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How Do Human Resource Management Practices Affect Innovation of Small- and Medium-sized Enterprises in a Transition Economy?

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  • Vu Hoang Nam
  • Hiep Ngoc Luu

Abstract

Small- and medium-sized enterprises (SMEs) are one of the engines for inclusive economic growth. Yet little is known about the contribution of human resource management (HRM) practices to the success of SMEs. This study empirically examines how HRM practices determine different categories of innovation of SMEs in the context of a transition economy. Using a longitudinal dataset and applying the instrumental variable methodology to correct for endogeneity problems, our study uncovers that HRM practices positively affect the quality of employed human and physical capital assets of SMEs. More importantly, we find that that HRM practices significantly contribute to the launch of new products and improvement of existing products. In addition, we also find that the adoption of HRM practices facilitate labour productivity and value added. Taken together, these findings highlight that HRM practices are a strategic resource for innovation and development of SMEs in transition economies by rewarding them with higher-quality capital assets. JEL: L25, O15, O31

Suggested Citation

  • Vu Hoang Nam & Hiep Ngoc Luu, 2022. "How Do Human Resource Management Practices Affect Innovation of Small- and Medium-sized Enterprises in a Transition Economy?," Journal of Interdisciplinary Economics, , vol. 34(2), pages 228-249, July.
    • Handle: RePEc:sae:jinter:v:34:y:2022:i:2:p:228-249
    DOI: 10.1177/02601079211032119
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    References listed on IDEAS

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    More about this item

    Keywords

    Human resource management; innovation; performance; SME; Vietnam;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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