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Article

Sustainable Human Resource Management and Employees’ Performance: The Impact of National Culture

by
Hilla Peretz
Department of Industrial Engineering and Management, Braude Academic College of Engineering, Karmiel 2161002, Israel
Sustainability 2024, 16(17), 7281; https://doi.org/10.3390/su16177281 (registering DOI)
Submission received: 14 June 2024 / Revised: 1 August 2024 / Accepted: 20 August 2024 / Published: 24 August 2024
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Abstract

:
In an era of rapid globalization and increased environmental consciousness, organizations must align their business practices with sustainable development goals. The main objective of this study is to explore the impact of sustainable human resource management (SHRM) on employees’ performance, focusing on the mediating role of employee engagement and the moderating effect of national culture. To do so, data were collected from 1950 individuals across 26 countries. The results of a multilevel analysis show that SHRM positively affects performance, with employee engagement acting as a mediator. Furthermore, the effectiveness of SHRM practices is moderated by cultural tightness–looseness, indicating that SHRM practices are more effective in flexible and adaptive cultural environments. This study contributes to the literature by integrating institutional theory and the JD-R model, demonstrating that SHRM enhances performance through increased employee engagement and that cultural context significantly influences this relationship. The findings emphasize the need for a culturally sensitive approach to SHRM, suggesting that organizations should tailor their sustainable practices to align with the cultural norms of their operational environments. This research provides valuable theoretical insights into the mechanisms through which SHRM impacts performance and practical implications for HR professionals seeking to implement effective and sustainable HR practices globally.

1. Introduction

In an era characterized by rapid globalization and heightened environmental consciousness, organizations are increasingly compelled to align their business practices with the sustainable development goals. Among these practices, Sustainable Human Resource Management (SHRM) has emerged as a pivotal element influencing organizational performance [1,2,3]. SHRM integrates the triple bottom line of economic, social, and environmental considerations into human resource (HR) practices, fostering a workforce that is not only efficient but also ethically attuned and environmentally conscious [4,5,6]. The main objective of this study is to explore the impact of Sustainable Human Resource Management on employees’ performance, focusing on the mediating role of employee engagement and the moderating effect of national culture, specifically cultural tightness–looseness. The research problem addresses how SHRM practices influence performance across different cultural contexts and how employee engagement mediates this relationship.
The relevance of SHRM in today’s business environment cannot be overstated. Organizations adopting SHRM practices are not only leaders in sustainability but also attract a workforce prioritizing environmental and social governance. The integration of SHRM practices has shown the potential to enhance employee morale and commitment [1,7], which are critical components of organizational success [8,9] and performance [10,11].
Existing research on Sustainable Human Resource Management (SHRM) has predominantly concentrated on its implementation and benefits within homogeneous cultural contexts [1,2,3], despite the profound impact of cultural norms on the perception and implementation of human resource management practices across different national contexts [12,13,14,15,16]. This has left a significant gap in understanding how SHRM practices interact with diverse national cultures to influence performance. Additionally, there has been limited exploration into the mechanisms through which SHRM impacts performance [6,7]; therefore, this study is crucial as it investigates these mechanisms, providing a more comprehensive and culturally nuanced perspective on the effectiveness of SHRM practices globally, and elucidating the relationship between SHRM and performance in ways that have not been previously examined.
This study underscores the necessity for a strategic approach to SHRM that is sensitive to cultural nuances and aligned with the sustainable development goals, thereby providing a roadmap for organizations aiming to optimize their performance through sustainable practices. Theoretically, it seeks to extend the discourse by employing institutional theory [17,18] to explain how different national contexts influence the efficacy of SHRM practices. This approach provides a richer understanding of how sustainable practices are not only adopted but also internalized within organizations, influencing organizational outcomes through employee engagement. Practically, this study aims to offer actionable insights for HR professionals and organizational leaders aiming to implement SHRM in a culturally sensitive manner. By highlighting the role of cultural norms in shaping the effectiveness of SHRM initiatives, this paper advocates for a tailored approach. It emphasizes that a one-size-fits-all strategy [19] may not be effective and underscores the need for organizations to adapt their sustainable practices to align with the institutional and cultural landscapes of their operational environments.
Figure 1 presents a summary of the theoretical model, depicting the proposed relationship between SHRM and performance. Specifically, it illustrates the mediating role of employee engagement in the relationship between SHRM and performance, as well as the moderating effect of cultural tightness level.
In order to empirically test the study model, data were collected from 1950 individuals across 26 countries. These countries represent a range of cultural tightness–looseness, a crucial aspect of this study. The tightness–looseness classification provides a framework for understanding the cultural context of each country. The countries included in this study are Australia, Austria, Belgium, Canada, Chile, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Korea, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Sweden, Switzerland, the United Kingdom, and the United States of America.
The remainder of the paper proceeds as follows: First, a definition of Sustainable Human Resource Management (SHRM) as used in this work. Second, an explanation of why and how SHRM impacts performance. Third, I postulate how employees’ engagement and cultural tightness level may serve as contextual influences on the SHRM–performance relationship, and I advance a series of hypotheses. Next, I set down the method, measures, and analytical procedures. I then present the results, discuss them in the context of the enfolding literature, and, finally, outline some implications arising from the results and suggest some directions for future research.

