"Strategic Human Capital Leveraging, Ambidexterity, and Dynamic Capabilities for Innovation"

Abstract

Recent research on human capital resources and its importance for firm performance has focused attention on how firms align its human capital resources for innovation. While considerable progress has been made with regards to understanding the nature and role of human capital resources, questions remain as to how the management of human capital resources transforms firm capabilities that result in innovation performance. Two postulated mechanisms through which firms may enable these human capital resources is through the dynamic capabilities and ambidexterity of firms. In this paper, we test a model of strategic human capital leveraging practices, dynamic capabilities, organizational ambidexterity and innovation performance in 456 small-medium sized firms using structural equation modelling (AMOS). Our results showed support for our direct relationship model. However, not all our hypothesized mediation links were supported. Organizational ambidexterity partially mediated the relationships between dynamic capabilities and innovation performance; while dynamic capabilities fully mediated the relationship between strategic human capital leveraging and organizational ambidexterity. Our model has significant implications for understanding the role of human capital and firm capabilities for innovation in small-medium sized firms.