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Article

Creating Financial and Social Value by Improving Employee Well-Being: A PLS-SEM Application in SMEs

by
Mercedes Rubio-Andrés
1,*,
Ma del Mar Ramos-González
2,
Santiago Gutiérrez-Broncano
3 and
Miguel Ángel Sastre-Castillo
4
1
Department of Business Administration, Faculty of Commerce and Tourism, Complutense University of Madrid, 28003 Madrid, Spain
2
Department of Business Administration, CEU San Pablo University, 28003 Madrid, Spain
3
Department of Business Administration, University of Castilla-La Mancha, Faculty of Social Sciences, 45600 Talavera de la Reina, Spain
4
Department of Business Administration, Complutense University of Madrid, 28003 Madrid, Spain
*
Author to whom correspondence should be addressed.
Mathematics 2022, 10(23), 4456; https://doi.org/10.3390/math10234456
Submission received: 18 October 2022 / Revised: 18 November 2022 / Accepted: 24 November 2022 / Published: 25 November 2022
(This article belongs to the Section Computational and Applied Mathematics)
Browse Figures
Versions Notes

Abstract

:
In the business world, the improvement of employee well-being in organizations is important, as there is empirical evidence that it brings social value and economic benefits to organizations. To advance in this line of research, we considered SMEs as the object of study due to their importance in Spanish businesses and the scarcity of empirical studies on the subject. We use the partial least squares structural equation modeling (PLS-SEM) to analyse the measurement models and the structural model. Our research focuses on the importance of influential variables on well-being, but also considers how they affect financial performance. In the model that we present, there is a direct effect between the latent variables HPWS, well-being, reputation and financial performance, which represents how human resource management based on good practice in small and medium-sized enterprises (SMEs) positively affects well-being by creating a good reputation and generating more business wealth. Our findings confirm the direct relationships proposed in the model, as well as the relevance of well-being and reputation as mediating variables.
Keywords:
well-being; financial value; social value; reputation; HPWS; SMEs
MSC:
62P25; 91C99

1. Introduction

Ensuring well-being in the workplace is one of today’s most important social challenges among organizations, due to its positive effects on employee motivation, reputation achievement and, consequently, increased financial performance and social value. If SMEs are to achieve this goal, they need to implement responsible human resource management in their organizations. The concept of well-being is understood as an individual experience that allows individuals to work more efficiently [1,2], thus offering great benefits to companies. Employers play an active role in ensuring the well-being of their employees [3].
Studies usually consider each dimension of well-being separately—first, happiness (commitment and satisfaction), and second, health (stressors and strain)—considering research that incorporates the dimension of happiness versus [4], and even more important studies on the analysis of satisfaction [5]. We include both dimensions by measuring happiness through the motivation indicator, which, as Van De Voorde et al. [6] point out, reflects the feeling of happiness and health through the degree of absenteeism.
We consider that well-being is a resultant variable, a consequence of the impact caused by two variables: the first is HPWS, justified by the fact that human resource management has a direct influence on companies. The second, reputation, is due to the fact that the image that employees have of the company affects their well-being. In addition, the reputation variable is established as a variable that is influenced by HPWS.
The creation of well-being in organizations [7] is an end, but it also has consequences on the resulting variables, such as the creation of social and financial value. Indeed, we also wish to investigate whether the achievement of well-being in organizations improves financial performance [2], which is essential for SMEs to be able to compete, as well as social value, given that this is a variable that also influences the performance of companies.
In view of this problem, we have set ourselves the following research questions: (1) Does well-being improve in the workplaces of Spanish SMEs if human resource management is based on HPWS? (2) What specific practices of HPWS have a positive impact on well-being creation? (3) Does it improve social value in SMEs if they achieve workplace well-being? (4) Does it improve financial performance?
The work is structured in the following sections. After the introduction, the theoretical background on well-being in the workplace and HPWS is explained, establishing the corresponding propositions and also considering the variables of reputation, social value and financial performance. Then, the proposed model is described, and the empirical analysis is carried out, applying the technique of structural equations (PLS-SEM), defining the most significant methodological aspects and paying special attention to the selected items, as well as the main aspects of the quantitative study carried out. Next, a specific section is dedicated to evaluating the results obtained, in order to finally reveal the most significant conclusions and propose future lines of research.

