Does intellectual capital matter? High-performance work systems and bilateral innovative capabilities

Abstract

Purpose – The purpose of this paper is to develop a systematic understanding of the mechanisms through which high-performance work systems (HPWSs) facilitate the incremental and radical innovative capabilities of organizations. Using a knowledge-based view of the firm, the paper introduces the mediating role of intellectual capital (composed of human, organizational and social capital) while examining this issue. Design/methodology/approach – Data were collected using a questionnaire survey approach from 164 firms in the People's Republic of China. The paper used analyses based on structural equation modeling to measure the main constructs and test the hypothesized relationships among the variables. Findings – The results indicate that HPWSs contribute to both the incremental and radical innovative capabilities of organizations. In addition, intellectual capital mediates the relationships between HPWSs and different types of innovative capabilities. Specifically, organizational and social capital mediate the relationship between HPWSs and incremental innovative capability, whereas social capital mediates the relationship between HPWSs and radical innovative capability. Originality/value – The study supports and expands on the strategic human resource management (SHRM) literature and knowledge-based view of the firm in terms of whether, why and how HPWSs can develop a competitive advantage on the basis of innovation.