Effects of HR practices on employee innovation through the

mediating role of creativity and Dynamic Capability

HR practices and innovation
Sustained competitive advantage created a significant link between organization performance
and HRM practices and attained substantial attention. (James Chohan,2016). Author depicts the
association between the skills-enhancing practices, motivation enhancing and opportunity
enhancing will leads to innovation (James Chohan,2016). Organization needs to adopt and fit
practices to go well with their strategic choices within a specified environment. strategic
activities that are in alignment of HRM practices craft differentiation in terms of human
resources are an asset to become sustainable competitive advantage. (James Chohan,2016). HRM
practices, teamwork, reward, job practices and hiring and selection are positively associated with
employee creativity and fully mediating the role between four HRM practices and organizational
innovation. Results indicates that HR practices can perform a vital function in overseeing people
to endorse innovation in Chinese organizations. This study established that hiring and selection,
reward, job design and teamwork practices were created to be the most key practices to aid
creativity (Jianwu Jiang a, Shuo Wang b & Shuming Zhao, 2014).individual worker creativity
and HI HRM(high involvement) practices have considerable cross-level influence on individual
built-in job motivation and creativity at work place and with higher involvement of worker with
high learning orientation can make them feel empowered and make them autonomous at
workplace have a greater positive impact job motivation than those who have low learning
course( Shung Jae Shin, InseongJeong & Johngseok Bae -2016). With the external reward
pressure employee are encouraged to perform in accordance with organizations desired level of
intrinsic job motivation, therefore HI-HRM practices will be a way to increase employee
motivation. (Shung Jae Shin, InseongJeong &Johngseok Bae -2016). Employee ought to have
more effective HI-HRM practices in order to be more effective learning orientation, thus
employee can exercise their given discretion of autonomy to prompt higher feelings at their work
place ( Shung Jae Shin, InseongJeong&Johngseok Bae -2016).HRM-performance maintain a
robust relationship in HRM system and HR practices and employees are immersed in their job
crafting and participate together to extra performance are strongly related at work
engagement(Xiaoyu Guan, Stephen Frenkel ,2018). HR practices that prompted employees to
continue or raise engagement and job prowess attitude that aid in high performance. HR
managers conspicuously implement HR principles and practices and work with those relative
line manager who are openly communicating and directly connected with the employees to
encourage to implement HR practices to desire individual responsibilities (Xiaoyu Guan,
Stephen Frenkel, 2018).Reducing Workplace obstacles and encouraging employees to exhibit
superior performance, as a result managers are obliged and advised to crafting jobs and
individual feedback also necessary for a successful job crafting at workplace, training and
knowledge transferring by redesigning workshop promising and employees are prompted to give
their suggestion for HRM practices to be implemented(Xiaoyu Guan, Stephen Frenkel ,2018).
Dynamic capabilities and competitive advantages
Dynamic capability is “the firm’s ability to integrate, build, and reconfigure internal and external
competences to address rapidly changing environments” (David J. Teece, Gary Pisano, and Amy
Shuen).Dynamic capabilities are hard to develop and imitate and therefore they provide
organization with competitive advantage. Researches have shown that organizations which lacks
dynamic capabilities are unable to perform well because they were unable to adapt to the
environmental change. (Chiu et al., 2016; Kelly 2009; Kock et al., 2011). Innovation alone is not
enough to make an organization successful without the presence of dynamic capabilities. (Teece,
2007). Lin & Huang (2012) found that innovation can be the one process to build organizational
process that help to achieve organization’s goals but this innovation is derived from dynamic
capability as it has a direct positive impact on innovation. Dynamic capabilities are best fitting
for innovation because it helps in developing new processes, new models by continuous learning
and problem solving. (Lawson & Samson, 2001). Dynamic capabilities help an organization to
exploit the innovation that is the result of past experiences. (Zang & li, 2017).
Dynamic capabilities effect company’s absorptive capacity and product innovation, which leads
to better market performance. (Watanabe & Kwintiana, 2003; Dacko et al., 2008; Hall et al.,
2013). A firm with dynamic capabilities can sense and seize an opportunity before the rivals do
and that can provide the firm with sustainable competitive advantage. (David J. Teece, Gary
Pisano, and Amy Shuen, 2017).Dynamic capabilities also govern how ordinary capabilities
should be combined and re orchestrated inside the firm, and which capabilities need to be added
or retrenched. (David J. Teece, Gary Pisano, and Amy Shuen, 2017). It helps identify new
products and services, potentially opening new markets where rivals have not yet appeared. It is
about doing the right things at the right time, based on new product (and process) development,
unique managerial orchestration processes, a strong and change-oriented organizational culture,
and a prescient assessment of the business environment and technological opportunities. The
process of continuous development of dynamic creation, reconfiguration and modification of
resources is the staple aspect of innovative activities in organization that enables the firm to
combine and match with the market level innovation. (Adner and Helfat, 2003; Ahuja et al.,
2005;
Perkmann and Walsh, 2007; Puranam and Srikanth, 2007; Anand et al., 2010; Makri et al.,
2010; Lichtenthaler and Ernst, 2012). The overlapping of expected and new knowledge increases
the human element to influence the innovation capacity of organization. (Hill & Rothaermel,
2003). Dynamic capabilities play a vital role for any firm’s business model and innovation
processes.
A lot of work has been done on micro foundations of organizational adaptation in groups or
teams but more is needed to be done on the process that how these processes connect with
dynamic capabilities that are crucial for any organization’s direction. (David J. Teece, Gary
Pisano, and Amy Shuen, 2017). Moreover, extensive research has been done on the factors that
impact on innovation output but how dynamic capability impact the employee innovation while
performing as antecedent is still ignored.