2. Background and Hypothesis Development

2.1. Sustainable Human Resource Management Practices and Performance

Sustainable Human Resource Management (SHRM) represents a transformative approach that integrates sustainability into the core of human resource practices [3,20,21]. It is predicated on the belief that human resource policies and practices should not only support the economic objectives of organizations but also advance social and environmental goals. SHRM aims to create a symbiotic relationship between organizational success and the welfare of the broader community as well as environment [22,23,24].
At its core, SHRM involves developing policies and practices that are ethical, respect human rights, and contribute to the economic, social, and environmental development goals of the communities in which organizations operate [20,21,25]. This includes everything from ensuring fair labor practices and providing equitable pay across an organization to implementing training programs that enhance employees’ skills for sustainable operations. Furthermore, SHRM includes promoting workplace diversity, encouraging work–life balance, and actively reducing the carbon footprint of business operations through green HR practices, such as virtual working arrangements and reducing travel [11,26,27].
The strategic incorporation of SHRM in an organization leads to several key benefits. For one, it enhances employer branding, making a company more attractive to top talent who prioritize sustainability in their job search [28]. Additionally, by fostering a culture that values long-term ecological balance and social equity, organizations can enhance employee morale and retention [29]. Employees typically demonstrate higher levels of productivity when they perceive their employers to be committed to sustainable practices [30,31].
Moreover, SHRM plays a critical role in risk management by aligning an organization’s human resource practices with global standards and expectations for sustainability, thereby mitigating potential conflicts with stakeholders and reducing compliance risks [32].
SHRM practices are designed not only to meet organizational sustainability goals but also to significantly enhance employee overall performance. A crucial area of study is the impact of SHRM on perceived employee performance, as employees’ perceptions of their own performance can greatly influence their actual productivity [33,34]. SHRM practices aim to improve both the actual capabilities of employees and their perceptions of their contributions to an organization and its sustainability goals [35].
This focus on perceived performance is essential because when employees believe they are performing well, they are more motivated, committed, and likely to exceed expectations [36]. Employees who see their values aligned with organizational goals, particularly in terms of sustainability, tend to view their job performance more positively [37,38,39]. SHRM practices that emphasize sustainability can give employees a sense of broader purpose, enhancing the perceived meaningfulness of their work [40,41]. This perception is closely linked to better self-reported performance, as employees feel that their roles contribute to positive social and environmental outcomes [42,43]. These factors not only enhance employees’ views of their performance but also contribute to greater organizational productivity and sustainability [44,45].
In essence, SHRM significantly influences employees’ perceptions of their performance by aligning job roles with personal and organizational values, empowering them, providing meaningful feedback as well as recognition, and supporting their professional growth. Therefore, the first hypothesis is as follows:
Hypothesis 1.
SHRM has a positive effect on employees’ perceived performance.

2.2. The Mediating Role of Employees’ Engagement

Work engagement may play a critical mediating role in the relationship between Sustainable Human Resource Management (SHRM) practices and employee performance. By fostering a supportive and resource-rich environment, SHRM practices can significantly boost work engagement, which in turn leads to higher employee performance [46,47].
Employee engagement mediates the relationship between SHRM practices and employee-perceived performance by channeling the positive effects of these practices into enhanced performance outcomes. When SHRM practices successfully increase employee engagement, engaged employees exhibit higher levels of creativity, productivity, and overall performance [48,49,50]. Employees who are engaged are more likely to exceed their job requirements, a behavior known as organizational citizenship, which can significantly enhance organizational performance.
The literature provides empirical support for the mediating role hypothesis. For example, studies [51,52,53] have shown that when organizations implement SHRM practices that are perceived as supportive and fair, employees are more likely to be engaged. Eventually, this engagement then translates into better performance, as engaged employees are more committed to the organization’s goals, more motivated to contribute positively, and more capable of handling the demands of their jobs effectively [54,55,56].
The JD-R (Job Demands–Resources) model [57] provides a theoretical framework supporting the mediating role of employee engagement. According to this model, job resources (which can be enhanced by SHRM practices) not only help in achieving work goals and reducing job demands but also stimulate personal growth and learning. These resources increase employee engagement, which in turn leads to better performance. Empirical studies utilizing the JD-R model have consistently found that job resources are positively related to employee engagement [58,59,60], which is directly linked to improved performance [57,61].
In sum, employee engagement may seem a crucial mediator in the relationship between SHRM practices and employee performance. By focusing on sustainable practices that enhance job resources and support employee well-being, organizations can foster a highly engaged workforce that is both productive and aligned with sustainability goals. Therefore, the second hypothesis of this study is as follows:
Hypothesis 2.
The relationship between SHRM and employees’ perceived performance is mediated by employees’ engagement.

