IMPACT OF HIGH-PERFORMANCE WORK SYSTEM ON SERVICE INNOVATION IN FINTECH FIRMS: THE MEDIATING ROLE OF EMPLOYEE AGILITY

Abstract

The study aims to explore the impact of HPWS (High-Performance Work System) on service innovation in fintech firms and explore the role of employee agility as a mediator between the two variables, which is grounded on the Dynamic Capability Theory. The adopted research design was a quantitative, explanatory research design, with data gathered using a structured cross sectional survey that was administered to the respondents (221 valid) in various functions relating to innovation, customer service and operation in the fintech organizations. The data was analyzed by Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS after preliminary screening in SPSS, reliability and validity were tested using Cronbach's Alpha, Composite Reliability and Average Variance Extracted, and hypothesis testing was performed by path analysis and bootstrapping with 5,000 resamples. The results show that employee agility is a significant predictor of service innovation (β = 0.522, p < 0.001) and mediator between HPWS and service innovation (β = 0.355, p < 0.001), where the model accounted for 46.4% of the variance in employee agility and 67.1% of the variance in service innovation. These findings advance Dynamic Capability Theory by conceptualizing employee agility as a micro-foundational capability, which transforms HR-related resources into innovative results, and provide novel empirical evidence from the fintech industry elucidating how human resource practices need to be complemented with strategic work on deliberate agility-building to both maintain and create service innovation in dynamic digital markets.