The meadiating effect of knowledge management on the relationship between human resource management practices and organizational innovation performance

Abstract

Strive competitive in market place drives enterprises to view human capabilities as critical asset for excellent organizational innovation performance (OIP). Hence This study investigated the relationship between human resource management (HRM) practices and organizational innovation performance (OIP) through knowledge management (KM). The previous studies on the relationship between HRM practices and OIP were focused on four main HRM components outlined in Guest Model, which are recruitment and selection (RS), training, performance appraisal (PA) and compensation. However, there is lack of evidence on which components of HRM practices could significantly influence OIP, especially within the environment of small and medium enterprises (SMEs). The uniqueness of SMEs from HR perspective is exhibited by the smaller numbers of employees. Hence, employees in SMEs tend to have wider opportunity to be involved in the business decision-making process. In addition, the focus on employee career development within SMEs is greater compared to in larger organizations. Hence, the purpose of this study was to extend the Guest model by adding employee participation (EP), and career development (CD) as the new HRM components, and to explore the impact of employee‘s knowledge management towards OIP based on the Black Box Model. This quantitative investigation utilized a survey instrument, which was distributed face-to-face and online to SMEs listed in the official SME list in Malaysia. The respondents consisted of 33 individuals who worked in different managerial levels at the respective organizations. Data analyses were conducted using the Smart-PLS 3.2.4 software for structural equation modeling. The findings from the study revealed that RS, training and compensation could significantly influence OIP, whereas the impact of PA, EP and CD towards OIP were insignificant. In addition, the findings suggested that KM played a significant role as a mediator between HRM practices and OIP. This study contributes towards HR knowledge enhancement via the expansion of the Guest Model, as well as the formation of the new HRM, KM and OIP frameworks. The importance of HR practices and the vital role of knowledge management to improve the effect of HR practices on OIP serve as important practical implications for HR practitioners and managers. Exploring additional factors, such as organizational strategy or organizational culture, which could both affect OIP within the SMEs, could be considered for further studies.