Assessing the Impact of Strategic HRM Practices on Organizational Innovation Through the Dynamic Capabilities Framework

Abstract

This study investigates the impact of Strategic Human Resource Management (SHRM) practices on organizational innovation through dynamic capabilities. Although there has been a growing appreciation of the strategic importance of HRM, very little empirical research has correlated SHRM with dynamic capabilities and innovation. This study formulates and experiments with a mediation model. This study design was quantitative and cross-sectional and based on 257 employees and managers in various organizations. The data were interpreted using descriptive statistics, reliability analysis, mediation, and regression analysis. The results indicate that SHRM practices have a beneficial effect on innovation (β =0.53, p < 0.001) and dynamic capabilities (β =0.62, p < 0.001). Dynamic capabilities, on the other hand, play a positive role in innovation (β = 0.57, p < 0.001). The findings of mediation indicate that dynamic capabilities mediate the relationship between SHRM practices and innovation in part. The coefficient alpha of Cronbach was above 0.80, indicating high reliability, and the coefficients between variables were 0.69 and 0.76, indicating that there was a strong relationship between the variables. This research indicates that SHRM practices not only enhance innovation directly but also enhance dynamic capabilities of an organization (sensing, seizing, and transforming). The study contributes to theoretical knowledge by linking the SHRM and dynamic capabilities viewpoints and provides practical implications to companies that want to become more innovative by relying on human capital-based capabilities.