2.3. The Moderating Role of National Culture

The study model suggests that the effectiveness of Sustainable Human Resource Management (SHRM) practices in affecting performance may be influenced by national culture. Lehman et al. [62] noted that “even when individuals from different cultures seem similar psychologically, underlying cross-cultural differences can profoundly affect motivations, cognitions, emotions, and behaviors”. This observation underscores the complexity and challenges inherent in examining the interplay between cultural and psychological studies, prompting us to consider significant cross-cultural differences alongside basic human similarities [63,64]. National culture is defined as “patterned ways of thinking, feeling, and reacting, conveyed primarily through symbols and manifesting in distinct achievements of human groups, including their artifacts. The core of culture comprises traditional ideas and their associated values” ([65], p. 181). Similarly, Hofstede [66] describes culture as a system of shared values. Empirical research supports the idea that national culture significantly influences individual behavior, transcending personal differences (e.g., [67,68,69]). Therefore, the study proposes that variations in culture across nations may illuminate how SHRM practices impact employees’ performance.
Integrating the institutional framework [17,70,71] as a theoretical explanation provides a deeper understanding of how national culture moderates the relationship between SHRM practices and employee performance. Institutional theory suggests that the effectiveness of HR practices is contingent upon national contexts (e.g., [72,73]). Institutional theory posits that organizations are influenced by the environments in which they operate. These environments are not just physical but also include the cultural, political, and social norms that shape organizational behavior. These institutions create expectations for organizational behavior, influencing how SHRM practices are designed and implemented. This study argues that the cultural aspect of tightness–looseness [74,75] acts as a critical moderator between SHRM practices and employees’ performance.
The framework of cultural tightness–looseness [74,75,76] offers a valuable lens with which to examine how varying degrees of societal norms and tolerance for deviance might moderate the relationship between SHRM practices and employees’ perceived performance. This concept, introduced by Michele Gelfand [74], distinguishes between cultures based on the strictness and enforcement of social norms. Cultural tightness refers to cultures with strict social norms, high conformity, and little tolerance for deviant behavior. In tight cultures, there are clear expectations for behavior, and deviations are met with significant sanctions. Cultural looseness, on the other hand, characterizes cultures that have more relaxed norms, greater acceptance of deviance, and a higher tolerance for a diversity of behaviors [74,75,76,77].
The relationship between SHRM practices and employees’ perceived performance may be more robust in loose cultures. Loose cultures are marked by their flexibility and openness to change [74,75,76]. This adaptability allows organizations within these cultures to implement innovative SHRM practices without significant resistance. For example, practices like remote working, flexible scheduling, or unconventional reward systems are more likely to be accepted and can be tailored to meet diverse employee needs as well as preferences, enhancing the perception of these practices’ effectiveness. Furthermore, in loose cultures, there is a greater emphasis on individual autonomy and self-direction [74,75,78]. SHRM practices that empower employees by providing them with choices in how they manage their work and professional development are likely to be highly effective. This empowerment can increase job satisfaction, engagement, and ultimately perceived performance [79,80,81] as employees feel that they have control over their work environment and can align their personal goals with organizational objectives. The flexibility of loose cultures allows SHRM to be more personalized to individual needs, which is instrumental in boosting employees’ perceived performance [82]. Personalization can include customized training programs, flexible benefits, and career paths that consider individual aspirations and lifestyle choices. Finally, loose cultures generally place a high value on diversity, inclusivity, and tolerance [74,75,76]. SHRM practices that emphasize diversity and inclusive workplace policies are likely to resonate deeply with employees in these cultures [83], enhancing their engagement and the inclusivity of the workplace, which in turn boosts perceived performance.
In summary, the stronger relationship between SHRM practices and employees’ perceived performance in loose cultures can be attributed to these cultures’ inherent flexibility, tolerance for deviation and innovation, emphasis on autonomy and personalization, and a natural alignment with modern, inclusive, and forward-thinking HR strategies. These factors collectively enhance the effectiveness of SHRM practices and their impact on employees’ performance.
Therefore, the third hypothesis of this study is as follows:
Hypothesis 3.
The relationship between SHRM and employees’ perceived performance is moderated by countries’ cultural tightness levels.