2. Theoretical Background and Hypotheses

2.1. Well-Being and High-Performance Work Systems

Several papers study the variables that have an impact on well-being in organizations, and HPWS is highlighted as one of the most relevant variables. Babic et al. [7] found those factors in HPWS that contribute to employee well-being, such as the possibility of acquiring competencies and skills, opportunities for promotion, job security and variety in job performance [8], increasing work engagement [9,10] and degree of participation [11,12,13].
Boxall and Macky [14], focusing on some of the HPWS factors listed above, demonstrated that degrees of stress, fatigue and work overload are lower when levels of worker participation and autonomy are higher; in short, greater job satisfaction is produced. Thus, they justify that high-performance work processes are associated with better work–life balance and greater satisfaction.
Most empirical research studying the relationship between HPWS and well-being finds a positive influence effect of HPWS on well-being [15] in western and also eastern countries [16,17], although, in this context, commitment levels are very low [18], while employee satisfaction and happiness are increasingly important [5,19].
For example, Riordan et al. [20] highlighted how HPWS has a positive impact on performance and well-being, and Beltrán-Martin and Bou-Llusar [21] found evidence that human resources bundles have a positive influence on motivation, employee abilities and opportunities to participate.
Furthermore, Ogbonnaya et al. [22] investigated the positive relationships between HPWS and employee health and well-being and examined the conflicting assumption that higher work intensification arising from HPWP might offset these positive relationships. Research suggests that there is a positive relationship between HPWS and employee job satisfaction [23,24], organizational commitment [25] and trust in management [26].
However, not all studies find a positive relationship. Some academics have presented a negative view of HPWS’s influence on employee well-being at work [27]. Truss (2001) [28], in his study of workplace wellness, which focused primarily on employee health, found that HPWS has a negative impact on wellness, although the effect on performance is positive. In addition, White et al. [29] argue that HPWS has negative indirect effects on the work–life balance, as employees ultimately have to work longer hours, leading to increased burnout and stress [30,31,32].
In our case, we focus on the line of research whereby HPWS positively influences the well-being of workplaces, so we propose the first hypothesis as follows:
Hypothesis 1.
HPWS has a significant and positive effect on employee well-being in SMEs.

2.2. High-Performance Work Systems and Financial Performance

In recent years, there have been a number of discussions about the appropriate human resource practices to use in organizations to achieve prosperity and well-being among workers and, consequently, greater efficiency and improved financial performance.
HPWS has been related to increased productivity [33], lower occupational injury [34] and the level of turnover for organizations [35,36,37], and thus to greater empowerment [38,39] and lower work–family conflict for employees [40].
Huselid [37] examined the effects of HPWS performance scales, through company turnover, labor productivity, the gross asset return rate and a Tobin Q variant. The results robustly confirmed the proposition that HPWS has a positive effect on the above measures of business performance. In a later study, Becker and Huselid [41] again confirmed that there is a positive correlation between the human resource management system and the business performance.
Moreover, in the study by Meddour et al. [42], the results indicate that firm performance can be improved through HPWS that induces employee creativity.
However, some research highlights the existence of economic and political conflicts associated with HPWS [43], calling into question the future of high-engagement when organizations face external pressures to increase their profitability [44].
Based on human resource system theory, the implementation of HPWS can help to develop workers’ skills so as to achieve better business performance and motivate them adequately to align themselves with company objectives [45].
According to previous research, we consider it interesting to empirically study HPWS and its impact on business results and propose the following:
Hypothesis 2.
HPWS significantly and positively affects financial performance in SMEs.

