .1700 .1127 .2338 19.20 Partially

(0.000) (0.000) Mediated

The results of the table 4 demonstrate a favorable correlation between HPHRP and EIB (r= 0.67, P<0.01) and DT (r=0.75, P<0.01).
As can be seen in Table 5, we found the existence of significant relationships between high performance HRM practices (extensive
training, selective staffing, and rewards) and employee innovative behavior (b = 0.669, p < 0.01), as well as between employee
innovative behavior and digital transformation (b = 0.497, p < 0.01). In addition, our results show evidence of the partial mediation
of employee innovative behavior (b = 0.1700, p < 0.01) in the relationship between high-performance human resource practices and
digital transformation shown in Table 6.

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5. Discussion
Three hypotheses were created to examine our research question. The purpose of this investigation is to determine if employee
creativity mediates the relationship between effective human resource management and digital transformation. So, the first
hypothesis determined whether the high-performance HRM practices and EIB are positively correlated. The second hypothesis was
made to determine that employee innovative behavior and digital transformation were associated. And the third hypothesis was that
employee innovative behavior partially mediates the relationship between high performance human resource practices and digital
transformation. The present study found that extensive training, selective staffing, and rewards are the high-performance human
resource practices that promote employee innovative behavior in DT of a company. According to the present study all hypotheses
were significant. Our findings are consistent with previous research (Agustın & Jimenez, 2021).
5.1.Theoretical Contributions
The present work and earlier literature will theoretically be connected. The study will advance the understanding of the subject and
change the way academics who research employee creativity and high-performance human resource strategies think about these
issues. By demonstrating the connections between high-performance human resource practices and employee inventive behavior in
digital transformation, the current study will make a significant contribution to the body of knowledge. First, despite the significance
placed on digital transformation inside the firm, there is a shortage of study into how High Performance HRM contributes to its
implementation (Verhoef et al., 2019; Vial, 2019).
Second, the present study added to the body of knowledge regarding certain High Performance HRM techniques that support DT
procedures. The significance of understanding the HRM practices relevant to DT is emphasized by Fenech et al. (2019). Here, the
present study demonstrated how High Performance HRM techniques tailored to this digital world encourage workers to act
creatively, which is crucial for the implementation and development of DT processes. According to the contingency theory, the
business must establish HRM procedures that motivate staff to act in ways that are compatible with the company's approach
(Woodward, 1958). The present study found that high-performance human resource practices (extensive training, selective staffing,
and rewards influences employee innovative behavior for digital transformation of companies.
5.2. Practical Implications
Management must start developing their organizational strategies while considering the internal human and technological resources
they may use to address environmental issues. As a result, they can alter their business plans. This entails creating an HRM strategy
that encourages businesses to take their employees into account when formulating company plans. These procedures can increase
employee involvement, engagement, and adoption of new behaviors, as well as their contribution to the organization's DT.
5.3.Limitations and Future Research
There are limitations in our study as this research is a cross section study. In future, research in this field might be advanced by
multilevel analysis and longitudinal studies. The present study concentrated on the information technology industry because there
is more room to incorporate DT-derived methods there. These companies automate their production processes more than those that
are just involved in the service or agriculture industries. In any case, the present study suggested extending this study to more sectors
in future research lines. The present study found that extensive training, selective staffing, and rewards influences employee
innovative behavior to digitally transform the business. In future study, researchers might find some other human resource practices
that favor employee innovative behavior and adding any moderation effects.

6. Conclusion
The current study shows that high-performance human resource practices were important to influence employee innovative behavior
in digitally transformation of companies. This study examined the direct impact of high-performance human resource practices on
employee innovative behavior and employee innovative behavior on digital transformation. And the mediating effect of employee
innovative behavior on high-performance HRM practices and digital transformation. The findings show that high performance
human resource procedures encourage employees to engage in creative behavior. As a result, managers will be better able to foster
innovation in the workplace by hiring employees who are anticipated to have a higher degree of enthusiasm. Managers that place a
strong emphasis on high performance human resource strategies will foster employee awareness of one another and increase their
willingness to try new things.

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