3. Methods

3.1. Participants and Procedure

In order to empirically test the study hypotheses, data were collected from individuals located in 26 different countries. To be included in the sample, a participant had to be employed and a resident of their country. All participants were managers with a minimum of three years of work experience in their respective organizations. These criteria ensured that participants were familiar with their companies’ operational processes and could accurately understand the content of the questionnaire. This familiarity is essential for answering questions about SHRM practices in their organizations. The final sample consisted of 1950 participants (mean age = 36.14; SD = 11.32, 52.7% male; and 62.4% work in private organizations) from the following countries: Australia (81), Austria (76), Argentina (78), Brazil (79), Canada (86), Chile (76), Estonia (75), Finland (77), Germany (79), Greece (78), Hungary (79), Iceland (72), India (77), Ireland (77), Israel (78), Italy (77), Japan (77), Korea (67), Mexico (82), the Netherlands (78), Poland (75), Portugal (77), Spain (76), Sweden (77), the United Kingdom (82), and the United States of America (91). The countries chosen for this study represent a diverse range of cultural tightness–looseness from around the world, providing a comprehensive sample to examine. Additionally, the countries were selected based on the availability of data for national-level variables (see below).
Data were collected using online questionnaires via the Prolific platform. To avoid cross-sectional biases, independent variables (SHRM) were collected in phase I (December 2023–January 2024), and mediating variables (employees’ engagement) were collected in phase II, a month after phase I. The dependent variable (employees’ perceived performance) was collected in phase III (one month after phase II) from the same participants. Participants were from 26 countries.

3.2. Measures

3.2.1. Individual-Level Measures (Questionnaire)

Except for the control variables, participants responded to each questionnaire item by rating it on a five-point scale ranging from 1 (“strongly disagree”) to 5 (“strongly agree”).

Sustainable Human Resource Management (SHRM)

SHRM was measured using a scale based on Mazur and Walczyna [6]. The questionnaire consists of 14 statements relating to three aspects of SHRM: social, psychological, and environmental. The social aspect (the level of activity associated with diversity management) was measured using five statements: the organization undertaking activities to support older workers, people with disabilities, various age groups, various cultural groups, and religious groups. The psychological aspect (employees have the opportunity to pursue a sustainable professional career) was measured using four items, such as the company covering training costs, the company tracking employee progress in sustainable development behavior, and professional development programs being available. The environmental aspect (incorporating ecological concerns into human resource management) was measured using the following five items: the company considers the pro-environmental attitudes of job candidates, encourages the use of public transport by employees, compensates them for their costs resulting from this, promotes the use of environmentally friendly cars, and offers organic food in the company canteen. Confirmatory factor analysis (CFA) confirmed the three-factor model of SHRM (NFI = 0.97, RMSEA = 0.03). Hence, three indices were created to measure SHRM by using the mean score of the variables in each factor: Social SHRM (α = 0.89, M = 3.42, SD = 0.73), psychological SHRM (α = 0.90, M = 3.37, SD = 0.70), and environmental SHRM (α = 0.88, M = 3.24, SD = 0.69).

Employees’ Engagement

Employees’ engagement was measured using Schaufeli et al.’s [84] scale of engagement. The scale consists of 17 items. Example items include the following: “When I get up in the morning, I feel like going to work”; “I’m enthusiastic about my job”; and “When I’m working, I forget everything around me”. The scale’s reliability was 0.88, and the average score across employees was 3.86 (SD = 0.74).

Perceived Performance

Perceived performance was measured using a three-item scale that was adapted from Riordan and Shore’s scale [85]. Participants rated the extent to which they agreed that they “most of the time produced high-quality work”, “most of the time tried new ways to improve productivity”, and “most of the time worked efficiently”. The scale’s reliability was 0.89, and the average score among employees was 3.76 (SD = 0.71).

3.2.2. National-Level Variable

Tightness–Looseness Scores

To measure cultural tightness–looseness (TL), each participant was assigned a TL score based on their country of residence. The TL scores were adapted from Gelfand’s tightness–looseness index [86]. Gelfand’s index is calculated as the average score of six items, each rated on a scale from 1 (strongly disagree) to 6 (strongly agree) and measures the extent to which social norms are widespread, well-defined, and consistently enforced within countries. Example items include “There are many social norms that people are supposed to abide by in this country” and “In this country, if someone acts in an inappropriate way, others will strongly disapprove”. The index was first validated across 33 nations in 2011 and then expanded for validation with a new sample of 57 nations in 2021 [87], which was utilized in the current study (m = 1.76, SD = 0.65).
Table 1 presents the classification of the participating countries according to their tightness–looseness scores. This table provides a clear visualization of the cultural context of each country.

