Building knowledge stock and facilitating knowledge flow through human resource management practices toward firm innovation

Abstract

The present study theoretically identifies the meaningful human resource management (HRM) practices that explain the emergence of two distinct dimensions of firm‐level knowledge management, namely, firm knowledge stock and flow, which are critical drivers of firm innovation. We also propose that these knowledge dimensions interact synergistically and that their effects on firm innovation are accentuated in firms with strong innovation strategy. The proposed theoretical framework was tested using multisource, large‐scale data collected from 203 manufacturing companies at three time points over a 5‐year period. Analysis confirmed that stock‐building and flow‐facilitating HRM practices increase firm‐level knowledge stock and flow, respectively. Firm knowledge flow (but not knowledge stock) exhibited a significant positive main effect on firm innovation. Firm knowledge stock was not related significantly to firm innovation, but it became a significant predictor of firm innovation when existing along a high level of firm knowledge flow, as well as in firms adopting innovation strategies. The present study provides significant insights for researchers and practitioners by offering comprehensive understanding of the nomological network of firm‐level knowledge management enhanced by effective HRM practices.