2.3. Well-Being, Social Value, and Financial Performance

Well-being, as a current challenge, is crucial for the proper operation of an organization. SMEs need to achieve good company results in terms of financial and social value creation means, considering the impact that well-being has on the company.
Achieving well-being in the workplace is a result of influence on social value creation (SVC) and improved business performance. Research that indicate that the well-being of the employee in the workplace has a positive influence on organizational performance, reduces the turnover and degree of absenteeism [46], improves work performance [47] and increases employees’ ability to value not only their personal interests but also the benefit of the organization [6].
Moreover, a good work environment and workplace culture have been associated with job satisfaction and employee engagement, motivation, commitment, turnover and talent attraction [48].
Mihail and Kloutsiniotis [9] demonstrate that organisational engagement is positively associated with employee satisfaction, finding that satisfied employees are less likely to be emotionally exhausted and more likely to be involved in their jobs, thus, increase social value.
Following the studies cited, we define hypothesis 3 below:
Hypothesis 3.
Well-being has a significant and positive effect on social value.
One of the fundamental principles in SMEs is to improve business performance. We believe that well-being has a direct impact on the improvement of financial performance. Indeed, different studies indicate that happier and healthier employees devote greater effort to their work, improving their contributions and the company’s productivity [49,50,51]. In general, the organization’s financial and social performance does not arise from human resource practices per se, but rather from the contributions that practices make to employee behaviour [52,53]. Thus, well-being has a mediating role between HPWS and business performance [54,55].
If we focus on the effect on financial value, we state hypothesis 4 as follows:
Hypothesis 4.
The higher the SMEs’ focus on well-being, the stronger their financial performance is.

2.4. Corporate Reputation and Mediating Effect

Reputation, defined as organization’s ability to create more value than the competition, has received considerable attention from organizational scholars [56,57,58,59,60,61,62]. Reputation is considered a valuable intangible asset that provides the company with sustainable competitive advantages [60,63] that exceed the competition [64]. For Ruiz et al. (2014) [65], companies may have different reputations for different criteria and as many reputations as there are stakeholders.
Applying HPWS in the workplace makes the organization more attractive so as to retain talent, promoting the selection of more qualified personnel, and achieves better conditions for the company, which will result in a good internal reputation for the enterprise [66,67], making the prestige and name of the company stronger [59].
Companies must find ways to improve their reputation and avoid unintentionally damaging it [68]. In this sense, we highlight a line of research that analyses the negative effects caused by the lack of a good reputation and maintains that stakeholders evaluate the irresponsibility of the company in a detrimental way [69,70,71,72].
Thus, we consider that HPWS has a direct impact on the corporate reputation of companies, increasing their prestige and good name [73], which leads us to propose the fifth hypothesis of the research:
Hypothesis 5.
HPWS has a significant and positive effect on reputation.
Organizational reputation is related to attracting customers and employees [74]. Turban and Cable [75] demonstrated that employers with better reputations attracted more applicants and were able to select higher-quality candidates.
Corporate social performance researchers tend to be concerned about external stakeholders, demonstrating that a positive reputation is achieved through good social performance. In addition, they show an improvement in organisational attractiveness to potential customers and employees [76,77].
We consider, therefore, that a friendly corporate reputation communicates a positive image of the company and generates well-being among the workers, and we propose the following hypothesis:
Hypothesis 6.
Reputation has a significant and positive effect on well-being.
According to MacMillan et al. [78], reputation focuses on the predictable behaviours by stakeholders and impacts the financial performance of companies by creating shareholder value. Money and Hillenbrand [79] explain reputation and value creation through the development of market assets, intangible assets and, finally, the company’s business performance.
Researchers have explored how organizational reputation can lead to positive outcomes for the company [80,81] and increased business growth [82], although the relationship between financial performance and company reputation is not simple and unidirectional [74].
Several studies state that a company’s reputation achieves higher value in the market [83] and is positively related to its acquisition price [84,85], avoiding the lack of volatility of its share price [80,86,87]. Roberts and Dowling [88] found a positive relationship between company reputation and subsequent asset performance. In this regard, Miller et al. [89] assessed how performance impacts depend on whether the company’s reputation in the current and previous period is positive, neutral or negative, empirically demonstrating that a good reputation is positively related to financial performance (measured in terms of economic return—ROA) and, conversely, when reputation is negative, a significant drop in profits is generated.
Positive business result, such as high levels of return on assets (ROA), Positive results are related to good management, a healthy corporate strategy and efficient allocation of resources, and have been linked to a good reputation [58,80,88].
Therefore, we propose hypothesis 7 as follows:
Hypothesis 7.
The higher the SMEs’ reputation, the stronger their financial performance is.
More research examining the creation of social value with financial effort considers social value without a financial orientation [90]. For some authors, quality is the most relevant variable in the creation of internal social value in SMEs, which is related to the improvement of financial performance.
Following Chapman et al. [91], there is a positive correlation between quality and business performance indices. Garvin [92] highlighted that there was a strong association between quality and profitability. If we refer to the creation of external social value, Marinič [93] found that customer satisfaction can improve business performance.
Auerswald [94] demonstrated that social value creation that social value creation is an opportunity to improve financial resources. Furthermore, he understands that SMEs have a greater capacity to create social value than large companies, as the latter are more constrained because their authority is more centralised, and management is more complex. SMEs enable markets to function more efficiently by introducing technological innovations and enhancing consumer choice, transparency and accountability, and are drivers for improving the quality of products and services.
Consequently, we consider that when SMEs create social value, it affects financial performance in a positive way, so Hypothesis 8 is stated as follows:
Hypothesis 8.
The more intensive the SMEs’ social value, the stronger their financial performance is.
Considering the above hypothesis, we present the conceptual model (Figure 1):

