The study focused on the association between HRM and innovation performance in small and medium-sized enterprises (SMEs). The independent variable was the level of HRMS, and the dependent variable was the level of innovation within SMEs. The mediators were IWB and department. Control variables included age, gender, and function. These findings show that HRMP and innovation are related but not identical. The impact of IWB on innovation was greater among SMEs with lower innovation performance than in firms with higher innovation performance.
Explains the variability of variables
The HR practice of team development was the only one that significantly explained the variance of the dependent variable, accounting for 40.2%. Other variables such as function and tenure did not have any significant impact on predicting the outcome. Further, the relationship between HR practices and innovation in SMEs was stronger for employees with managerial roles than for those with non-management roles. In the future, these HR practices will likely influence the innovative work behavior of SMEs.
HR practices and innovation in SMEs are related in two ways. The former has an impact on IWB when it is emphasized by a manager. However, a more important influence on innovation in an organization’s culture comes from the latter. The most innovative companies are those with highly creative teams and a high-technology culture. A creative work environment can help increase motivation and creativity, while an environment that is challenging and rewarding may help employees stay motivated.