IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/109486.html
   My bibliography  Save this paper

Human Resource Policies And Firm Innovation: The Moderating Effects Of Economic And Institutional Context

Author

Listed:
  • Krammer, Sorin

Abstract

This paper examines the effects of human resource (HR) policies on firm innovation. Specifically, we argue that firms who implement policies to stimulate job autonomy and performance-based pay will be more likely to innovate, as proxied by investments in R&D. In addition, we contend that the institutional (i.e., labour regulations) and competitive (i.e., pressure from imports) contexts in which a firm operates will affect the relationship between HR policies and innovation, albeit in different ways. We test these hypotheses using a dataset of more than 900 firms across a heterogenous set of 12 countries, majority of which are emerging markets. We find strong empirical backing for the role of both job autonomy and performance-based pay policies in stimulating firm innovation, and partial support for the moderating effects of institutional and competitive contexts of this relationship.

Suggested Citation

  • Krammer, Sorin, 2021. "Human Resource Policies And Firm Innovation: The Moderating Effects Of Economic And Institutional Context," MPRA Paper 109486, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109486
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/109486/1/MPRA_paper_109486.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bee Yan Aw & Mark J. Roberts & Daniel Yi Xu, 2011. "R&D Investment, Exporting, and Productivity Dynamics," American Economic Review, American Economic Association, vol. 101(4), pages 1312-1344, June.
    2. Justus Haucap & Christian Wey, 2004. "Unionisation structures and innovation incentives," Economic Journal, Royal Economic Society, vol. 114(494), pages 149-165, March.
    3. Caballero, Ricardo J. & Cowan, Kevin N. & Engel, Eduardo M.R.A. & Micco, Alejandro, 2013. "Effective labor regulation and microeconomic flexibility," Journal of Development Economics, Elsevier, vol. 101(C), pages 92-104.
    4. Inderst, Roman, 2009. "Innovation management in organizations," European Economic Review, Elsevier, vol. 53(8), pages 871-887, November.
    5. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 917-962.
    6. Ruth Towse, 2001. "Creativity, Incentive and Reward," Books, Edward Elgar Publishing, number 1953.
    7. Michael Hitt & M. Tina Dacin & Edward Levitas & Jean-Luc Arregle & Anca Borza, 2000. "Partner Selection in Emerging and Developed Market Contexts : Resource-Based and Organizational Learning Perspectives," Post-Print hal-02276706, HAL.
    8. Cindy Zoghi & Robert D. Mohr & Peter B. Meyer, 2010. "Workplace organization and innovation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(2), pages 622-639, May.
    9. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    10. Nocco, Antonella & Ottaviano, Gianmarco I.P. & Salto, Matteo, 2019. "Geography, competition, and optimal multilateral trade policy," Journal of International Economics, Elsevier, vol. 120(C), pages 145-161.
    11. Fuentelsaz, Lucio & Garrido, Elisabet & Maicas, Juan P., 2020. "The effect of informal and formal institutions on foreign market entry selection and performance," Journal of International Management, Elsevier, vol. 26(2).
    12. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2013. "Labor Laws and Innovation," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 997-1037.
    13. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    14. Cindy Zoghi & Robert D. Mohr & Peter B. Meyer, 2010. "Workplace organization and innovation," Canadian Journal of Economics, Canadian Economics Association, vol. 43(2), pages 622-639, May.
    15. Bloom, Nicholas & Sadun, Raffaella & Lemos, Renata & Scur, Daniela & Van Reenen, John, 2014. "The new empirical economics of management," LSE Research Online Documents on Economics 58009, London School of Economics and Political Science, LSE Library.
    16. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2010. "Does Product Market Competition Lead Firms to Decentralize?," American Economic Review, American Economic Association, vol. 100(2), pages 434-438, May.
    17. Krammer, Sorin M.S., 2014. "Assessing the relative importance of multiple channels for embodied and disembodied technological spillovers," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 272-286.
    18. Krammer, Sorin M.S., 2009. "Drivers of national innovation in transition: Evidence from a panel of Eastern European countries," Research Policy, Elsevier, vol. 38(5), pages 845-860, June.
    19. Mark Loon & Lilian Otaye‐Ebede & Jim Stewart, 2020. "Thriving in the New Normal: The HR Microfoundations of Capabilities for Business Model Innovation. An Integrated Literature Review," Journal of Management Studies, Wiley Blackwell, vol. 57(3), pages 698-726, May.
    20. Zoe Adams & Simon Deakin, 2014. "Institutional Solutions to Precariousness & Inequality in Labour Markets," Working Papers wp463, Centre for Business Research, University of Cambridge.
    21. Jiangyong Lu & Xiaohui Liu & Mike Wright & Igor Filatotchev, 2014. "International experience and FDI location choices of Chinese firms: The moderating effects of home country government support and host country institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(4), pages 428-449, May.
