Working Paper Series, Department of Industrial Economics & Strategy, Copenhagen Business School
Keld Laursen and Nicolai J. Foss
New HRM Practices, Complementarities, and the Impact on Innovation Performance
Abstract: Although organisational structure has sometimes been
mentioned in evolutionary economics as well as in the innovation literature
as a possible determinant of innovation performance, very little systematic
theoretical and empirical work exist on this issue. In this paper, we take
our theoretical point of departure in recent work in organisational
economics and elsewhere, on systems of human resource management practices.
We put and develop the argument that just as complementarities between new
HRM practices positively influence financial performance, they will also
positively influence innovation performance. We examine this overall
hypothesis by estimating an empirical model of innovation performance,
using data from a Danish survey of 1900 business firms. Using principal
components analysis we identify two HRM systems which are conducive to
innovation. The first is one in which all of our nine HRM variables matter
(almost) equally for the ability to innovate. The second system, which is
found to be conducive to innovation is dominated by performance related pay
and to some extent by firm-internal training. Of our total of nine sectors
we find that the four manufacturing sectors correlate with the first
system, while also firms located in ICT intensive service sectors are
associated with the first system. Firms belonging to the wholesale trade
sector tend to be associated with the second system.
Keywords: Innovation; human resource management practices; organisational complementarities; evolutionary economics.; (follow links to similar papers)
JEL-Codes: C25; D23; O32; (follow links to similar papers)
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