Teaching Service Quality Impacted by Innovation Strategy and Employee Engagement Practices: Vision 2030 Human Capital Development Tested as Moderator in Higher Education of Saudi Arabia

1. INTRODUCTION

The increased digitalisation of education and hybrid learning formats has escalated pressures on higher education to innovate teaching practices and enhance service delivery in education. As a result of this, university-wide strategic focus has shifted towards innovation in pedagogy, curriculum design, and online classroom environments as a way to achieve sustainable competitiveness.

An increasing number of researchers note that creative pedagogical approaches increase the effectiveness of learning, interest, and performance of students at contemporary institutions of higher learning (Khadijah et al., 2025). In addition to innovation, staff engagement in academic work has become one of the essential organisational variables affecting the quality of teaching and institutional performance (Gede & Huluka, 2024; Nalini et al., 2026). Engaged faculty members are more committed, more motivated, and willing to embrace new pedagogical practices in instructional activities. Engagement practices that include professional development, empowerment, and supportive organisational climates are thus getting more attention in higher education institutions. These practices help to enhance satisfaction of academic staff, staff retention, and general teaching performance in universities working in competitive international settings (Ghamooshi et al., 2023; Verma & Kaur, 2024).

Nevertheless, the challenge of aligning employee engagement programs and innovation strategies has continued to be a major issue in most institutions of higher learning across the globe. Effective interaction in universities is a difficult task since academic staff are likely to be overwhelmed with workloads, administration, and the need to keep research prolific and preserve the quality of teaching. These issues are especially noticeable in the countries that are developing mass educational transformation and economic diversification programs.

Saudi Arabia is one of the notable examples of such change with its national development program called Vision 2030. Vision 2030 focuses on building a knowledge-based economy through enhancing institutions of higher learning and workforce capacity (Abdulrahim, 2025). Human Capability Development Program (HCDP), initiated as a part of (Saudi Vision 2030, 2021), aims at empowering the population with skills that will enable their economic competitiveness in the future. According to a report published recently, the rate of Saudi graduates joining the labour market within six months rose to 44.43% in 2024 out of 13.3% in 2016 (Saudi Gazette, 2025). The level of youth employment among Saudis aged between fifteen and twenty-four years also increased to 36.2, which is the positive effect of human capital development activities (Saudi Gazette, 2024). Moreover, Vision 2030 reforms are centred on continuous learning and skill development as critical elements of national workforce transformation. (ETS, 2025) published the results of the 2025 Human Progress Report and found that over 90% of Saudis surveyed trust that lifelong learning and skill building are keys to career success. These reform initiatives can also be seen in the form of Saudi higher education, which has shown some form of measurable improvement in academic rankings around the world. For instance, twelve universities in Saudi Arabia were listed as one of the top one thousand universities in the Shanghai world ranking (SPA, 2024). These results demonstrate the growing concern with the quality of education, research, and innovation in Saudi institutions of higher learning.

Nevertheless, in spite of these promising efforts made under Vision 2030, there are a number of challenges that impede the full achievement of the educational targets of Vision 2030. Saudi culture is deeply ingrained in traditional teaching and curricula, and it is challenging to implement new methods without facing resistance (Abdulrahim, 2025). Therefore, effective organisational practices and national policies regarding human capital should be combined to achieve sustainability in the quality of education.

Despite emerging research interest, the available studies tend to study employee engagement and innovation strategies separately in a higher education setting. Moreover, the research on the impact of national human capital development initiatives on the connection between teaching service quality and organisational practices is limited.

Thus, this study aims to assess the influence of employee engagement practices, innovation strategy, and the teaching service quality in Saudi Arabian higher education institutions as well as to examine the moderating effect of Vision 2030 Human Capital Development. Theoretically, this paper is a combination of Social Exchange Theory, Resource-Based View, and Human Capital Theory in explaining how an organisation and policy have an effect on the quality of teaching services. Such an integration leads to the expansion of multi-theoretical views on the interaction of engagement practices, innovation capabilities, and human capital development within the system of higher education. Empirically, the research offers quantitative results of Saudi post-secondary education institutions by applying PLS-SEM to estimate the interdependence of engagement practices, innovation strategy, and teaching service quality.

