The strategy of human resource flexibility versus absorptive capacity of knowledge

Purpose - The study analyzes the relationship between human resources (HR) flexibility and absorptive capacity (AC) of knowledge in a sample of Spanish manufacturing firms. The purpose of the research is to analyze if firms with greater AC are more flexible than other firms and to assess the implications of different combinations of HR flexibility and AC for innovation. Design/methodology/approach - The study sample consisted of 1,666 Spanish industrial firms in 2015 compiled from a large set of statements from the Survey of Business Strategies (SBS) questionnaire. The methodology includes a cluster analysis and a case study of selected firms. First, a k-means clustering analysis was carried out to explore how homogeneous are the SBS firms according to several HR flexibility and AC measures. The authors complement the clustering itself with some descriptive statistics for each cluster. Second, the statistical analysis is followed by a selection of case studies from industrial firms in different positions regarding innovation, AC, and HR flexibility. The information for the cases studies comes from secondary sources such as corporate governance reports and statements of managers and employees from company websites and public reports. Findings - The empirical evidence indicates that some combinations of HR flexibility and AC are positively related to innovation outputs whereas others are not. Firms with greater AC, R&D effort and innovation outputs have less “bad” HR flexibility (external numerical flexibility from temporary employees and temporary help agencies) and more “good” HR flexibility (internal and external functional flexibility). On the contrary, firms with minimum or non-existent innovation and AC efforts have the highest levels of temporary employment and do not hire external R&D experts. Research limitations/implications - The limitations of the cross-sectional nature of the study make the authors cautious about any proposition that may suggest a causal relationship among the studied variables. Practical implications - Managers should pay attention to the different implications of each HR flexibility dimension for innovation activities since innovative companies value more those HR flexibility dimensions that contribute to the dispersion of knowledge within the firm. Originality/value - The authors propose a framework to analyze the combination of HR flexibility and AC most suitable to different types of firms. Based on the statistical analyses and the case studies, the authors propose some strategic implications useful for the management of human resources. The matrix's framework analyzes the firm's innovation strategies according to the interactions between AC and the mix of HR flexibility dimensions.