The role of human resources practices and the mediating effect of innovative capacity on the growth of Vietnamese enterprises

Purpose – In today’s competitive global market, Vietnamese enterprises are faced with highly competitive rivals, including not only domestic corporations but now multinational corporations as well. The role of human resources and their constant innovation are considered significant factors in supporting the survival and continued growth of Vietnamese enterprises. In this new era, HR management is required to promote and strive for innovative development and disseminate its implementation within enterprises. Aim(s) – This empirical study examined the role of human resources practices (training and development (TD), leadership skills (LS), compensation and benefits (CB) and talent acquisition (TA)) and the mediating effect of innovative capacity (IC) that leads to the improvement of the growth of Vietnamese enterprises (EG). Design/methodology/approach – The empirical research study used questionnaires for data collection and the rest of the study was conducted using quantitative analysis on 398 suitable samples utilizing the convenience technique and the findings and conclusions of the outcome study using exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modelling (SEM). Findings – The findings showed that the mediating role of IC greatly and positively impacted enterprise growth (EG). Meanwhile, TA strongly impacted on IC towards EG. The second strongest factor affecting IC towards EG was CB. The third strongest factor affecting IC towards EG was LS. The fourth strongest factor affecting IC was TD. Additionally, the supporting factors in human resources practices (TD, LS, CB, TA) and the mediating role of IC have a great positive influence on EG. Limitations of the Study and Future Research- Due to the time and the financial term, the research has many limitations in this study. Firstly, the researcher only collected data from around HCMC, meaning that there is a need to widen the collection in Vietnam to have a full snapshot of the HR knowledge and innovation capacity for enterprise development. Secondly, there is a lack of comparison. In the future, further studies should study individual industries to reference and compare the different outcomes of research. From these outcomes, the solutions will be relevant for HR strategies for Vietnamese enterprises. Lastly, there is a limitation in the factors studied. Future research could study additional factors such as salary, motivation factor, etc., to develop and enrich the study model. Practical implications – The role of HR management and innovative capacity are the crucial factors that affect the enterprise growth. Therefore, Vietnamese enterprises should reference, practise and apply this valued knowledge to support their overall change to survive, adapt and develop within the new era. Originality/value – The results have also indicated that the administrators of Vietnamese enterprises in Ho Chi Minh City have good perception in applying HR practices and improving innovative capacity, which will support enterprise growth. The outcome of the study will contribute valuable knowledge to the field of human resources and contribute to further research.