2. LITERATURE REVIEW

2.1. Key Constructs

Employee engagement practices are the organisational programs aimed at boosting the psychological involvement, commitment, and participation of employees in their work roles. (Kahn, 1990) defines employee engagement as the process of mobilising the physical, cognitive, and emotional energies of employees into work performance. Engagement practices are a more recent literature that describes structured activities like training, empowerment, recognition, and participatory decision-making, through which the motivation of employees and organisational commitment are promoted (Omolola, 2023). These practices are especially relevant in the context of higher education because they can affect the motivation of the faculty, their teaching performance, and readiness to embrace new methods. This study views employee engagement practices as an institutional process of promoting faculty involvement and commitment, which can relate to higher-quality teaching service provision.

Even though both employee engagement practices and Vision 2030 human capital development are associated with such elements as training and development, they differ in the scope, purpose, and level of operation. Employee engagement practices refer to institution-wide programs that aim to increase faculty motivation, involvement, and commitment using empowerment, recognition, and participative decision-making processes. By contrast, Vision 2030 human capital development is a macro-level policy framework that is intended to enhance the workforce capability of different sectors by making massive investments in education, skills development, and institutional capacity building. Therefore, engagement practices emphasise the expansion of psychological and behavioural participation in organisations, whereas human capital development is based on the more extensive structural and policy-related initiatives to empower the national talent and competencies. The distinction between these two constructs guarantees that they are conceptually and analytically independent, though they have some developmental similarities.

Innovation strategy is defined as the conscious way through which an organisation creates and deploys new ideas, processes, or technologies in order to improve performance and competitiveness. The concept of innovation introduced by Joseph Schumpeter assumes the new combinations in production and organisation processes (Ziemnowicz, 2020). The modern studies describe the innovation strategy as a codified plan that determines the way new methods of teaching, digital technologies, and pedagogical advancements are introduced into the institutions (Sumathi, 2022). Curriculum redesign, digital learning integration, and interactive teaching practices are some of the innovation strategies that are applied in the context of higher education. Innovation strategy is considered in the given study as an institutional capacity that can help improve the quality of teaching services by utilising innovative teaching strategies successfully.

The quality and effectiveness of teaching performance is teaching quality, which is perceived by different stakeholders, including students. (Parasuraman et al. (cited in Alemu, 2023) created Servqual model, according to which teaching service quality is the expectations and perceived performance difference. In higher education teaching service quality refers to the reliability, responsiveness, instructional effectiveness, and overall learning experience. In this study, this construct is the outcome variable: the association between engagement practices and innovation strategies and perceived teaching effectiveness in the university. Additionally, in here, this construct is evaluated through the lens of faculty members and indicates their assessment of instructional performance, responsiveness, and teaching practices in general. Though students are widely regarded as being the main assessors of service quality in the education sector, the research determines the teaching service quality through the lens of the faculty since the relationship between organisational practices and the teaching process is the focus of this study. Faculty members have direct involvement in the design and delivery of teaching, so they are appropriate respondents to evaluate the extent to which engagement practices and innovation strategies affect the quality of instruction.

2.2. Theoretical Framework

This study has its basis on three complementary schools of thought, which include Social Exchange Theory, Resource-Based View, and Human Capital Theory.

