HRM and innovation: a multi‐level organisational learning perspective

• DOI: http://doi.org/10.1111/1748-8583.12127
• Published date: 01 April 2017
• Date: 01 April 2017
• Author: Karin Sanders,Cai‐Hui (Veronica) Lin

HRM and innovation: a multi-level organisational

learning perspective

Cai-Hui (Veronica) Lin, Queen’s Management School, Queen’sUniversity Belfast

Karin Sanders, UNSWBusiness School, Universityof New South Wales Australia

Human Resource Management Journal, Vol27, no 2, 2017, pages 300–317

Drawing on the 4Iorganisational learning framework, this article develops a model to explain themulti-level

and cross-level relationships between HRM practices and innovation. Individual-, team- and organisational-

level learning stocks are theorised to explain how HRM practices affect innovation at a given level. Feed-

forward andfeedback learning flows explainhow cross-level effectsof HRM practices on innovationtake place.

In addition, we propose that HRM practices fostering individual-, team- and organisational-level learning

should form a coherent system to facilitate the emergence of innovation. The article is concluded with

discussions on itscontributions and potential future research directions.

Contact:Dr Cai-Hui (Veronica) Lin,Queen’s Managem ent School, Queen’s University Belfast,Room

02.006, RiddelHall, 185 Stranmillis Road, Belfast BT9 5EE, UK. Email: veronica.lin@qub.ac.uk

Keywords: HRM practices; innovation; organisational learning; multi-level

INTRODUCTION

Innovation is essential for success, survival and renewal of organisations, especially in a

rapidly changing business environment (Anderson et al.,2014).Asinnovationisa

knowledge-intensive activity and much knowledge is mental (Grant, 1996; Argote and

Ingram, 2000), human resources are expected to impact innovation (Hayton, 2005; Kang

et al., 2007; Kang and Snell, 2009). Consistent with this argument, an increased number of

studies have explored the relationship between HRM and innovation (e.g. Hayton, 2005;

Collins and Smith, 2006; Shipton et al., 2006; Jiménez-Jiménez and Sanz-Valle, 2008; Sanders

and Lin, 2016; Seeck and Diehl, 2016).

Despite progress, this stream of research is characterised by limitations. A prominent

limitation is thelack of a levels perspective, because both HRM and innovation are multi-level

phenomena. While previous research on multi-level HRM has elaborated on the level of

abstraction, which is pertinent to the internal vertical fit between HRM philosophies, policies

and practices (e.g. Kepes and Delery, 2006; Arthur and Boyles, 2007), scholars note that HRM

practices (including single or systemsof HRM practices) could target individualactors or group

of actors and affect outcomes at different levels of analysis (Kepes and Delery, 2007). Several

authors haveexamined HRM practices at differentlevels of analysis inrecent years (e.g. Wright

and Nishii,2007; Jiang et al., 2013). Innovation is also a multi-level constructbecause it occurs at

individual, team and organisational levels and even higher industry and geographic region

levels (Drazinet al., 1999; Gupta et al., 2007). Nevertheless, limited research establishesthe link

betweenHRM practices at one level and performanceat another level (Kepes and Delery, 2007).

This observation applies squarely to HRM–innovation research. Reviewing existing studies

reveals thatsingle-level research dominatesthe field, and research at different levels of analysis

is guided by divergent theoriesand frameworks (Lin, 2015).To illustrate, research on individual

creativity and innovation has typically drawn on psychological theories to examine employee

knowledge, skillsand motivation as the antecedents of innovation (e.g. Binyamin and Carmeli,

2010; Chang et al., 2014; Liu et al., 2016), whereas research on organisational innovation comes

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

©2017 John Wiley & Sons Ltd

Please citethis article in press as: Lin,C.-H. and Sanders, K. (2017) ‘HRMand innovation: a multi-levelorganisational learningperspective’.Human

ResourceManagementJournal 27:2,300–317

doi: 10.1111/1748-8583.12127

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from an intellectualcapital (e.g. Wang and Chen,2013) or knowledge managementperspective

(Chen and Huang, 2009). The disparate literature leavesresearchers with a rather fragmented

picture (see also Sandersand Lin, 2016).

Another limitation associated with the lack of a levels perspective is that it constrains

researchers’capacity to understand the multi-level and cross-level effects involved in the

relationship between HRM and innovation. Do HRM practices that stimulate innovation at

one level necessarily induce innovation at another level? How do HRM practices fostering

individual innovation ultimately impact organisational innovation? How do HRM practices

aiming to enhance organisational and team level innovation influence individual innovation?

Answering these questions entails more theoretical elaborations on the intervening processes.

To address these limitations, the first aim of this study is to bridge the research at different

levels of analysis by utilisingan organisational learning framework. Learningrefers to the gain

of knowledge from past experiences (Argote, 2012). It is accompanied by change in cognition

and behaviour,which is the driver of innovation (Veraet al., 2011). Scholarship has extensively

evidenced that learning is central to innovation (e.g. Montes et al., 2005; Shipton et al.,2005),

whether learning from within a community (Brown and Duguid, 1991) or from outside of an

organisation (e.g. Cohenand Levinthal, 1990). Although learning is beneficial for performance

in general (Argote, 2012), the knowledge-intensive nature of innovation means that learning

holds a particularlyprominent position in innovation. Stata (1989)contends that organisational

learning is the principal process by which innovation occurs.

Although multiple streams exist within the organisational learning literature (Easterby-

Smith et al.,2000), one framework thatis inherently multi-leveland therefore speaks to the aims

of this article is the 4I framework (Crossan et al., 1999). The 4I framework proposes that

organisationallearning occurs at multiple levels:individual, team (or group) and organisation.

Learning within a given level accumulates learning stocks (Vera and Crossan, 2004). Learning

across levelsis linked by social and psychological processes: intuiting, interpreting, integrating

and institutionalising (the4Is). While the intuiting-institutionalisinglink represents feed-forward

(i.e. bottom-up) learning flow, the institutionalising-intuiting link involves feedback (i.e. top-

down) learning flow. The 4I framework is developed to address a central issue in strategic

renewal –the tensionbetween exploration and exploitation. Crossan et al. (1999) contend that

feed-forward learning is related to organisational exploration and feedback learning is

associated with organisational exploitation. Because exploration captures discovery and

innovation and exploitation includes refinement and efficiency (March, 1991), this framework

is pertinent to the outcome of interest in this article –innovation. In fact, the 4I framework has

been used to explain phenomena related to innovation, such as entrepreneurial opportunities

(Dutta and Crossan, 2005). Moreover, the 4I framework takes a process orientation approach

(Crossan et al., 2011), which makes it appropriate for explaining the mechanisms involved in

the HRM–innovation relationship.

In this article, we propose that HRM practices contribute to innovation through

accumulating learning stocks at each of the individual, team and organisational levels and

aligning learning stocks with learning flows across levels. On the one hand, we specify the

HRM practices that influence the learning stocks at each level; on the other hand, wepropose

that HRM practices at different levels should form a coherent system to align learning stocks

with flows to facilitate the emergence of innovation. We also propose a guiding principle to

bundle HRM practices across levels.

We provide several contributions to the literature. First, we apply the 4I organisational

learning framework to the study of the HRM–innovation relationship. This framework offers

a multi-level perspective that enables us to explain the multi-level and cross-level effects

Cai-Hui (Veronica) Lin and Karin Sanders

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL27, NO 2, 2017 301

©2017 John Wiley& Sons Ltd.