Enhancing innovation performance: how do IC-enhancing HR practices work?

Abstract

Scholars debate over departing away from the standard and human capital-centered HR practices and paying attention to the social and organizational side of an HR system, highlighting the concept of intellectual capital (IC)-enhancing HR practices. To improve our understanding of how IC-enhancing HR practices help firms achieve innovation performance, we develop and empirically test a framework investigating the joint effects of IC- enhancing HR practices, innovative work behavior (IWB), transformational leadership (TL), and innovation performance. We designed rigorous time-lagged research with three waves of data gathering from CEOs, R&D employees, and R&D managers. Analysis of 279 manufacturing companies in the healthcare industry demonstrates that individual-level IWB positively and significantly mediates the relationship between IC-enhancing HR practices and innovation performance. More conspicuously, we found that the effect of IC-enhancing HR practices on IWB is higher when TL exists. We discuss outright novel theoretical and empirical insights that our study offers.