The first theoretical basis is the Social Exchange Theory (SET), which was initially developed by George C. Homans and elaborated by Peter Blau (Cook et al., 2014). The theory describes social relationships as the process of exchanges of gains and responsibilities between individuals and organisations. In organisations, employees are likely to have favourable attitudes and behaviours towards the organisation when they feel that they are supported by the organisation, through recognition, empowerment, or professional development (Ajobi et al., 2025; Tan et al., 2025). Engagement practices adopted by the university in higher education institutions can therefore motivate the faculty to participate in the teaching processes more effectively. Using SET, (Sultana et al., 2024) discovered a positive correlation between the psychological capital and the innovative work behaviour among university teaching staff, in which employee engagement was also observed to support this association. These results indicate that mutual organizational behavior may contribute to participation and beneficial work results in education settings.

The second theory is the Resource-Based View (RBV) proposed by Jay Barney. According to RBV, organisations attain sustainable advantage when they make efficient use of valuable and strategic resources, including knowledge, capabilities, and expertise (Sugiarno & Novita, 2022). Faculty knowledge, teaching skills, and new instructional methods in institutions of higher education are valuable, intangible resources that can bring quality to education. In this light, the strategies of innovation, including new teaching techniques, e-learning tools, and curricular restructuring, can be interpreted as the capabilities of the institution that make use of the resources. A recent investigation based on resource-based theory reveals that knowledge management and innovation practices are organisational capabilities that play a significant role in performance and learning outcomes across organisations (Cui, 2025). Therefore, the RBV was a suitable theoretical framework to use in the analysis how in higher education institutes innovation strategies impact teaching service quality.

The third theoretical view is the Human Capital Theory (HCT), which was created by Theodore Shultz and further advanced by Gary Becker. The HCT asserts that investments in education, skills, and training make people more productive and effective in institutions (Fix, 2021). Faculty members are one of the most important human capitals in a college or university, and their professional development can be improved to boost teaching potential and organisational performance. (Ali et al., 2024) discussed the importance of human capital and intellectual capital in university performance and emphasised the significance of faculty knowledge and competencies in enhancing institutional performance. Likewise, recent studies of higher education policy show that human capital investment via education and training is one of the main sources of institutional growth and knowledge creation (Ma, 2025). Vision 2030 in the Saudi context focuses on development of human capital development initiatives to enhance skills, innovation and quality education to further fortify the relationship between organisational practices and teaching outcomes.

In order to go beyond a parallel application of the theories, this study conceptually unites Social Exchange Theory, Resource-Based View, and Human Capital Theory with an underlying mechanism of perceived policy alignment. Perceived policy alignment refers to the degree to which faculty members perceive national-level initiatives, including the programs of Vision 2030’s human capital development, as being in line with and conducive to their practices and professional roles within the institution. According to the Social Exchange Theory, in cases where the faculty members feel that the institutional practices of engagement coincide with the national policy priorities, they tend to pay back by dedicating more effort and better teaching results.

According to a Resource-Based View, this alignment helps to use innovation-related resources more effectively, as faculty are more open to using and implementing new teaching methods when they feel strategic coherence. In terms of the Human Capital Theory, investment in skills and development in the country can be converted into better teaching results only after people internalise them as useful and applicable. Therefore, Vision 2030 is not just an external moderator, but it functions via the process of shaping the faculty perceptions, which consequently impact the way in which the engagement practices and the innovation strategies influence the teaching service quality. It should be noted that the conceptual mechanism of perceived policy alignment is not empirically tested in the current study, but is introduced to explain the interaction between the macro-level policy and the micro-level behaviour.

2.3. Hypotheses Formation

In a study by (Pan et al., 2025), the researchers sought to investigate the effect of professional development practices on the performance of teaching by Chinese university faculty. This study sampled 550 educators of 23 universities to investigate the associations by structural equation modelling. The results showed that teaching performance is greatly enhanced through professional development, suggesting that practices of institutional engagement support faculty effectiveness and classroom outcomes. Nevertheless, the research concentrated more on development practices and did not reflect the wider engagement practices of empowerment or reward systems.

