ISSN: 2222-6990
Open access
Employee performance is an important concern for Malaysian micro, small and medium-sized enterprises (MSMEs), which employ almost half of the country's workforce but contribute a smaller share of national GDP. This conceptual paper develops a framework for explaining how human resource management (HRM) practices may influence employee performance directly and through work engagement. Guided primarily by Ability-Motivation-Opportunity (AMO) theory, the framework brings together training, compensation, performance appraisal and industrial relations. Training is treated mainly as an ability-enhancing practice; compensation and appraisal as motivation-enhancing practices; and industrial relations as an opportunity-enhancing practice. Four propositions are developed: HRM practices are positively related to employee performance and work engagement; work engagement is positively related to employee performance; and work engagement partially mediates the relationship between HRM practices and performance. The paper extends earlier conceptual work on performance appraisal by examining four practices within one MSME framework. It also clarifies that the propositions remain untested and require empirical validation.
Abdul Hamid, S. N., & Yahya, K. K. (2016). Mediating role of work engagement on the relationship between person-job fit and employees' retention: Evidence from semiconductor companies in northern region of Malaysia. International Review of Management and Marketing, 6(S7), 187-194.
Aboramadan, M., Albashiti, B., Alharazin, H., & Dahleez, K. A. (2020). Human resources management practices and organizational commitment in higher education: The mediating role of work engagement. International Journal of Educational Management, 34(1), 154-174. doi:10.1108/IJEM-04-2019-0160
Abu-Mahfouz, S., Bahkia, A. S., & Alias, N. (2021). The impact of human resource management practices on employee performance and the mediating role of employee commitment. Journal of Governance and Regulation, 10(4), 222-234. doi:10.22495/jgrv10i4siart3
Aktar, A., & Pangil, F. (2018). Mediating role of organizational commitment in the relationship between human resource management practices and employee engagement: Does black box stage exist? International Journal of Sociology and Social Policy, 38(7/8), 606-636. doi:10.1108/IJSSP-08-2017-0097
Alabedeen, O. Z., & Rahim, N. A. A. (2026). Mediating effect of work engagement in the link between performance appraisal and employee performance: Developing a conceptual framework. Journal of Management Theory and Practice, 6(1), 42-47. https://doi.org/10.37231/jmtp.2025.6.1.454
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), 7-35. doi:10.1108/JOEPP-08-2014-0042
Appelbaum, E., Bailey, T., Berg, P., & Kalleberg, A. L. (2000). Manufacturing advantage: Why high-performance work systems pay off. Ithaca, NY: Cornell University Press.
Armstrong, M. (2010). Armstrong's essential human resource management practice: A guide to people management. London, UK: Kogan Page.
Arthur, J. B. (1994). Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37(3), 670-687. doi:10.2307/256705
Aryee, S., Walumbwa, F. O., Seidu, E. Y. M., & Otaye, L. E. (2012). Impact of high-performance work systems on individual- and branch-level performance: Test of a multilevel model of intermediate linkages. Journal of Applied Psychology, 97(2), 287-300. doi:10.1037/a0025739
Bakker, A. B., & Albrecht, S. (2018). Work engagement: Current trends. Career Development International, 23(1), 4-11. doi:10.1108/CDI-11-2017-0207
Bakker, A. B., & Demerouti, E. (2008). Towards a model of work engagement. Career Development International, 13(3), 209-223. doi:10.1108/13620430810870476
Bature, N., Friday, O., & Mustapha, A. (2013). Manpower training and development: A tool for higher productivity in Zenith Bank Plc, Maitama Branch, Abuja. European Journal of Business and Management, 5(28).