3.2.3. Control Variables

To minimize the impact of potential confounding demographic differences [88], age (M = 36.14; SD = 11.32), gender (52.7% male), and education level (67.4% bachelor’s degree) were also included as control variables.

3.3. Analytic Strategy

The study utilized a hierarchical structure in which individuals were grouped according to their respective countries. To effectively analyze the relationships within these nested data, multilevel modeling was employed using Mplus 8.0 [89]. Multilevel analysis simultaneously analyzes variables at both the individual and national levels. This approach is essential because it accounts for potential correlations within groups and allows for the examination of both individual-level and country-level effects. Each participant from the same country was assigned the same TL score, reflecting the collective cultural characteristics of their country. By using multilevel modeling, the study can accurately assess how cultural differences, such as tightness–looseness, influence the relationship between SHRM practices and perceived employee performance while controlling for within-country variability. Variables at level 1 (the individual-level measures: SHRM variables, employees’ engagement, employees’ perceived performance, and control variables) were group-mean-centered, and country-level variables (tightness–looseness variables) were grand-mean-centered at level 2. Finally, overall pseudo R2 (~R2) and incremental pseudo R2 (Δ~R2; [90]) were calculated for each group (control variables, main effect, and cross-level interaction).

3.4. Preliminary Tests for Data Quality

To address possible common-method bias, the IVs, MV, and DVs of the study were collected in three surveys separated by a month from each other. Additionally, the Harmon test was conducted and found to be below the 0.5 threshold.
Additionally, one of the challenges in cross-cultural research is ensuring that measurements are equivalent across different cultural groups, which means that the concepts being studied should be defined the same way across cultures. If measurement equivalence exists, it means that an instrument has the same meaning across different countries [91]. To examine the measurement equivalence of employees’ work engagement and perceived performance, Meta-Analytic Structural Equation Modeling (MASEM) was used, which is an appropriate method for analyzing data from three or more countries [89,92]. The fit indices for the results were TLI = 0.91 and CFI = 0.93, indicating no issues with measurement invariance [93].

4. Results

Table 2 presents the mean, standard deviation, and correlation among the study variables.

Tests of Hypothesis

Hypothesis 1 predicted a positive relationship between SHRM and employees’ perceived performance. The results (see Table 3) indicate that social SHRM, psychological SHRM, and ecological SHRM are all positively and significantly related to employees’ perceived performance (0.38 **, 0.36 **, and 0.29 **, respectively), supporting Hypothesis 1.
Hypothesis 2 predicted that the relationship between Strategic Human Resource Management (SHRM) and employees’ perceived performance would be mediated by employees’ engagement. In order to test this hypothesis, an indirect multilevel regression analysis was conducted. The results (see Table 4) confirmed this hypothesis by showing a significant indirect effect. When the indirect effect was included, it led to a decrease in the coefficient of the direct effect of all three components of SHRM (social, psychological, and ecological) on employees’ perceived performance (0.21 **, 0.19 **, and 0.25 ***, respectively) and an increase of 10 percent in the amount of variance explained by the predictors, resulting in a total of 27% of the variance (see Models 1 and 2 in Table 3).
Finally, Hypothesis 3 suggested that the relationship between SHRM and employees’ perceived performance would be moderated by cultural tightness level. In order to test this hypothesis, a cross-level interaction regression analysis was conducted. The results, shown in Table 5, support this moderation effect. The cross-level interactions between social, psychological, and ecological SHRM and between countries’ tightness level were found to be significant (−0.20 **, −0.21 **, and −0.24 **, respectively), supporting Hypothesis 3.
Figure 2, Figure 3 and Figure 4 graphically illustrate the relationship of SHRM practices with employees’ perceived performance as a function of high (+1 SD) and low (−1 SD) levels of cultural tightness. As the figures suggest, the relationship between SHRM and employees’ perceived performance is stronger under conditions of low cultural tightness (high cultural looseness).
Finaly, a moderated mediation effect was tested [94] to examine the study model holistically. This integrative approach accurately estimated how the indirect effect of SHRM practices (independent variables) on perceived employee performance (dependent variable) via employee engagement (mediator) varied under different levels of the moderator (country tightness level). The model fit indices for the integrated model indicated a good fit (RMSEA = 0.04, NFI = 0.93).
Specifically, the relationship between SHRM practices and perceived employee performance through employee engagement was more robust at low (−1 SD) levels of tightness (high looseness) compared to high (+1 SD) levels of tightness, further supporting the study’s theoretical model (Figure 1).
Overall, these findings suggest that SHRM practices are effective in enhancing perceived employee performance, particularly in cultures with lower levels of tightness. Employee engagement plays a crucial role in this process, acting as a mediator in the relationship.