    22. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    23. Sharon Traiberman, 2019. "Occupations and Import Competition: Evidence from Denmark," American Economic Review, American Economic Association, vol. 109(12), pages 4260-4301, December.
    24. Yasar, Mahmut & Paul, Catherine J. Morrison & Ward, Michael R., 2011. "Property Rights Institutions and Firm Performance: A Cross-Country Analysis," World Development, Elsevier, vol. 39(4), pages 648-661, April.
    25. Lau, Chung-Ming & Ngo, Hang-Yue, 2004. "The HR system, organizational culture, and product innovation," International Business Review, Elsevier, vol. 13(6), pages 685-703, December.
    26. Haichao Fan & Yao Amber Li & Stephen R. Yeaple, 2015. "Trade Liberalization, Quality, and Export Prices," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 1033-1051, December.
    27. Kafouros, Mario & Aliyev, Murod & Krammer, Sorin M.S., 2021. "Do firms profit from patent litigation? The contingent roles of diversification and intangible assets," Research Policy, Elsevier, vol. 50(6).
    28. Michael Hitt & M. Tina Dacin & Edward Levitas & Jean-Luc Arregle & Anca Borza, 2000. "Partner Selection in Emerging and Developed Market Contexts : Resource-Based and Organizational Learning Perspectives," Post-Print hal-02312691, HAL.
    29. Maksimov, Vladislav & Wang, Stephanie Lu & Luo, Yadong, 2017. "Institutional imprinting, entrepreneurial agency, and private firm innovation in transition economies," Journal of World Business, Elsevier, vol. 52(6), pages 854-865.
    30. Krammer, Sorin M.S., 2015. "Do good institutions enhance the effect of technological spillovers on productivity? Comparative evidence from developed and transition economies," Technological Forecasting and Social Change, Elsevier, vol. 94(C), pages 133-154.
    31. Keld Laursen & Nicolai J. Foss, 2003. "New human resource management practices, complementarities and the impact on innovation performance," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(2), pages 243-263, March.
    32. Richard M. Burton & Børge Obel, 2018. "The science of organizational design: fit between structure and coordination," Journal of Organization Design, Springer;Organizational Design Community, vol. 7(1), pages 1-13, December.
    33. Haichao Fan & Yao Amber Li & Stephen R. Yeaple, 2015. "Trade Liberalization, Quality, and Export Prices," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 1033-1051, December.
    34. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    35. Christian Bjørnskov & Niklas Potrafke, 2011. "Politics and privatization in Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(2), pages 201-230, April.
    36. van Hoorn, André, 2014. "Individualism and the cultural roots of management practices," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 53-68.
    37. Matej Bajgar & Beata Javorcik, 2020. "Climbing the Rungs of the Quality Ladder: FDI and Domestic Exporters in Romania," The Economic Journal, Royal Economic Society, vol. 130(628), pages 937-955.
    38. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Reenen, 2014. "Jeea-Fbbva Lecture 2013: The New Empirical Economics Of Management," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 835-876, August.
    39. Daniel Lederman, 2010. "An international multilevel analysis of product innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(4), pages 606-619, May.
    40. Furman, Jeffrey L. & Porter, Michael E. & Stern, Scott, 2002. "The determinants of national innovative capacity," Research Policy, Elsevier, vol. 31(6), pages 899-933, August.
    41. Greenhalgh, Christine & Rogers, Mark, 2006. "The value of innovation: The interaction of competition, R&D and IP," Research Policy, Elsevier, vol. 35(4), pages 562-580, May.
    42. Philippe Aghion & Olivier J. Blanchard, 1998. "On privatization methods in Eastern Europe and their implications1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 87-99, May.
    43. Micheline Goedhuys, 2007. "Learning, product innovation, and firm heterogeneity in developing countries; Evidence from Tanzania," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(2), pages 269-292, April.
    44. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    45. Schot, Johan & Steinmueller, W. Edward, 2018. "Three frames for innovation policy: R&D, systems of innovation and transformative change," Research Policy, Elsevier, vol. 47(9), pages 1554-1567.
    46. Wakelin, Katharine, 1998. "Innovation and export behaviour at the firm level," Research Policy, Elsevier, vol. 26(7-8), pages 829-841, April.
    47. Klaus E. Meyer & Saul Estrin & Sumon Kumar Bhaumik & Mike W. Peng, 2009. "Institutions, resources, and entry strategies in emerging economies," Strategic Management Journal, Wiley Blackwell, vol. 30(1), pages 61-80, January.
    48. Bauer, Florian & Schriber, Svante & Degischer, Daniel & King, David R., 2018. "Contextualizing speed and cross-border acquisition performance: Labor market flexibility and efficiency effects," Journal of World Business, Elsevier, vol. 53(2), pages 290-301.
