THE INTERPLAY BETWEEN THE SOCIAL AND ECONOMIC HUMAN RESOURCE MANAGEMENT SYSTEMS ON INNOVATION CAPABILITY AND PERFORMANCE

Abstract

This study established the social and economic human resource management (HRM) systems and analysed their respective impacts and interplay on the innovation capability and product innovation. With 1,940 longitudinal samples over five waves, the results show that the effects of the social HRM system on the capability and performance of innovation are much stronger than the effect of the economic HRM system on innovation capability and product innovation. The findings also show that no congruence effects between the social and economic HRM systems on the innovation capability and product innovation were found in that the combined effects of the two HRM systems are not maximised when the levels of the two HRM systems are in agreement. Further, findings suggest that the main effects of the social HRM system can be supplemented with the economic HRM system in that the effects of the social HRM system tend to increase as the level of the economic HRM system increases. This study contributes to the understanding of the HRM system that has traditionally pursued one best bundle of HRM practices regardless of underlying principles and assumptions on human nature and society.