5. Discussion

The purpose of this study was to examine the impact of sustainable human resource management (SHRM) on employees’ perceived performance, focusing on the mediating role of employee engagement and the moderating effect of national culture. The results confirmed that SHRM positively influences employees’ perceived performance, with employee engagement mediating this relationship. Furthermore, the effectiveness of SHRM practices is moderated by national culture, particularly cultural tightness–looseness.
Notably, this study is among the first to focus on the effects of national context on the SHRM–performance relationship. It extends past research (e.g., [1,2,4]) by emphasizing employees’ engagement and exploring the mechanisms of this effect, considering the role of contextual conditions such as national culture.
This study advanced a multilevel framework and drew on the JD-R theory [95]. This multilevel analysis enabled testing an integrative model that includes the direct, mediating, and moderating elements of how SHRM practices relate to employees’ performance.
Regarding the direct relationship observed between SHRM practices and employees’ performance (Hypothesis 1), the results reinforce previous studies suggesting a positive link between HR practices, including sustainable HR, and performance in other contexts [96,97]. The findings on the factors that mediate or moderate the effect (Hypotheses 2 and 3) help explain how SHRM advances performance. Specifically, the results show that employees’ engagement mediates the SHRM–performance relationship, confirming the importance of positive work attitudes in facilitating work performance. Focusing on country-level cultural tightness [74,75] allows for the examination of how employees worldwide respond to the same external event. This approach captures the dynamic relationships between an individual worker, a specific situation, and the broader environment.

5.1. Theoretical Implications

This study’s findings reinforce the pivotal role of SHRM in enhancing organizational performance, aligning with previous studies that highlight the importance of integrating sustainability into HR practices [11,98]. The positive relationship observed between SHRM practices and employees’ perceived performance underscores the comprehensive impact of SHRM, which includes social, psychological, and ecological dimensions. This study contributes to the literature by illustrating how SHRM practices not only support economic objectives but also advance social and environmental goals, thus fostering a holistic approach to organizational success [30,99].
The mediating role of employee engagement in the SHRM–performance relationship aligns with the Job Demands–Resources (JD-R) model, which posits that job resources increase employee engagement, leading to better performance [57,100]. The findings provide empirical support for this model, demonstrating that SHRM practices enhance employee engagement, which in turn positively influences perceived performance. This highlights the importance of fostering a supportive and resource-rich work environment through SHRM practices to boost employee engagement and, consequently, organizational performance.
The mediation analysis reveals that SHRM practices, by enhancing employees’ engagement, can lead to higher levels of perceived performance. This is crucial as it suggests that organizations focusing on sustainable HR practices are not only promoting ethical and environmentally friendly behaviors but are also cultivating a workforce that is more engaged and motivated. This dual benefit strengthens the case for integrating SHRM into core HR strategies. The findings align with the JD-R model, suggesting that SHRM practices provide essential job resources that fuel employee engagement, which then translates into improved performance outcomes [57,58,59,100].
The moderating effect of national culture, specifically cultural tightness–looseness, on the relationship between SHRM and employees’ perceived performance offers a nuanced understanding of how cultural contexts influence the effectiveness of SHRM practices. The concept of cultural tightness–looseness ([74,75,76,77] provides a valuable framework for examining these variations. The results suggest that SHRM practices are more effective in cultures characterized by low tightness (high looseness), where there is greater flexibility and openness to change. This finding underscores the importance of considering cultural norms and values when designing and implementing SHRM practices to maximize their effectiveness. This moderating effect indicates that cultural tightness–looseness influences how SHRM practices are perceived and implemented. In cultures with high tightness, there is a strong adherence to social norms and less tolerance for deviation, which might limit the flexibility needed for SHRM practices to be effective. Conversely, in loose cultures, where norms are more flexible and there is greater acceptance of diversity, SHRM practices can be more innovative and tailored to individual needs, leading to higher perceived performance.
Hence, this study integrates institutional theory to explain the role of national culture in moderating the effectiveness of SHRM practices. Institutional theory posits that organizations are influenced by the environments in which they operate, including cultural, political, and social norms [101,102]. The findings extend this theory by demonstrating that the cultural environment, specifically cultural tightness–looseness, significantly moderates the relationship between SHRM practices and employees’ perceived performance. This suggests that organizations must align their SHRM practices with the cultural norms of the countries they operate in to enhance their effectiveness.
Furthermore, the study also contributes to the literature on cultural tightness–looseness by providing empirical evidence of its moderating role in the SHRM–performance relationship. Previous research on cultural tightness–looseness has primarily focused on its impact on broad organizational behaviors and outcomes [74,77,78]. This study extends this research by examining its specific impact on the effectiveness of SHRM practices. The findings suggest that cultural tightness–looseness is a critical factor that organizations need to consider when implementing SHRM practices, as it influences how these practices are perceived and their overall effectiveness.
Finally, the study enhances the understanding of SHRM’s impact by employing a multilevel framework that considers individual-level employee engagement and country-level cultural tightness–looseness. This comprehensive approach provides a more holistic understanding of how SHRM practices influence organizational performance across different levels. It underscores the importance of considering both micro (individual) and macro (cultural) factors in SHRM research, offering a more integrated perspective that can inform both theory and practice.
In summary, the theoretical implications of this study highlight the critical role of SHRM in enhancing organizational performance, the importance of employee engagement as a mediator, and the significant moderating effect of national culture. These insights contribute to the existing literature by providing a deeper understanding of the mechanisms through which SHRM practices influence organizational outcomes and the contextual factors that shape their effectiveness. They underscore the need for a culturally sensitive approach to SHRM that considers the unique cultural contexts in which organizations operate.

