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New HRM Practices, Complementarities, and the Impact on Innovation Performance

Author

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  • Keld Laursen
  • Nicolai J. Foss

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.

Suggested Citation

  • Keld Laursen & Nicolai J. Foss, "undated". "New HRM Practices, Complementarities, and the Impact on Innovation Performance," IVS/CBS Working Papers 00-5, Department of Industrial Economics and Strategy, Copenhagen Business School.
  • Handle: RePEc:ivs:iivswp:00-5
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    File URL: http://ep.lib.cbs.dk/download/ISBN/8778690552.pdf
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    Cited by:

    1. Gerard Ballot & Fathi Fakhfakh & Fabrice Gallia & Ammon Salter, 2011. "The Fateful Triangle Complementarities between product, process and organizational innovation in the UK and France," TEPP Working Paper 2011-05, TEPP.

    More about this item

    Keywords

    Innovation; human resource management practices; organisational complementarities; evolutionary economics.;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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