3. Research Methodology

3.1. Population and Sample

The sample includes Spanish SMEs (Annex I of Commission Regulation-EU-No 651/2014) with between 6 and 249 employees in the manufacturing industry, the construction sector, retail trade and services in Spain [95]. The final sample was 1136 Spanish SMEs distributed as follows: 459 companies with less than 10 employees, 576 companies with less than 50 employees and 101 companies with less than 250 employees for a confidence level of 95%.

3.2. Measuring Instrument

It is important to recognise that there is a lack of consensus on defining HPWS and specifying the components to measure it [96]. Following the literature, SME managers were asked to indicate their level of agreement with 28 indicators using a 5 point Likert scale (1 = “strongly disagree” and 5 = “strongly agree”).

3.3. Measuring Indicators

Latent variables have been measured through the following indicators.
High-Performance Work Systems: An exogenous latent variable, this indicates how SMEs manage their human resources. We have used, for its measurement, 11 indicators described as HPWS: employee information, contingent compensation, employee participation in decision making, investment in training, selective hiring, pay equity, job security, career, continuous training, performance evaluation and feedback, job flexibility [14,55,97,98,99,100,101,102,103].
Well-being: An endogenous latent variable, this is understood as job commitment and satisfaction [6,48] and is measured through two indicators: level of absenteeism and employee motivation.
Reputation: An endogenous latent variable that is measured by three indicators: the experience that the customer [104] and the external reputation and the transparency in management towards stakeholders [105].
Social value: A latent endogenous variable estimated through five indicators: SMEs’ commitment to the creation of social and economic value [106,107,108,109], the quality of the SMEs’ products [110,111,112], process efficiency and anticipation of changes in the environment, knowledge about the client satisfaction index.
Financial performance: A latent endogenous variable that reflects the creation of financial value of SMEs through seven indicators: cost reduction, business growth, improvement of sales expectations, profitability, financing volume, cost of financing and expenses and commissions required from SMEs.
Reflective variables are used in this study to meet the research objectives [113]. The indicators and observable variables are a reflection of the constructs, so they were not directly observed, but were linked to the selected indicators. [114,115].

4. PLS-SEM

We use partial least squares structural equation modelling (PLS-SEM) for the analysis model, which allows us to estimate the chains of causal relationships defined between unobservable latent variables using statistical methods [116]. The reflective model is estimated with the PLS technique using the SmartPLS 4 software package. This measure is determined by the following equation:
R e f l e c t i v e   X j h = w j h ε j + e j h
Xjh = the manifiest variable j of the endogenous latent variables h = 1, …H
wjh = the estimated load of the indicator Xji
εj = the latent variable, j = 1,…,J
ejh = the error term.
The proposed model is recursive. All relationships between latent variables are unidirectional and are defined in a left-to-right direction, i.e., they do not contain circular or reciprocal effects.
It is not necessary to specify the existence of covariance between the latent independent variables because there is only one in the model. Moreover, there is a direct effect between the latent variables HPWS, reputation, well-being and financial performance.