5.2. Practical Implications

This study’s findings have significant practical implications for HR professionals and organizational leaders. The moderating effect of cultural tightness–looseness indicates that a one-size-fits-all approach to SHRM may not be effective. Organizations operating in different cultural contexts should tailor their SHRM practices to align with local cultural norms and values. For example, in cultures with high looseness, organizations can implement more flexible and innovative SHRM practices, such as remote working and personalized career development programs, to enhance employee engagement and perceived performance. Conversely, in tighter cultures, more structured and standardized SHRM practices may be necessary to meet employees’ expectations and achieve desired outcomes.
Given the mediating role of employee engagement, organizations should prioritize SHRM practices that foster a supportive and resource-rich work environment. This includes providing opportunities for professional development, recognizing and rewarding employees’ contributions, and promoting work–life balance. By enhancing employee engagement, organizations can improve perceived performance, which is crucial for achieving sustainability goals and maintaining competitive advantage. HR professionals should develop strategies to assess and enhance employee engagement regularly, ensuring that SHRM practices are effectively contributing to organizational performance.

5.3. Limitations and Suggestions for Future Research

This study has a few limitations that provide opportunities for future research. Firstly, even though the study used different data sources to test the hypotheses, as described in the Methods section, data on SHRM practices, engagement, and performance were all obtained via surveys. In the future, it would be beneficial to include data from additional sources; for instance, evaluating employees’ performance from their supervisors’ perspective. Secondly, relying on self-reported measures may introduce social desirability bias. Future studies could incorporate objective performance metrics and multi-source data to validate the findings.
Finally, while this study focused on cultural tightness–looseness as a moderator, other cultural dimensions, such as uncertainty avoidance or individualism–collectivism [15], could also influence the effectiveness of SHRM practices. Future research should study these dimensions to gain a more comprehensive understanding of how national culture moderates the SHRM–performance relationship.

6. Conclusions

This study adds to the increasing body of literature on sustainable human resource management (e.g., [103,104,105]) by demonstrating its positive impact on employees’ perceived performance and emphasizing the mediating role of employee engagement. The findings also emphasize the importance of considering national culture, particularly cultural tightness–looseness, in shaping the effectiveness of SHRM practices. These insights offer valuable theoretical and practical implications, suggesting that organizations need to adopt culturally sensitive SHRM practices to optimize their performance and achieve sustainability goals. By fostering a supportive and engaged workforce, organizations can not only enhance their performance but also contribute to broader social and environmental sustainability.

Funding

This research received no external funding.

Institutional Review Board Statement

The study was approved by the College Ethics Committee, Braude Academic College of Engineering (date November 2023).

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

The data presented in this study are available on request.

Conflicts of Interest

The author declares no conflicts of interest.

