New human resource management practices, complementarities and the impact on innovation performance

Abstract

In this paper, we take our theoretical point of departure in recent work in organisational economics on systems of human resource management (HRM) practices. We develop the argument that just as complementarities between new HRM practices influence financial performance positively, there are theoretical reasons for expecting them also to influence innovation performance positively. We examine this overall hypothesis by estimating an empirical model of innovation performance, using data from a Danish survey of 1,900 business firms. Using principal component analysis, we identify two HRM systems which are conducive to innovation. In the first one, seven of our nine HRM variables matter (almost) equally for the ability to innovate. The second system is dominated by firm-internal and firm-external training. Of the total of nine sectors that we consider, we find that the four manufacturing sectors correlate with the first system. Firms belonging to wholesale trade and to the ICT intensive service sectors tend to be associated with the second system.

A note on testing for complementarity and substitutability in the case of multiple practices

“…These may further improve our test procedure, but go beyond the scope of this note. 7 Examples include Black and Lynch (2001) with a number of observations of about 1,000, Galia and Legros (2004) with about 1,800, Laursen and Foss (2003) with about 1,900, Belderbos et al (2006) with about 2,000, Bresnahan et al (2002) with about 2,200, Catozzella and Vivarelli (2007) with about 3,000, Mohnen and Röller (2005) with about 5,500 and Cozzarin and Percival (2006) with about 5,900 observations. 8 For comparison, we executed similar Monte Carlo simulations with correlation coefficients set at 0.8, -0.8 and 0, respectively and without systematic correlation between the practices.…”

Research Productivity and Values

“…It is generally agreed that university knowledge creation, or research productivity, is a function of a complex array of antecedent factors (Dundar & Lewis, 1998;Erdogan & Bauer, 2005;Hara, Solomon, Kim & Sonnenwald, 2003;Laursen & Foss, 2003;Lucas, 2006;Morton & Beard, 2005;Rachal, Shelley & David, 2008;Ramsden, 1994;Rothausen-Vange, Marler & Wright, 2005;Rynes, Bartunek & Daft, 2001). …”

Knowledge flows in the emerging market MNC: The role of subsidiary HRM practices in Korean MNCs

“…Firstly, the subsidiary may use formal, codified procedures, systems and databases to reduce inefficiency (Morris et al, 2006) and "to encourage the continuous development of employees' skills and abilities, their motivation and the effective utilization of their labour through progressive and adaptive workplace operations" (Barton & Delbridge, 2004: 333). Formal practices are not limited to a single aspect of HR management (Laursen & Foss, 2003, Barton & Delbridge, 2004. Guest (1997) suggested that formally designed HRM practices apply in areas such as appraisal, rewards, and job design.…”