Human Resource Management Practices and Innovation

Abstract: This chapter surveys, organizes, and critically discusses the literature on the role of human resource practices for explaining innovation outcomes. We specifically put an emphasis on what is often called “new” or “modern” HRM practices—practices that imply high levels of delegation of decisions, extensive lateral and vertical communication channels, and the use of reward systems. We discuss how individual practices influence innovation, and how the clustering of specific practices matters for innovation while drawing attention to the notion of complementarities between practices. Moreover, we discuss various possible moderators and mediators of the HRM/innovation link, such as the type of knowledge involved (tacit/codified), knowledge sharing, social capital, and network effects. We argue—despite substantial progress made in the pertinent literature—that the precise causal mechanisms underlying the HRM/innovation links remain poorly understood. Against this backdrop we suggest avenues for future research.