A different study by (Chen et al., 2025) at Sichuan University focused on the effects of performance management practices such as training and development, monitoring, rewards and talent management on faculty job performance in higher education. A total of 647 academic staff were sampled and the results showed that performance management practices have a great effect on job performance and it is thus important to ensure that organisational practices are effective in enhancing academic performance.

However, the focus of the study was on overall job performance and not specifically studying teaching service quality in the context of teaching in university.

On the same note, (Ahmed et al., 2024) tested how training and digital enablement practices can influence the competence of employees in institutions of higher learning. The participants in the research were 541 employees from different universities, and they applied SmartPLS to determine the association between training practices, competence, and organisational outcomes. The results showed that training practices are important in improving employee competence, which leads to better performance and organisational effectiveness in academic settings. Nonetheless, the research failed to clearly connect the engagement practices with teaching service quality as an independent variable in higher education.

In addition, a study of a public university in Zimbabwe by (Chatiza et al., 2021) focused on assessing how employee engagement influences service delivery through a mixed-method case study approach with 87 academic and administrative staff. The results showed that there exists a great positive correlation between engagement and service delivery, and that the drivers of disengagement are poor remuneration, no recognition, poor communication, and low empowerment. These findings imply that the organisational engagement practices are key factors that determine the quality of services since insufficient mechanisms of institutional support negatively affect the motivation and performance of employees in service delivery. Nevertheless, the research had limitations, including a single-institution approach and a COVID-19 environment, which restricted the scope of generalisation and the necessity of more extensive and context-focused studies into higher education systems.

Despite the heavy empirical evidence on the relationship between the practices of employee engagement and performance outcomes, there is little research on its effects on the quality of teaching service. Furthermore, these relationships have never been investigated in terms of Saudi Arabian higher education, especially within the context of transformation agenda of the vision 2030. Thus, the hypothesis is the following:

H1: Teaching service quality in Saudi Arabian higher education is positively and significantly impacted by employee engagement practices.

The recent literature shows that digital transformation, pedagogical innovation, and faculty development are innovation strategies that help in improving the quality of teaching and provision of educational services in higher education. (Abdurashidova et al., 2023) conducted a study to investigate the effect of digitalisation and innovation strategies on the quality of higher education in universities. The research used a mixed-methodology to gather data from 300 participants (faculty, students, and administrators) and assess the practices of innovation and education quality. The results showed that 83 per cent of the respondents believed digital technologies and innovation strategies have positively impacted the quality of education and teaching in the universities. Nevertheless, the research was based on the perceptual data and did not isolate individual dimensions of teaching service quality and test the relationships between these dimensions and causality using sophisticated quantitative methods.

The other study by (Paños-Castro et al., 2024) intended to examine the strategies of digital transformation and teaching innovation in a Spanish university. The research design was a case study that concentrated on institutional practices, faculty training, and digital innovation efforts that were put in place following the COVID-19 transition. Findings showed that digital innovation and faculty training had a powerful impact on teaching practice, use of resources, and overall teaching quality in the university. However, the research was confined to one institutional setting, so the impact on generalisation was limited in other higher educational establishments and policy environments.

In addition, (Arrieta & Avolio, 2020) also investigated the impact of factors on the quality of the higher education services in Peruvian universities, especially, curriculum design and teaching processes. The study, based on the data of students and graduates, discovered that the perceived teaching quality and the level of effectiveness of the instruction delivery methods are the determinants of the service quality. These results suggest that curriculum changes and improved teaching practices, which are viewed as innovation strategy, have a direct impact on the enhancement of the quality of teaching service in institutions of higher education. Nevertheless, the research had limitations posed by its qualitative nature and a small sample size, which limited the scope of generalisation and the quantitative validation of the relationships between innovation and quality.

