HRM Practices that affect the Annovation process - Dissertation Example

For example, a study conducted by Laursen and Foss (2003) of 1,900 Dutch business organizations found that effective HRM practices not only had a positive influence on an organization’s financial performance, but also had a positive influence on a firm’s innovation. Researchers have generally taken two approaches to explaining how HRM practices have a positive influence on an organization’s overall performance: systems and strategic perspectives (Bowen & Ostroff, 2004). The systems approach to researching HRM practices and its link to organizational performance focuses on the impact of the cumulative value of HRM practices.

The strategic perspective analyses how individual HRM practices impact firm performance. The underlying concept is the belief that HRM practices are designed to “develop employees’ skills, knowledge and motivation” so that “employees behave in ways that are instrumental to the implementation of a particular strategy” (Bowen & Ostroff, 2004, pp. 203-204). . Empirical research in the literature substantiates this assumption. (Joseph & Dai, 2009; Zeidan, 2006). Wang and Zang (2005) conducted a two-part study consisting of field study on HRM practices and its maim compartments among Chinese companies and partnerships and case studies on entrepreneurship frameworks from the perspective of strategic HRM practices.

The research findings indicate that there is a positive link between strategic HRM practices and firm innovation (Wang & Zang, 2005). Businesses currently operate in an environment where knowledge continuously changes at a rapid rate. Thus, innovation is crucially important for building and sustaining an organization’s success and as a result, “the human capital of the organization is an issue of increasing importance” (Jorgensen, Becker & Matthews, 2009, p. 451). Essentially, strategic human resource management by definition is directly and indirectly linked to firm innovation.

According to Sims (2007) strategic HRM is defined as: .the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility (p. 323). Armstrong (2011) argues that competitiveness in today’s market has placed firms under increasing pressure to adopt innovation as a key business model. Innovation models involve changes that organizations should implement to become and remain competitive and how they may improve organizational performance generally.

These changes not only involve people, but also have an impact on people. Employees are engaged in both the planning and implementation phases of organizational change. Thus HRM is critical for perfecting an innovative business model, because HRM is