Blumberg, M., & Pringle, C. D. (1982). The missing opportunity in organizational research: Some implications for a theory of work performance. Academy of Management Review, 7(4), 560-569. doi:10.2307/257222
Borst, R. T., Kruyen, P. M., Lako, C. J., & de Vries, M. S. (2020). The attitudinal, behavioral, and performance outcomes of work engagement: A comparative meta-analysis across the public, semipublic, and private sector. Review of Public Personnel Administration, 40(4), 613-640. doi:10.1177/0734371X19840399
Bos-Nehles, A., Townsend, K., Cafferkey, K., & Trullen, J. (2023). Examining the ability, motivation and opportunity (AMO) framework in HRM research: Conceptualization, measurement and interactions. International Journal of Management Reviews, 25(4), 725-739. doi:10.1111/ijmr.12332
Bowen, D. E., & Ostroff, C. (2004). Understanding HRM-firm performance linkages: The role of the "strength" of the HRM system. Academy of Management Review, 29(2), 203-221. doi:10.2307/20159029
Christian, M. S., Garza, A. S., & Slaughter, J. E. (2011). Work engagement: A quantitative review and test of its relations with task and contextual performance. Personnel Psychology, 64(1), 89-136. doi:10.1111/j.1744-6570.2010.01203.x
Chung, N. G., & Angeline, T. (2010). Does work engagement mediate the relationship between job resources and job performance of employees? African Journal of Business Management, 4(9), 1837-1843. https://doi.org/10.5897/AJBM.9000225
Delaney, J. T., & Huselid, M. A. (1996). The impact of human resource management practices on perceptions of organizational performance. Academy of Management Journal, 39(4), 949-969. doi:10.2307/256718
DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421-433. doi:10.1037/apl0000085
Department of Statistics Malaysia. (2025). Micro, small & medium enterprises (MSMEs) performance 2024. Retrieved from https://www.dosm.gov.my/portal-main/release-content/micro-small--medium-enterprises-msmes-performance-2024
Fulmer, I. S., Gerhart, B., & Kim, J. (2023). Compensation and performance: A review and recommendations for the future. Personnel Psychology, 76(2), 687-718. doi:10.1111/peps.12583
Gravina, N. E., & Siers, B. P. (2011). Square pegs and round holes: Ruminations on the relationship between performance appraisal and performance management. Journal of Organizational Behavior Management, 31(4), 277-287. doi:10.1080/01608061.2011.619418
Hallberg, U. E., & Schaufeli, W. B. (2006). "Same same" but different? Can work engagement be discriminated from job involvement and organizational commitment? European Psychologist, 11(2), 119-127. doi:10.1027/1016-9040.11.2.119
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268-279. doi:10.1037/0021-9010.87.2.268
Jiang, K., Lepak, D. P., Hu, J., & Baer, J. C. (2012). How does human resource management influence organizational outcomes? A meta-analytic investigation of mediating mechanisms. Academy of Management Journal, 55(6), 1264-1294. doi:10.5465/amj.2011.0088
Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33(4), 692-724. doi:10.2307/256287
Karatepe, O. M. (2013). High-performance work practices and hotel employee performance: The mediation of work engagement. International Journal of Hospitality Management, 32, 132-140. doi:10.1016/j.ijhm.2012.05.003
Karatepe, O. M., & Olugbade, O. A. (2009). The effects of job and personal resources on hotel employees' work engagement. International Journal of Hospitality Management, 28(4), 504-512. doi:10.1016/j.ijhm.2009.02.003
Karatepe, O. M., & Olugbade, O. A. (2016). The mediating role of work engagement in the relationship between high-performance work practices and job outcomes of employees in Nigeria. International Journal of Contemporary Hospitality Management, 28(10), 2350-2371. doi:10.1108/IJCHM-03-2015-0145
Kuvaas, B. (2006). Performance appraisal satisfaction and employee outcomes: Mediating and moderating roles of work motivation. International Journal of Human Resource Management, 17(3), 504-522. doi:10.1080/09585190500521581
Marin-Garcia, J. A., & Martinez Tomas, J. (2016). Deconstructing AMO framework: A systematic review. Intangible Capital, 12(4), 1040-1087. doi:10.3926/ic.838
Nwankwo, E. C., Nkechi, O. A., & Adanso, O. C. (2023). Effect of industrial relations practices on the productivity of the public sector in Nigeria. International Journal of Advance Multidisciplinary Research and Studies, 3(2), 217-224.