Although earlier research tends to understand innovation strategy as a factor that shapes performance outcomes in an indirect way, such as organisational capabilities, faculty competence, or engagement, the direct impact of innovation strategy on teaching service quality remains to be studied. When applied to the sphere of higher education, digital learning integration, curriculum redesign, and pedagogical developments could create a direct effect on teaching practice and student learning experience. Exploring this direct relationship gives a baseline insight into whether innovation initiatives can lead to service quality independently, especially with rapidly changing educational environment, like in Saudi Arabia under Vision 2030. Thus, the following hypothesis is proposed:

H2: Teaching service quality in Saudi Arabian higher education is positively and significantly impacted by innovation strategy.

Recent literature has highlighted that human capital development programs like training, skill development, and institutional support are a major aspect in enhancing organisational results in higher education. (Al-Mekhlafi et al., 2024) conducted a study that sought to investigate the moderating effect of training and development of human capital on the relationship in organisations in Saudi institutions. Data from 318 respondents were analysed through the application of PLS-SEM to examine the relationship between governance practices, development of human capital, and organisational outcomes. Results showed that human capital development is an important moderator of connections in organisational practices and performance, reinforcing the efficacy of institutional strategies. Nevertheless, the research focused on nonprofit organisations and did not include the higher education setting and teaching service quality.

(Abubakar et al., 2024) conducted another study that intended to explore the major factors in human capital development in line with the objectives of Saudi Vision 2030. The sample included 203 participants in the public sector, and PLS-SEM was used to examine the links between the training, institutional support, and development of the workforce capability. Findings revealed that training, institutional support, and integration of technology play a great role in enhancing the development of human capital and organisational effectiveness. These results imply that the influence of organisational practices can be enhanced by means of human capital programs, which enhance the adaptability and capabilities of employees. However, the moderating effects in the context of higher education teaching or service quality were not directly tested in the study. Likewise, (Mohiuddin et al., 2023) also conducted a study that aimed to investigate higher education reform initiatives as part of the Vision 2030 and their outcomes on institutional development. The analysis discussed the practice and policy reform in higher education, and the importance of the fact that innovation, training, and human capital programs could contribute to the enhancement of institutional performance. The evidence indicated that the Vision 2030 initiatives enable universities to gain abilities to advance teaching, innovation, and the general level of education. Nevertheless, it was conceptual rather than empirical in that it did not test moderating relationships between the development of human capital and organisational practices.

Although much evidence is accumulating in favour of the significance of human capital development in reinforcing organisational performance, little literature has investigated its moderating effect in higher education. Moreover, Vision 2030 human capital development can be viewed as moderating through the prism of perceived policy alignment. Particularly, the effectiveness of engagement practices and innovation strategies is likely to increase when faculty members feel a good fit between national human capital initiatives and institutional practices. On the other hand, poor alignment can reduce the transfer of policy efforts into better teaching performance. Hence, a positive moderating effect is hypothetically postulated, but its practical implementation may differ across settings. Thus, the following hypotheses are proposed:

H3: Vision 2030 Human Capital Development has positive and significant moderating impact on employee engagement practices and teaching service quality relationship in Saudi Arabian higher education.

H4: Vision 2030 Human Capital Development has positive and significant moderating impact on Innovation strategy and teaching service quality relationship in Saudi Arabian higher education.

2.4. Conceptual Framework

Fig. (1) displays the hypothesized relationships between the study variables and gives a graphical representation of the hypothesized effects and moderating relationships to be tested in this study. The independent variable is represented by this conceptual framework as employee engagement practices and innovation strategy, affecting the teaching service quality as the dependent variable. Vision 2030 human capital development is incorporated as a moderating variable that is expected to influence the strength of these relationships. The model is contextualized test of established relationships within a national reform setting as it represents a synthesis of organisational practices and national policy initiatives to explain differences in the quality of teaching services (Fig. 1). Social Exchange Theory, Resource-Based View, and Human Capital Theory found the basis of the model, wherein their combined understanding facilitate comprehension of the relationship n between institutional and policy-level factors that can impact educational outcomes in higher education.