Radical innovation is crucial for a firm’s success, and organisations should promote it. Prior research has argued that human capital is essential for a company’s innovation. However, the direct and indirect effects of Human Resource Management (HRM) on radical innovation have not yet been determined. Therefore, the present paper aims to explore the direct impact of HRM on radical innovation with a content approach and a process approach. It will also examine the mediating effect that learning through an exploration process has on HRM and radical innovation. Using data from 200 medium-sized Spanish industrial firms, our results demonstrate that Strategic Human Resource Management (SHRM) has a positive and direct effect on radical innovation. We also find that an HRM system directed toward change and creativity and SHRM positively support the process of exploration learning, and that competence exploration has a favourable impact on radical innovation. These results indicate that competence exploration mediates the effect HRM systems and SHRM have on radical innovation.
In today’s increasingly uncertain, changing and complex markets, firms have to possess critical factors that enable them to create value and obtain a competitive edge (Bhatnagar, 2012; Hecker & Ganter, 2013). This idea has gained support in recent years due to the global economic crisis and consequent recession (Hausman & Johnston, 2014). As key factors in the competitiveness of firms, innovativeness (Caia, Chenb, Chena, & Bruton, 2017; Cegarra-Navarro, Reverte, Gomez-Melero, & Wensley, 2016; Khosravi, Newton, & Rezvani, 2019; Volberda, Van Den Bosch, & Heij, 2013; Zhang, Zhao, Voss, & Zhu, 2016) and human capital (Collins & Clark, 2003; Jiang, Wang, & Zhao, 2012; Renkema, Meijerink, & Bondarouk, 2017; Sozen, Varoglu, Yeloglu, & Basim, 2015) stand out. Innovativeness refers to firms’ capacity to innovate; that is, the capacity to create new products, services, markets or processes and/or to improve existing ones (Wang & Ahmed, 2004). Innovation includes any new practice added to firms, including equipment, products, processes, policies and projects (Damanpour, 1991). Human capital also bestows value on a firm and includes a series of characteristics which make it valuable, scarce, difficult to imitate and impossible to substitute; all of which mean that it has a strategic role to play within the organisation according to the resource-based view (RBV) (Barney, 1991; Huselid, 1995; Jiang et al., 2012; Renkema et al., 2017). Due to the great importance of innovativeness and human capital, special attention has been given to the impact that HRM can have on firms’ innovative performance (Ardito, Petruzzelli, & Albino, 2015). In the studies that relate human capital and innovation, it is assumed that employees play a key role in innovation since workers’ learning processes are essential in order to acquire the knowledge, skills and experience necessary for innovation to occur (Collins & Clark, 2003; Gebauer, Worch, & Truffer, 2012; Wright, Dunford, & Snell, 2001). One way to stimulate learning is through HRM because it plays a central role in orientating the behaviour of employees and can boost positive attitudes toward learning (Kang & Snell, 2009; Lopez-Cabrales, Real, & Valle, 2011).