Obi-Anike, H. O., & Ekwe, M. C. (2014). Impact of training and development on organizational effectiveness: Evidence from selected public sector organizations in Nigeria. European Journal of Business and Management, 6(29), 66-75.
Pfeffer, J. (1998). Seven practices of successful organizations. California Management Review, 40(2), 96-124.
Priem, R. L., & Butler, J. E. (2001). Is the resource-based "view" a useful perspective for strategic management research? Academy of Management Review, 26(1), 22-40. doi:10.5465/amr.2001.4011928
Quartey, S. H., & Attiogbe, E. J. (2013). Is there a link between compensation packages and job performance in the Ghana police service? African Journal of Business Management, 7(44), 4398-4406.
Rahaman, A., Gupta, A., Ibn Ali, A. R. S., Ali, J., & Taru, R. D. (2021). Identification of determining factors of employee performance of SME business. Academy of Entrepreneurship Journal, 27(6), 1-6.
Rees, C., Alfes, K., & Gatenby, M. (2013). Employee voice and engagement: Connections and consequences. International Journal of Human Resource Management, 24(14), 2780-2798. doi:10.1080/09585192.2013.763843
Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21(7), 600-619. doi:10.1108/02683940610690169
Salanova, M., & Schaufeli, W. B. (2008). A cross-national study of work engagement as a mediator between job resources and proactive behaviour. International Journal of Human Resource Management, 19(1), 116-131. doi:10.1080/09585190701763982
Schaufeli, W. B., & Bakker, A. B. (2004). Job demands, job resources, and their relationship with burnout and engagement: A multi-sample study. Journal of Organizational Behavior, 25(3), 293-315. doi:10.1002/job.248
Schaufeli, W. B., Salanova, M., Gonzalez-Roma, V., & Bakker, A. B. (2002). The measurement of engagement and burnout: A two sample confirmatory factor analytic approach. Journal of Happiness Studies, 3(1), 71-92. doi:10.1023/A:1015630930326
Shantz, A., Alfes, K., Truss, C., & Soane, E. (2013). The role of employee engagement in the relationship between job design and task performance, citizenship and deviant behaviours. International Journal of Human Resource Management, 24(13), 2608-2627. doi:10.1080/09585192.2012.744334
Tahir, H. M., Razak, N. A., & Rentah, F. (2018). The contributions of small and medium enterprises (SME's) on Malaysian economic growth: A sectoral analysis. In Advances in Intelligent Systems and Computing (pp. 704-711). Singapore: Springer. doi:10.1007/978-981-10-8612-0_73
Tiwari, P., & Saxena, K. (2012). Human resource management practices: A comprehensive review. Pakistan Business Review, 13(4), 669-705.
World Bank. (2022). Small and medium enterprises (SMEs) finance. https://www.worldbank.org/ext/en/topic/competitiveness/small-and-medium-enterprises-smes-finance
Yao, J., Qiu, X., Yang, L., Han, X., & Li, Y. (2022). The relationship between work engagement and job performance: Psychological capital as a moderating factor. Frontiers in Psychology, 13, 729131. doi:10.3389/fpsyg.2022.729131
Zeb-Obipi, I., Obiekwe, O., & Ateke, M. D. (2019). Industrial relations environment and organizational resilience: Implications on Nigerian managers. International Journal of Social Sciences and Management Research, 5(1), 22-35.
Alabedeen, O. Z., & Rahim, N. A. A. B. A. (2026). The Role of Work Engagement in the Relationship between HRM Practices and Employee Performance in Malaysian MSMEs A Conceptual Framework Based on AMO Theory. International Journal of Academic Research in Business and Social Sciences, 16(10), 1353–1365.
Copyright: © 2026 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode