Innovation and firm performance: the role of human resource management practices

The purpose of this paper is to study the relationship between human resource (HR) practices and innovative performance in the Spanish industry. Specifically, the authors will focus on innovativeness, analysing the extent to which this capability is favoured by some human resource management (HRM) practices as investments on training and whether it is also affected by the use of full time and/or temporary workers.

The authors propose the assessment of these relationships by means of the Spanish Survey of Industrial Strategic Behaviour. The authors focus the longitudinal analysis on the period 2001-2008, years of the highest economic growth in Spain during the last decades.

The findings show that the most innovative firms are also the most competitive ones in terms of added value. Moreover, while a significant and positive relationship between the use of full-time workers and innovativeness is demonstrated, the role of temporary workers employees remains unclear. Finally, and surprisingly, training investments on new technologies, languages and data processes do not have any impact on innovativeness. The paper is closed with a discussion about some lessons the authors may learn from these wealthy years and the role played by HRM investments on firms.

This study demonstrates the existence of two objectives that managers should seek to achieve. On one side, they should focus on innovation as a way of increasing firm performance. And, on the other side, managers should invest on specific training, in order to develop more innovative and profitable organizations.

This paper proposes and tests a model where innovation mediates the relationships between HRM practices and performance. Such mediation would be a contribution to the strategic HRM field as very recent research call for the study of new mediators. Also, this paper employs panel data (2001-2008) for assessing these relationships. This is worthy because it is coherent with the idea of internal development of capabilities, instead of cross-sectional analyses and because the authors may infer causality with the study design, as it is demanded by researchers.