5. Results

5.1. Measurement Model Evaluation

The individual reliability of the indicators is tested by examining the weights obtained by PLS (λ). In our study we eliminated indicators with standardized weights below 0.4 [117] were removed, and the model was reformulated.
Cronbach’s alpha values confirm a high reliability of the constructs because the values were above 0.70 [118] (between 0.648 and 0.934), which confirms the constructs’ high reliability. All constructs meet the recommended criteria, reaching even higher values. [119,120].
The AVE criterion requires latent variable values of 0.5 or higher [119]. All constructs are above the indicated value, with the values for the latent variables of reputation, well-being, and financial performance showing a high AVE with values of 0.803, 0.865 and 0.867, respectively (Table 1).

5.2. Discriminant Validity

The factor loading matrix and the cross-loadings show that the load of an indicator in its corresponding latent variable is greater than its loads crossed with the rest of the latent variables. The discriminant validity implies that each construct must be significantly different from the rest of the constructs with which it is not related (Table 2).
Furthermore, in the cross-loading matrix, we highlight the loads between the indicators of the latent variables and confirm that the loading of an indicator on its associated construct is higher than its loading on the other constructs (Table 3).
Henseler et al. (2016) [121] showed that a lack of validity is best detected through the Heterotrait–Monotrait ratio indicator. We confirmed that the Heterotrait–Monotrait ratio is below 1. Gold et al. (2001) [122] even consider a value of 0.90. We analysed the residual matrix of correlations and verified that there were no significant residual values that would indicate a prediction error for the indicators or manifest variables of the constructs.

5.3. Structural Model Evaluation

5.3.1. Variance Inflation Factor

The assessment of the structural model comprised various evaluations [120,123]. Multicollinearity in the structural model is analysed by tolerance evaluation—with a value below 0.20—and the variance inflation factor, with values below 5.

5.3.2. Endogeneity

We have measured the possible existence of endogeneity through the approach of the Gaussian copula [124,125]. The p-values obtained are greater than 0.05, so there are no endogeneity problems. Each of the relationships between the variables, as well as the combinations that were never lower than a p-value of 0.05, was checked (Table 4).

5.4. Validation of the Hypothesis

Table 5 shows the results for the beta (β) coefficient, degree of significance and importance of the value distribution, obtained using Student’s t-test. To test the hypotheses, a bootstrapping procedure with 5000 subsamples was used, as recommended by Chin (1998) [126].
The results obtained confirm the positive effects and meanings of the hypotheses (p < 0.001), showing the maximum statistical significance (100%). All hypotheses are accepted except for Hypothesis 2, which presents a positive but not significant result, which means that SMEs manage to create financial value due to HPWS if they generate well-being, improve their reputation and create social value.
The t-values are significant when they are greater than 1.96 (τ ≥ 1.96); the most important results logically correspond to these relationships, and the result achieved stands out, especially the one achieved regarding well-being and social value (τ = 29.006).
On the main endogenous variable, financial performance, the indirect effect generated by reputation, social value and well-being amplifies considerably the direct effect of HPWS on financial performance, being 0.322, and the total effect is 0.337.
Among the specific indirect effects, the mediating effect of well-being between HPWS and financial performance stands out, which means a total effect of 0.1355; the mediating effect of social value between well-being and financial performance means a relevant effect of the same, with the total effect being 0.563 (versus the direct effect of 0.302). On the other hand, reputation implies that a total effect of 0.492 is reached due to its mediating effect between the variables of well-being and financial performance.

