HPWS and Innovation in Professional Service Firms: The Mediating Effects of Social Capital and Knowledge Transfer

Abstract

This study investigates the intricate relationships between High-Performance Work Systems (HPWS), Social Capital (SC), Knowledge Sharing (KS), and Innovative Behavior (IB) in professional service firms in Pakistan. Drawing on data from 70 respondents and utilizing Partial Least Squares Structural Equation Modeling (PLS-SEM), the findings reveal significant positive relationships: HPWS positively impacts SC (β = 0.445, p < 0.001), SC significantly influences KS (β = 0.622, p < 0.001), and KS positively affects IB (β = 0.263, p < 0.05). The results underscore that HPWS indirectly impacts IB through the sequential mediation of SC and KS. Contrary to expectations, the moderating role of Need for Cognition (NFC) in the KS-IB relationship was not statistically significant. These findings contribute to the theoretical and practical understanding of how organizational systems foster innovation by leveraging social and knowledge-sharing mechanisms, offering implications for both academia and human resource management practice.