Social media, open innovation & HRM: Implications for performance

Firms are increasingly leveraging social media tools to access knowledge from external actors, particularly customers and other users, to facilitate the innovation process and firm performance. Yet empirical research investigating the impact of external knowledge sourced via social media tools is scant; empirical studies that do exist are mixed, leading to calls for research into the conditions under which knowledge flows via social media from external actors contribute to innovation and firm performance. Using a large-scale survey of firms in Tasmania, Australia, this study examines how external knowledge flows from market-based actors sourced by social media influence innovation and business performance, and the extent to which modern human resource management (HRM) practices moderate this relationship. We find that while knowledge flows from market-based actors are positively related to innovativeness, the relationship between external knowledge flows via social media and innovativeness depends on the importance a firm places on modern HRM practices: a significant positive relationship exists between knowledge sourced via social media and innovativeness when firms attach high importance to modern HRM practices. In contrast, there is no significant relationship in firms in which modern HRM practices are of low importance.