Understanding the HRM systems double contribution to radical and incremental innovation in SMEs: A configurational approach

Abstract

Aim/purpose – In this paper, we explore the contribution of Human Resource Manage- ment Systems (HRMS) to innovation in SMEs. We consider two HRMS with different orientations: Commitment HRMS (focusing on long-term career development to in- crease employees’ creativity) and Collaboration HRMS (focusing on the use of external human capital to achieve innovation). We believe that SMEs’ radical and incremental innovation follow different paths from a configurational perspective. We want to under- stand how the two HRMS influence radical and incremental innovation, consequently, we explore the contributions of Commitment HRMS and Collaboration HRMS. Design/methodology/approach – We apply a set-theoretic method, an analytic quanti- tative and qualitative technique to approach data – fuzzy-set Qualitative Comparative Analysis (fsQCA) – to test our models. We use a sample of 377 Portuguese SMEs from across industries. Findings – Results show there are two pathways that lead SMEs to high levels of incre- mental innovation and three alternative paths that originate high levels of radical innova- tion. By contrast, there are ways that lead to lower levels of incremental (two options) and radical innovation (three options). Research implications/limitations – We provide propositions for theory development on the contribution of HRMS to innovation. Managerial contributions regard the several options provided to SME managers in search of innovation. Limitations regard the lack of generalization power of results due to the cross-sectional nature of the work. However, the research design is replicable without restrictions. Originality/value/contribution – We suggest that SMEs’ radical and incremental inno- vation follow different paths from a configurational perspective. With this study, we contribute to showing the diversity of ways to reach higher innovation levels at SMEs, so that managers know the alternatives they have at their disposal. Additionally, we reveal the ways that lead to lower innovation levels at SMEs, so we alert managers to the undesired pathways they should be cautious about. Keywords: Human Resources Management Systems, incremental innovation, radical innovation, SME, fsQCA. JEL Classification: M12, O15, O31.