    49. Zoe Adams & Simon Deakin, 2014. "Institutional Solutions to Precariousness and Inequality in Labour Markets," British Journal of Industrial Relations, London School of Economics, vol. 52(4), pages 779-809, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Jian-xun & Zhang, Bo & Zhan, Wu & Sharma, Piyush & Budhwar, Pawan & Tan, Hui, 2022. "Demystifying the non-linear effect of high commitment work systems (HCWS) on firms’ strategic intention of exploratory innovation: An extended resource-based view," Technovation, Elsevier, vol. 116(C).
    2. Mehmet Güney Celbiş & Pui-Hang Wong & Karima Kourtit & Peter Nijkamp, 2021. "Innovativeness, Work Flexibility, and Place Characteristics: A Spatial Econometric and Machine Learning Approach," Sustainability, MDPI, vol. 13(23), pages 1-29, December.
    3. Krammer, Sorin M.S., 2022. "Navigating the New Normal: Which firms have adapted better to the COVID-19 disruption?," Technovation, Elsevier, vol. 110(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Krammer, Sorin M.S., 2022. "Human resource policies and firm innovation: The moderating effects of economic and institutional context," Technovation, Elsevier, vol. 110(C).
    2. Alessia Amighini & Claudio Cozza & Elisa Giuliani & Roberta Rabellotti & Vittoria Scalera, 2015. "Multinational enterprises from emerging economies: what theories suggest, what evidence shows. A literature review," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(3), pages 343-370, September.
    3. Krammer, Sorin M.S. & Jiménez, Alfredo, 2020. "Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    4. Singla, Chitra & George, Rejie & Veliyath, Rajaram, 2017. "Ownership structure and internationalization of Indian firms," Journal of Business Research, Elsevier, vol. 81(C), pages 130-143.
    5. Chenxi Zhou & Kent Ngan-Cheung Hui & Kevin Zheng Zhou & Yuanyuan Gong, 2023. "Is failure the mother of success? Prior failure experience and cross-border M&A completion by emerging market firms," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 775-813, June.
    6. Krammer, Sorin & Jimenez, Alfredo, 2019. "Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe," MPRA Paper 94942, University Library of Munich, Germany.
    7. Bennedsen, Morten & Tsoutsoura, Margarita & Wolfenzon, Daniel, 2019. "Drivers of effort: Evidence from employee absenteeism," Journal of Financial Economics, Elsevier, vol. 133(3), pages 658-684.
    8. Manuel Aníbal Silva Portugal Vasconcelos Ferreira & Nuno Rosa Reis & Fernando A. Ribeiro Serra & Benny Kramer Costa, 2014. "Understanding the Footprint of the RBV in International Business Studies: the Last Twenty Years of Research," Brazilian Business Review, Fucape Business School, vol. 11(4), pages 53-83, August.
    9. Li, Guangzhong & Egger, Peter H. & Li, Jie & Wu, Han, 2022. "Exporting firms’ factor and product-quality adjustments in response to employment protection legislation: Evidence from China," China Economic Review, Elsevier, vol. 73(C).
    10. Louis Y. Y. Lu & John S. Liu, 2013. "An innovative approach to identify the knowledge diffusion path: the case of resource-based theory," Scientometrics, Springer;Akadémiai Kiadó, vol. 94(1), pages 225-246, January.
    11. Carsten Eckel & Stephen R. Yeaple, 2023. "Inefficient Labor Market Sorting," Rationality and Competition Discussion Paper Series 437, CRC TRR 190 Rationality and Competition.
    12. Krammer, Sorin, 2021. "Navigating The New Normal: Which Firms Have Adapted Better To The Covid-19 Disruption?," MPRA Paper 109485, University Library of Munich, Germany.
    13. Li Peng & Yuan Li & Marc Essen & Mike W. Peng, 2020. "Institutions, resources, and strategic orientations: A meta-analysis," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 499-529, June.
    14. Theophilus Lartey & Diana Owusu Yirenkyi & Samuel Adomako & Albert Danso & Joseph Amankwah‐Amoah & Ashraful Alam, 2020. "Going green, going clean: Lean‐green sustainability strategy and firm growth," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 118-139, January.
    15. Krammer, Sorin M.S., 2015. "Science, technology and innovation for economic competitiveness: the role of smart specialization in less-developed countries," MPRA Paper 80203, University Library of Munich, Germany.
    16. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    17. Weng, David H. & Peng, Mike W., 2018. "Home bitter home: How labor protection influences firm offshoring," Journal of World Business, Elsevier, vol. 53(5), pages 632-640.
    18. Belloc, Filippo, 2021. "Industrial actions and firing regimes: How deregulating worker “Exit” reshapes worker “Voice”," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 251-264.
    19. Che, Yi & Li, Xuchao & Zhang, Yan & Zhao, Lin, 2024. "Labor protection and firms’ risk-taking behavior: evidence from China’s New Labor Contract Law," Journal of Asian Economics, Elsevier, vol. 91(C).
    20. Spyros Arvanitis & Florian Seliger & Tobias Stucki, 2016. "The relative importance of human resource management practices for innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(8), pages 769-800, November.

    More about this item

    Keywords

    Human Resource Management; Job autonomy; Performance-based pay; Firm innovation; Labour regulations; Import competition;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J8 - Labor and Demographic Economics - - Labor Standards
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:109486. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.