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Figure 1. Proposed theoretical model.
Figure 1. Proposed theoretical model.
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Figure 2. Moderating effect of cultural tightness level on the relationship between social SHRM and perceived performance.
Figure 2. Moderating effect of cultural tightness level on the relationship between social SHRM and perceived performance.
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Figure 3. Moderating effect of cultural tightness level on the relationship between psychological SHRM and perceived performance.
Figure 3. Moderating effect of cultural tightness level on the relationship between psychological SHRM and perceived performance.
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Figure 4. Moderating effect of cultural tightness level on the relationship between ecological SHRM and perceived performance.
Figure 4. Moderating effect of cultural tightness level on the relationship between ecological SHRM and perceived performance.
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Table 1. Classification of countries according to Tightness–Looseness Scale.
Table 1. Classification of countries according to Tightness–Looseness Scale.
VariableScoreTightness Level
Argentina1.56Low
Australia1.9Medium
Austria2.1High
Brazil1.69Low
Canada1.83Medium
Chile1.68Low
Estonia1.62Low
Finland1.75Medium
Germany2.03High
Greece1.71Medium
Hungary1.46Low
Iceland1.94High
India2.48High
Ireland1.8Medium
Israel1.66Low
Italy1.87Medium
Japan2.09High
Korea2.09High
Mexico1.69Low
The Netherlands1.59Low
Poland1.7Medium
Portugal2High
Spain1.71Medium
Sweden2.2High
UK1.77Medium
USA1.82Medium
Table 2. Descriptive statistics and correlations.
Table 2. Descriptive statistics and correlations.
VariableMeanSD1234
1. Social SHRM3.420.73
2. Psychological SHRM3.370.700.45 **
3. Ecological SHRM3.240.690.41 **0.39 **
4. Employees’ perceived performance3.760.710.32 **0.29 **0.42 **
5. Cultural tightness1.650.65−0.30 **−0.27 **−0.21 **−0.15 **
n = 1950. Country-level means assigned down to the individual level. ** p < 0.01. Two-tailed test.
Table 3. The main effect of SHRM practices on employees’ perceived performance.
Table 3. The main effect of SHRM practices on employees’ perceived performance.
Employees’ Perceived Performance
Level 1 Main Effects
Age0.14 * (0.04)
1 Gender0.04 (0.02)
2 Educational level0.24 ** (0.11)
Social SHRM0.28 ** (0.15)
Psychological SHRM0.23 ** (0.10)
Ecological SHRM0.36 ** (0.15)
~R20.15
n = 1950 individuals (level 1) in 26 countries (level 2). * < 0.05; ** < 0.01. 1 dummy variable. (a) female (47.3%) and (b) male (52.7%); 2 dummy variable. (i) bachelor’s degree (67.4% %), (ii) master’s degree (26.8%), and (iii) PhD (5.8%).
Table 4. The indirect effect of SHRM on employees’ perceived performance via employees’ engagement.
Table 4. The indirect effect of SHRM on employees’ perceived performance via employees’ engagement.
Employees’ Perceived Performance
Variables1 Model 12 Model 2
Level 1 Main Effects
Age0.14 * (0.04)0.12 * (0.04)
Gender0.04 (0.02)0.03 (0.01)
Educational level0.24 ** (0.11)0.20 ** (0.09)
Social SHRM0.28 ** (0.15)0.19 ** (0.08)
Psychological SHRM0.23 ** (0.10)0.15 ** (0.06)
Ecological SHRM0.36 ** (0.15)0.21 ** (0.10)
Employees’ engagement0.32 ** (0.12)0.24 ** (0.11)
Level 1 Indirect Effects
Social SHRM via employees’ engagement 0.21 ** (0.09)
Psychological SHRM via employees’ engagement 0.19 ** (0.08)
Ecological SHRM via employees’ engagement 0.25 ** (0.12)
~R20.180.28
Δ~R2 0.10
n = 1950 individuals (level 1) in 26 countries (level 2). * < 0.05; ** < 0.01. 1 Model includes controls and direct main effects; 2 model includes controls, direct main effects, and indirect effects.
Table 5. Moderating effect of cultural tightness level on the relationship between SHRM and employees’ perceived performance.
Table 5. Moderating effect of cultural tightness level on the relationship between SHRM and employees’ perceived performance.
Employees’ Perceived Performance
Variables1 Model 12 Model 2
Level 1 Main Effects
Age0.13 * (0.04)0.13 * (0.04)
Gender0.04 (0.02)0.03 (0.02)
Educational level0.22 ** (0.11)0.22 ** (0.11)
Social SHRM0.26 ** (0.14)0.24 ** (0.12)
Psychological SHRM0.21 ** (0.10)0.18 ** (0.09)
Ecological SHRM0.33 ** (0.14)0.27 ** (0.12)
Level 2 Main Effects
Cultural tightness level (TL)−0.18 ** (0.07)−0.15 ** (0.06)
Cross–Level Interactions
Social SHRM × TL −0.20 ** (0.07)
Psychological SHRM × TL −21 ** (0.08)
Ecological SHRM × TL −24 ** (0.08)
~R20.170.25
Δ~R2 0.08
n = 1950 individuals (level 1) in 26 countries (level 2). * < 0.05; ** < 0.01. 1 Model includes controls and main effects; 2 model includes controls, main effects, and cross-level interaction.
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Peretz, H. Sustainable Human Resource Management and Employees’ Performance: The Impact of National Culture. Sustainability 2024, 16, 7281. https://doi.org/10.3390/su16177281

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Peretz H. Sustainable Human Resource Management and Employees’ Performance: The Impact of National Culture. Sustainability. 2024; 16(17):7281. https://doi.org/10.3390/su16177281

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Peretz, Hilla. 2024. "Sustainable Human Resource Management and Employees’ Performance: The Impact of National Culture" Sustainability 16, no. 17: 7281. https://doi.org/10.3390/su16177281

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