HRM and radical innovation: A dual approach with exploration as a mediator

Abstract

Radical innovation is crucial for a firm’s success, and organisations should promote it. Prior research has argued that human capital is essential for a company’s innovation. However, the direct and indirect effects of Human Resource Management (HRM) on radical innovation have not yet been determined. Therefore, the present paper aims to explore the direct impact of HRM on radical innovation with a content approach and a process approach. It will also examine the mediating effect that learning through an exploration process has on HRM and radical innovation. Using data from 200 medium-sized Spanish industrial firms, our results demonstrate that Strategic Human Resource Management (SHRM) has a positive and direct effect on radical innovation. We also find that an HRM system directed toward change and creativity and SHRM positively support the process of exploration learning, and that competence exploration has a favourable impact on radical innovation. These results indicate that competence exploration mediates the effect HRM systems and SHRM have on radical innovation.