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New HRM Practices, Complementarities, and the Impact on Innovation Performance

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Author Info
Keld Laursen
Nicolai J. Foss

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Abstract

Although organisational structure has sometimes been mentioned in evolutionary economics as well as in the innovation literature as a possible determinant of innovation performance, very little systematic theoretical and empirical work exist on this issue. In this paper, we take our theoretical point of departure in recent work in organisational economics and elsewhere, on systems of human resource management practices. We put and develop the argument that just as complementarities between new HRM practices positively influence financial performance, they will also positively influence innovation performance. We examine this overall hypothesis by estimating an empirical model of innovation performance, using data from a Danish survey of 1900 business firms. Using principal components analysis we identify two HRM systems which are conducive to innovation. The first is one in which all of our nine HRM variables matter (almost) equally for the ability to innovate. The second system, which is found to be conducive to innovation is dominated by performance related pay and to some extent by firm-internal training. Of our total of nine sectors we find that the four manufacturing sectors correlate with the first system, while also firms located in ICT intensive service sectors are associated with the first system. Firms belonging to the wholesale trade sector tend to be associated with the second system.

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Paper provided by Department of Industrial Economics and Strategy, Copenhagen Business School in its series IVS/CBS Working Papers with number 00-5.

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Handle: RePEc:ivs:iivswp:00-5

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Related research
Keywords: Innovation; human resource management practices; organisational complementarities; evolutionary economics.;

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Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Henderson, Rebecca., 1994. "The evolution of integrative capability : innovation in cardiovascular drug discovery," Working papers 3711-94., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  2. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June. [Downloadable!] (restricted)
  3. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July. [Downloadable!] (restricted)
  4. Love, James H & Ashcroft, Brian & Dunlop, Stewart, 1996. "Corporate Structure, Ownership and the Likelihood of Innovation," Applied Economics, Taylor and Francis Journals, vol. 28(6), pages 737-46, June. [Downloadable!] (restricted)
  5. Milgrom, Paul R & Qian, Yingyi & Roberts, John, 1991. "Complementarities, Momentum, and the Evolution of Modern Manufacturing," American Economic Review, American Economic Association, vol. 81(2), pages 84-88, May. [Downloadable!] (restricted)
  6. Dalum, Bent & Laursen, Keld & Verspagen, Bart, 1999. "Does Specialization Matter for Growth?," Industrial and Corporate Change, Oxford University Press, vol. 8(2), pages 267-88, June.
  7. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April. [Downloadable!] (restricted)
  8. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September. [Downloadable!] (restricted)
  9. Holmstrom, Bengt & Roberts, John, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 73-94, Fall. [Downloadable!] (restricted)
  10. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June. [Downloadable!] (restricted)
  11. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September. [Downloadable!] (restricted)
  12. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July. [Downloadable!] (restricted)
  13. Richard Harris & Mary Trainor, 2005. "Innovations and R & D in Northern Ireland Manufacturing: A Schumpeterian Approach," Regional Studies, Taylor and Francis Journals, vol. 29(7), pages 593-604, April. [Downloadable!] (restricted)
  14. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December. [Downloadable!] (restricted)
  15. Nelson, Richard R, 1980. "Production Sets, Technological Knowledge, and R & D: Fragile and Overworked Constructs for Analysis of Productivity Growth?," American Economic Review, American Economic Association, vol. 70(2), pages 62-67, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Peter Nielsen & Bengt-Åke Lundvall, 2003. "Innovation, Learning Organizations and Industrial Relations," DRUID Working Papers 03-07, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  2. Keld Laursen & Volker Mahnke & Per Vejrup-Hansen, 2005. "Do Differences Make a Difference? The Impact of Human Capital Diversity, Experience and Compensation on Firm Performance in Engineering Consulting," DRUID Working Papers 05-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  3. F. Galia & D. Legros, 2003. "Compétence et Gestion des Ressources Humaines de l'Industrie Française dans une Perspective d'Innovation," Working Papers ERMES 0320, ERMES, University Paris 2. [Downloadable!]
  4. Keld Laursen, 2002. "The Importance of Sectoral Differences in the Application of Complementary HRM Practices for Innovation Performance," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 9(1), pages 139-156, February. [Downloadable!] (restricted)
    Other versions:
  5. Keld Laursen & Ammon Salter, 2005. "My Precious. The Role of Appropriability Strategies in Shaping Innovative Performance," DRUID Working Papers 05-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  6. Keld Laursen & Francesca Masciarelli, 2007. "The effect of regional social capital and external knowledge acquisition on process and product innovation," ROCK Working Papers 043, Department of Computer and Management Sciences, University of Trento, Italy, revised 12 Jun 2008. [Downloadable!]
  7. Nicolai J. Foss, 2006. "The Emerging Knowledge Governance Approach Challenges and Characteristics," DRUID Working Papers 06-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  8. Czarnitzki, Dirk & Kraft, Kornelius, 2007. "Mitarbeiteranreizsysteme und Innovationserfolg," ZEW Discussion Papers 07-075, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  9. Nicolai J. Foss & Keld Laursen, 2002. "Performance Pay, Delegation, and Multitasking under Uncertainty and Innovativeness An Empirical Investigation," DRUID Working Papers 02-14, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
    Other versions:
  10. Nicolai J. Foss, 2002. "'Coase vs Hayek': Economic Organization and the Knowledge Economy," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 9(1), pages 9-35, February. [Downloadable!] (restricted)
    Other versions:
  11. Anker Lund Vinding, 2006. "Absorptive capacity and innovative performance: A human capital approach," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 15(4-5), pages 507-517, June. [Downloadable!] (restricted)
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