5.5. Predictive Relevance of the Model

We calculate the coefficient of determination, R-squared, to explain the model’s explanatory power in terms of the dependent variables that compose it [127,128].
Specifically, for financial performance, for social value, 44.3% of its behaviour is explained by well-being; 48.4% of the variability is explained by the latent variables HPWS, well-being, reputation, and social value (Figure 2).
In our model, the most remarkable results obtained for f2 correspond to the effect of HPWS on well-being. (0.181) and reputation (0.220) and the effect of social value on financial performance (0.155), all of which are medium-sized effects, as well as the high effect of well-being on social value (0.794).
Finally, we calculate Stone’s Q2 criterion [129] and Geisser [130]. There is predictive relevance in the dependent construct considered, when the Q2 is positive, and the higher its value, the greater the relevance [120]. The predictive significance of our model is correct, because a positive value is reached for each endogenous variable.

6. Discussion of Results

The first aspect to note in the research is the importance of well-being in SMEs and how HPWS (e.g., participation in decision making, career design, selective recruitment) have a positive impact on well-being (Hypothesis 1).
Secondly, we seek to explain the mediating effect of well-being between HPWS and financial performance. Understanding that HPWS are essential for organizations to achieve good results [45,131], the effect varies according to the reaction of employees, which depends on the perceived well-being. For this reason, SMEs must boost workers’ motivation to achieve better financial results. To achieve this, it is necessary that the owners–managers implement high-performance practices and selective selection processes, encourage employee participation in decision making, offer compensation based on contributions and provide continuous training, since these are the most relevant indicators in our model.
Thirdly, it should be noted that although the literature has attempted to identify the influence of HPWS on financial performance [42], in our model, this relationship is positive but not significant (Hypothesis 2), which confirms the relevance of the mediating effect of well-being (Hypothesis 4). Furthermore, when SMEs generate well-being, this not only improves financial performance but also enhances their reputation and the creation of social value [46,47] (Hypothesis 3).
Fourthly, we aimed to explain the importance of the positive influence of well-being on financial performance [49,50,51], with the greatest impact if social value plays a mediating role between both variables. When workers’ motivation is higher, social value is also higher and absenteeism is reduced, resulting in more satisfied customers, more efficient processes, higher quality products and a greater capacity to adapt to changes in the environment, and ultimately higher business results.
Fifthly, we consider the role of the reputation in the model created. It is connected to the independent variable HPWS, and it directly influences the variables of well-being (Hypothesis 6) and financial performance (Hypothesis 7) and indirectly affects social value (hypothesis 8). If SMEs improve their transparency, they can improve their financial performance [88]. Our research highlights the indirect effect that the reputation variable contributes to the relationship between HPWS and well-being. We find that transparent management leads to favourable reputation and employee well-being in SMEs.
Finally, if companies adopt HPWS, we observe that better financial results are achieved, but this relationship is intensified by the mediation effects of the latent variables that are part of the model presented, such as reputation, well-being and social value.

7. Conclusions

We have contributed to the literature on well-being- influencing variables in SMEs, in particular, HPWS and reputation. HPWS are systems of human resource practices that improve engagement, productivity and skills, becoming a source of competitive advantage [33].
Additionally, it improves SME performance by improving employee involvement in the business and aligning their commitment to organizational goals [31,36,132,133,134]. HPWS, compared to traditional human resource management practices, are more effective in improving employee and business performance levels in a variety of organizational and cultural environments [135,136]. According to Meddour et al. [42], the link between HPWS and company performance provides a viable research direction for future studies.
In addition, previous HPWS studies have shown greater organizational benefits for companies that adopt a broad range of resource management practices compared to weaker adoption [35,97,103]. Huang et al. [15] recommend future research to validate the results of different aspects of well-being with respect to HPWS, with larger samples, since their sample consisted of 50 companies. In our study, we used a larger sample to validate the hypotheses proposed by these authors.
For Carvalho and Chambel [137], when employees perceive that the organization incorporates HPWS, they are considered to have greater job autonomy and support and fewer job demands. The organisation should improve training policies, invest in selection policies, promote participation, use fair performance appraisals, equitable rewards and empower employees.
We empirically demonstrate that HPWS improves employee well-being because it also communicates that they are valued by the organization [138]. Employees perceive these signals as fair treatment by the organization and respond with more trust and higher levels of commitment [23,25].
The financial performance of SMEs should not be explained solely through intangibles such as reputation, because it also influences how the company interacts with employees [139]. Wiedmann and Prauschke [140] suggest that the relationship between intangible assets and market assets is mediated by reputation. In our case we have followed these authors and included reputation as an intangible and financial performance as a market asset.
According to Lange et al. [74], due to the conceptual relevance, further empirical research is needed on the different interactions between the dimensions of organizational reputation.
Agarwal et al. [141] suggest that business strategy researchers could investigate the importance of organisational reputation in terms of business results, such as firm performance. In our study, we use reputation to analyse its dual mediating effect between HPWS and well-being, on the one hand, and between HPWS and financial performance, on the other. We confirm its relevant role in the model.

