Abstract
This article is aimed at examining the effect, direct and indirect, of knowledge-based human resource management on innovative offerings of service small and medium-sized enterprises (SMEs). Knowledge-based human resource management essentially reflects the central role played by the embedded knowledge-centric human resource management practices, which may lead to new or improved services. A cross-sectional survey was implemented involving a sample of 278 business service SMEs from Malaysia and indicated two key findings from the study. First, knowledge-based human resource management was found to positively influence innovative service offerings. Second, dynamic capability in the aspects of entrepreneurial orientation, marketing capability, and technological capability were found to mediate the knowledge-based human resource management–innovative service offerings relationship. This study espouses the potentials of creating innovative service offerings among business service SMEs through embedding knowledge perspective in human resource management practices as well as investment in dynamic capabilities.
Highlights
Service small and medium-sized enterprises (SMEs) from developing countries have been increasingly internationalized in their quest for growth and survival (Martin et al, 2017)
The results indicated that knowledge-based human resource management (KBHRM) positively and significantly influences entrepreneurial orientation (β = .628, t = 17.020, p < .01), marketing capability (β = .487, t = 9.914, p < .01), and technological capability (β = .371, t = 6.707, p < .01), supporting Hypothesis 2a (H2a), Hypothesis 3a (H3a), and Hypothesis 4a (H4a)
Concerning the mediation effect assessment, the outcomes of the analysis showed that dynamic capabilities, namely, entrepreneurial orientation, marketing capability, and technological capability exerted mediating effect on KBHRM–innovative service offerings relationships, whereby the result for entrepreneurial orientation was β = .088, t = 2.006, p < .05; marketing capability, β = .094, t = 2.802, p < .01; and technological capability, β = .146, t = 5.101, p < .01, thereby providing support for Hypothesis 2 (H2), Hypothesis 3 (H3), and Hypothesis 4 (H4)
Summary
Service small and medium-sized enterprises (SMEs) from developing countries have been increasingly internationalized in their quest for growth and survival (Martin et al, 2017). In the context of business service SMEs which are knowledge intensive (Rodríguez & Nieto, 2012) and depend highly on knowledge workers in producing and delivering innovative services (Radulovich et al, 2018), it is necessary to take a human resource management (HRM) approach that focuses on knowledge (Kianto et al, 2017) Key to this is the purposefully designed HRM practices involving recruitment, training and development, appraisal, and compensation systems, which support employees’ knowledge-based behaviors (Hussinki et al, 2017; Kianto et al, 2017). Knowledge-based human resource management (KBHRM) offers a plausible explanation for the creation of an environment that is conducive for sharing and creating knowledge in an organization, which may result in enhanced innovative capability as innovation processes are considered as knowledge-based processes (Kianto et al, 2017; Minbaeva, 2013)
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