‘’Innovation facilitating HPWS HRM-practices: a mixed methods study’’ The relationship of HPWS HRM-practices with product and technological process innovation

With increasing worldwide competition and the rapidly changing environment, the ability of firms to innovate has become even more crucial for their survival and sustainable competitive advantage (Koberg, Detienne, & Heppard, 2003). Even though the role of Human Resource Management (HRM) as an important contributor of sustainable innovation is recognized by many, there is still a knowledge gap in the literature on their relationship (Becker & Huselid, 1998). Thus, current study examines (1) which HPWS HRM-practices are supportive for technological innovation within manufacturing firms and, (2a) how they are implemented and (2b) received in the workplace. By addressing this question the study aims to explore which HRM-practices are contributing to technological innovation and if there is an added-value when the practices are combined as HPWS. Another goal is to find out how these relationships and possible added value occurs, by opening the ‘black-box’. To examine the concepts and their inter-concept relations, a literature study was done and followed by an empirical research. With regard to the first question, quantitative data gained through European Manufacturing Survey (EMS) has been analyzed by examining the statistical effect(s) of HRM-practices and (squared)HWPS (configuration of HRM practices) on both product and technological process innovation (N=302-325). Regarding the second question, a qualitative research was conducted by means of semi-structured interviews (N=3) and analyzed with theory-guided coding. The results from the quantitative analyses reveal a significant positive relation between overall HRMpractices and technological process innovation. This relationship is not found for product innovation. Regarding individual HRM-practices, appraisal has a significant positive impact on product innovation, whereas training and planning show a significant relation with technological process innovation. No significant single effects of other HRM-practices on both innovations are found. On the other hand, HRM-practices combined as HPWS show a positive significant relationship with product as well as process innovation. However, for the relationship between squared-HPWS and both innovations, no significant outcomes are found. Regarding part (a) of question two, qualitative outcomes reveal that, even though variations in the intensity and scope exist, all HPWS HRMpractices included in this study are implemented within the firms. The development of HRM-practices follows in general the following sequence; set up a general HRM-policy, and design and implement HRM-practices, derived from the HRM-policy. Since employees are closely involved with HRM, the universality and generalizability of the HRM-policy are rather challenging points for a HRM-department. For this reason, customization of the actual HRM-practices to the situation of individual employee is part of this process. The findings for question (2b) show that perceptions of employees towards HRM are often measured by worksatisfaction surveys, whereas behavioral reactions are often discussed during appraisal sessions or in other individual conversations. Based on this measurement and other observations, firms state that employees are in general neutral to positive towards HRM. However, there are also negative instances and feedback from employees is considered a crucial factor in this process. Thus, it is rather an iterative-process in which HRM affects employees and their feedback leads to possible changes within HRM, until the aimed goals are achieved. Based on the quantitative outcomes, it can be concluded that HRM-practices affect both innovations. However, different practices are important for each innovation and in general, some practices are more important for technological innovations than others. Further, the impact of the configuration of HRM-practices as a HPWS has an added value above their single effects. The higher the number of the practices included in HPWS, the greater their impact. However, this increase in their impact is not exponentially. Concerning qualitative outcomes, it is concluded that all the practices examined in present study are considered important and implemented in cooperation with the employees. Thus, the relationship between HRM and innovation is rather dynamic, reciprocal and highly influenced by employees. Based on this research, theoretical as well as practical implications are discussed and recommendations are made.