8. Future Lines and Limitations

Our study has several limitations. We use management surveys, and they always have a certain degree of subjectivity.
We emphasize that there may be more variables that we have not considered in our model, and it may even be that HPWS has a negative effect on well-being. [29].
Well-being could be measured through other indicators in addition to the ones we have used, absenteeism and motivation, e.g., the quality of life of SME employees, preventive measures, health and safety at work [142], as well as other policies to improve the stay in the workplace [102].
Finally, we also highlight that a future line of research is to extend the research to the European level, as other studies [143] due to the relevant number of SMEs throughout Europe.

Author Contributions

Conceptualization, M.R.-A. and M.Á.S.-C.; methodology, M.R.-A. and M.d.M.R.-G.; software, M.R.-A. and M.d.M.R.-G.; validation, S.G.-B. and M.R.-A. and M.d.M.R.-G.; formal analysis, M.R.-A., S.G.-B. and M.d.M.R.-G.; investigation, M.R.-A.; M.d.M.R.-G.; S.G.-B. and M.Á.S.-C.; writing—original draft preparation M.R.-A.; M.d.M.R.-G.; S.G.-B. and M.Á.S.-C.; writing—review and editing, M.R.-A., M.d.M.R.-G., S.G.-B. and M.Á.S.-C. All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by the UCM-Cofares Research Chair.

Data Availability Statement

Data are available on request due to restrictions.

Conflicts of Interest

The authors declare no conflict of interest.

