HRM and innovation: looking across levels

• Author: Alan Brown,Pawan Budhwar,Paul Sparrow,Helen Shipton
• Published date: 01 April 2017
• Date: 01 April 2017
• DOI: http://doi.org/10.1111/1748-8583.12102

HRM and innovation: looking across levels

Helen Shipton, Nottingham Business School, Nottingham TrentUniversity

Paul Sparrow, Centre for Performance-ledHR, Lancaster University Management

School

Pawan Budhwar, Aston Business School

Alan Brown, Institute of Employment Research,University of Warwick

Human Resource Management Journal, Vol 27,no 2, 2017, pages 246–263

Studies are starting to explore the role of human resource management (HRM) in fostering organisational

innovation,but empirical evidenceremains contradictoryand theory fragmented. Thisis partly because extant

literatureby and large adopts a unitary levelof analysis, rather than reflecting on the multi-leveldemands that

innovation presents. Building on an emergent literature focused on HRM’s role in shaping innovation, we

shed light on the question of whether, and how, HRM might influence employees’innovative behaviours in

the direction of strategically important goals. Drawing upon instituti onal theory, our contributions are

threefold: to bring out the effect of two discrete HRM configurations –one underpinned by a control and the

other by an entrepreneurial ethos, on attitudes and behaviours at the individual level; to reflect the way in which

employee innovative behaviours arising from these HRM configurations coalesce t o shape higher-level

phenomena, such as organisational-level innovation; and to bring out two distinct patterns of bottom-up

emergence, one driven primarily by composition and the other by both composition and compilation.

Contact: Helen Shipton, Nottingham Business School, Nottingham Trent University, Nottingham

NG1 4BU, UK. Email:helen.shipton@ntu.ac.uk

Keywords: humanresource management; innovation; multi-level; human resource strategy

INTRODUCTION

One of the central challenges facing organisations given global uncertainty, escalated

technological change and ever-growing consumer expectations is enhancing,

renewing and revitalising existing work systems, services and products. It has been

argued that organisations exhibiting innovation, rather than remaining committed to what

worked in the past, are more likely to thrive in challenging times (Shalley et al., 2009). Yet

innovation presents challenges for organisations, and moving away from accepted ways of

working into new domains is not straightforward, especially given peoples’commitment

to what worked well in the past (Unsworth and Clegg, 2010). It has been argued that

isomorphic pressures reinforce rigidity in line with what is accepted and legitimate rather

than opening the prospect of critical reflection, novelty and value-added change (Di Maggio

and Powell, 1983).

Although traditionally innovation has been viewed as in the hands of scientific or

technologicalspecialists, there is nowrecognition that organisationshave the potential to draw

on the insights, abilities and motivations of employees across levels andfunctional areas. This

raises the prospect for improvements that may be more incremental than radical but

nonetheless add strategic value. It also points to the importance of supporting others in their

quest to enhance organisational functioning, suggesting that innovation arises in part from

bottom-up interactive activities acrossemployee groups as well as by endeavours of scientific

experts or business leaders. Implicit in this view is that HRM influences the propensity of

employees to work inthis way. With significant exceptions (Collins and Smith, 2006), studies

246 HUMAN RESOURCEMANAGEMENT JOURNAL, VOL 27, NO 2, 2017

©2017 John Wiley & Sons Ltd

Please citethis article in press as: Shipton, H.,Sparrow, P., Budhwar, P. and Brown,A. (2017) ‘HRM and innovation: lookingacross levels’.Human

ResourceManagementJournal 27:2,246–263

doi: 10.1111/1748-8583.12102

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have adopted a unitary level of analysis,investigating the effect of a set of organisational-level

predictors on organisational outcomes. Yet according to Gupta et al. (2007), innovation is

inherentlymulti-level, because it representschange in one entity in responseto a wider context.

One danger implicitin adopting a unitary frame of reference ismisattributing causality to the

variables in question when some deeper factor is at play (Carpenter et al., 2012).

In this paper, we build on the emergent literature on HRM’s role in shaping innovation in

order to shed light on how HRM influences employees’innovative behaviours towards

strategically important goals. Drawing on institutional theory (Di Maggio and Powell, 1983),

our explanation highlights two discrete HRM configurations (Figure 1), underpinned by

principles of isomorphism. We describe the first configuration as ‘control-oriented HRM’and

the second as ‘entrepreneurial HRM’, which involves exploring options for challenging the

institutional parameters that may inhibit innovation. This latter configuration is derived, but

distinct, from the contingency perspectives in HRM (Kang et al., 2007; Chadwick and Dabu,

2009). We explain how employee innovative behaviours can arise from these different HRM

configurations and coalesce to shape organisational-level innovation. These cross-level

innovation processes bring out two distinct patterns of bottom-up emergence, one primarily

driven by ‘composition’and the other by both ‘composition’and ‘compilation’.

Although contingency perspectives have proposed contrasting configurations of HRM

practices depending upon internal andexternal fit (Schuler and Jackson, 1987),they understate

the role of institutional isomorphism (Di Maggio and Powell, 1983) in consciously or

FIGURE 1 A multi-level model of HRM and innovation[Colour figure can be viewed at wileyonlinelibrary.

com]

The effect of HRM systems

CONTROL-ORIENTED HRM

The effect of HRM systems

ENTREPRENEURIAL HRM

Effect of employee actions on collective-level outcomes

ALIGNED INNOVATIVE BEHAVIOURS

Effect of employee actions on collective-level outcomes

REFLECTIVE INNOVATIVE BEHAVIOURS

LEGITIMACY-

ORIENTED

INNOVATION

REFLECTIVE

INNOVATION

COMPILATION &

COMPOSITION

COMPOSITION

Helen Shipton,Paul Sparrow, Pawan Budhwarand Alan Brown

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL27, NO 2, 2017 247

©2017 John Wiley& Sons Ltd.