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Mathematics 10 04456 g001 550
Figure 1. Research model. (Source: Own elaboration).
Figure 1. Research model. (Source: Own elaboration).
Mathematics 10 04456 g001
Mathematics 10 04456 g002 550
Figure 2. Model results. (Source: Own based on SmartPLS); p ** < 0.01; p *** < 0.001.
Figure 2. Model results. (Source: Own based on SmartPLS); p ** < 0.01; p *** < 0.001.
Mathematics 10 04456 g002
Table
Table 1. Discriminant and convergent validity of constructs. (Source: own based on SmartPLS).
Table 1. Discriminant and convergent validity of constructs. (Source: own based on SmartPLS).
ConstructIndicatorsLoads (λ)CACRAVE
HPWS 0.8860.9080.524
Employee participation in decision makingHPWS_20.757
Professional careerHPWS_30.819
Selective HiringHPWS_40.721
Investment in trainingHPWS_50.775
Continuous trainingHPWS_60.748
Employee informationHPWS_70.638
Performance evaluation & feedbackHPWS_80.673
Pay EquityHPWS_90.718
Contingent CompensationHPWS_100.648
WELL-BEING 0.7580.8900.803
Motivation of workersWB_10.923
Work absenteeismWB_20.868
REPUTATION 0.8430.9270.865
Positive image and reputationREP_10.931
TransparencyREP_20.929
SOCIAL VALUE 0.8450.8950.681
Quality of the productsSV_10.783
Efficiency of the processesSV_20.820
Customer satisfactionSV_30.863
Rapid anticipation of environmental changesSV_40.835
FINANCIAL PERFORMANCE 0.8470.9290.867
Business growthFP_20.928
ProfitabilityFP_40.934
Loads (λ) > 0,7 Cronbach Alphas (CA) > 0.7; Composite reliability (CR) > 0.6. Average variance extracted (AVE) > 0.5.
Table
Table 2. Fornell–Larcker Criterion. (Source: our own based on SmartPLS).
Table 2. Fornell–Larcker Criterion. (Source: our own based on SmartPLS).
Financial PerformHPWSReputationSocial ValueWell-Being
FINANCIAL PERFOR0.931
HPWS0.3880.724
REPUTATION0.3850.4250.930
SOCIAL VALUE0.6420.4580.3940.826
WELL-BEING0.6120.4910.3860.6650.896
Table
Table 3. Cross Loadings (Source: our own based on SmartPLS).
Table 3. Cross Loadings (Source: our own based on SmartPLS).
IndicatorsFinancial PerformSocial ValueWell-BeingReputationHPWS
FP_20.9280.5880.5560.3400.342
FP_40.9340.6070.5830.3760.381
SV_10.4300.7830.4580.3030.352
SV_20.5630.8200.5310.2930.367
SV_30.5230.8630.6000.3570.375
SV_40.5860.8350,5910,3460.415
WB_10.6230.6430.9230.3650.516
WB_20.4550.5410.8680.3250.346
REP_10.3740.3740.3540.9310.390
REP_20.3410.3590.3640.9290.400
HPWS_20.2470.3040.3330.2700.757
HPWS_30.3000.3510.3630.2960.819
HPWS_40.3020.3290.3750.3060.721
HPWS_50.3050.3630.3630.3330.775
HPWS_60.2820.3300.3560.2940.748
HPWS_70.3750.3780.4570.4150.638
HPWS_80.2310.3040.3010.2820.673
HPWS_90.2080.3250.3220.3000.718
HPWS_100.1940.2380.2330.1760.648
Table
Table 4. Gaussian Copula Approach. (Source: our own based on SmartPLS).
Table 4. Gaussian Copula Approach. (Source: our own based on SmartPLS).
Gaussian Copulap-Value
GC (HPWS)→ Financial value0.064
GC (HPWS) → Reputation0.436
GC (HPWS) → Well-being0.073
GC (Reputation) → Financial value0.312
GC (Reputation) → Social value0.742
GC (Reputation) → Well-being0.424
GC (Well-being) → Social value0.284
Table
Table 5. Validation of the hypotheses. (Source: Own based on SmartPLS).
Table 5. Validation of the hypotheses. (Source: Own based on SmartPLS).
Hypothesisβ Coefficients t-Valuesp-ValuesSupported
H1HPWS–well-being0.39912.7350.000Yes
H2HPWS-financial performance0.0150.5240.600No
H3Well-being–social value0.66529.0060.000Yes
H4Well-being–financial performance0.3027.1920.000Yes
H5HPWS–reputation0.42516.5990.000Yes
H6Reputation–well-being0.2176.5450.000Yes
H7Reputation–financial performance0.1073.4800.001Yes
H8Social value–financial performance0.39210.6180.000Yes
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Rubio-Andrés, M.; Ramos-González, M.d.M.; Gutiérrez-Broncano, S.; Sastre-Castillo, M.Á. Creating Financial and Social Value by Improving Employee Well-Being: A PLS-SEM Application in SMEs. Mathematics 2022, 10, 4456. https://doi.org/10.3390/math10234456

AMA Style

Rubio-Andrés M, Ramos-González MdM, Gutiérrez-Broncano S, Sastre-Castillo MÁ. Creating Financial and Social Value by Improving Employee Well-Being: A PLS-SEM Application in SMEs. Mathematics. 2022; 10(23):4456. https://doi.org/10.3390/math10234456

Chicago/Turabian Style

Rubio-Andrés, Mercedes, Ma del Mar Ramos-González, Santiago Gutiérrez-Broncano, and Miguel Ángel Sastre-Castillo. 2022. "Creating Financial and Social Value by Improving Employee Well-Being: A PLS-SEM Application in SMEs" Mathematics 10, no. 23: 4456. https://doi.org/10.3390/math10234456

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