Creativity and Employee Innovation

word creativity came from the Latin term creō "to create". It also came from Latin. The word
"create" appeared as early as the 14th century. There is no reluctance that creativity and
innovation are the indispensable elements for any dynamic organization, but the bureaucratic
practices like controlling, ruling and regulating are equally important. Training and development
T&D can be defined as an HR practice that organizations instrument to advance performance
through a variety of instructive methods and programs (Alba Manresa 2018). Continuous
education and refining employee skills and productivity through T&D practices are recognized
as tremendously important factors that ensuring the long-term achievement (Andrea Bikfalvi
2018).Alba Manresa, 2018 asked the question, “What factors effect a company’s tendency to
implementing training and development practices for creativity and innovation?”, the results
indorse that the relationship of creativity and innovation are related to several conditional factors,
for example, innovation capability for novel products and services. Research should emphasis on
the correlation between training and development for creativity and innovation practices and
firms’ performance (Andrea Bikfalvi -2018). Formalization has a negative relation with
employee creativity, demonstrating that high formalization in any organizations leads to little
generation of idea. The formalization conquers organizational innovation signifying that
formalization the idea implementation in firm. It influences the employee creativity, which
obstructs the organizational innovation (Atif Bilal, Faiza Majid 2018). The formalization should
be synthesized, to the point relevant, suitable and pointless controls should be impassive in order
to inspire creativity and innovation (Hafiz Mushtaq Ahmad 2018). Supervisors should focus on
the outcomes that employees are constructing in the form of a unique idea (Faiza Majid 2018).
When employee make a creative and effective idea, executive should be left with the employees,
and they should not be uttered or organized about how they have done their work (Hafiz
Mushtaq Ahmad 2018). Executives need to weed out the needless formalization that may enable
creativity and innovation (Atif Bilal, Faiza Majid 2018). The administrative governor practices,
like formalization are also the condition to sustain and regulate the behavior of employees (Faiza
Majid 2018). (Atif Bilal, Hafiz Mushtaq Ahmad, Faiza Majid 2018) suggested that falling in
formal rules to enable creativity and innovation that may offer organizations as lasting
competitive advantage. EOX(employee–organization exchange) is confidently related to
employee creativity(Wen Pan, Li-Yun Sun 2017).Satisfaction facilitates the association between
EOX and employee creativity and LMX (leader-member exchange) augments the EOX-need
satisfaction connection (Long W. Lam 2017)CSE (creative self-efficacy) have relation with
satisfaction and creativity, and EOX has solid influence on creativity through need satisfaction
when employees have greater LMX and lower CSE (Wen Pan, Li-Yun Sun & Long W. Lam
2017). Employee and organization relationship itself and suggested that the long-term concerned
with social exchange-based EOX offers prosperous condition for human need satisfaction and
turn leads to be creativity. (Wen Pan, Li-Yun Sun & Long W. Lam 2017). The perspective of
SDT (self-determination theory) highlights the significance of the social exchange environment
of EOX in indorsing need satisfaction which is influence to creativity (Long W. Lam 2017).
Organizations must be adopted long-term concerned with social exchange. relationships between
employees and organization as well as built relation with employees and their manager. If EOX
or LMX is weed, employee will feel that their organization does not have value of their well-
beings and his job is just instrument to economic welfares and his financial security. He does not
enhance his new ideas. So, his motivation is reserved as engaging in creative activity (Wen Pan,
Li-Yun Sun & Long W. Lam 2017). Individual initiative and ability positively affect the
creativity. Knowledge and creative possessions play moderating roles in affecting the
relationships (Chung-Jen Chen 2014). Ability variety provides the essential skills for employees
to do creative events, while creativity is significant characteristic to assisting them to overcome
existing constraints and transform elaborate thoughts into valuable and practical ideas (Hsi-An
Shih 2014). The high nature of knowledge in the jobs facilitates low-initiative workers to
perform tasks properly and more smoothly. Low-initiative workers are additional able to apply
suitable knowledge to solve problems or generate practical solutions when the essential
knowledge is more exact than less specific solution (Ya-Ching Yeh) 2014.Individuals with high
creativity and ability variety would revelation more creativity when they have appropriate
creative resources, compare with those with little initiative and ability variety (Chung-Jen Chen a
, Hsi-An Shih b &– 2014).Employee creativity can be established through HRM practices. There
was no association between the performance appraisal and employee creativity. Performance
appraisals can be used to focus on what employee have done wrong, employees should gain a
clear view; how they can recover through progressive response that motivates them to recover in
impending performance and apply new ideas to improve batter performance (Jianwu Jiang a ,
Shuo Wang b & Shuming Zhao – 2012).HRM can raise the inclusive creativity of an
organization’s workforce through selecting employees with their creative potential and use
reward systems by appraisal to increase the employees’ motivation to be creative. Employees’
creativity entirely mediated the association between HRM practices and organizational
innovation. (Jianwu Jiang a, Shuo Wang b & Shuming Zhao – 2012). Employee innovation is the
method of merging different thoughts or categories, mental images, either across or within areas,
in such a way that haven’t been done before, for developing an original and suitable solution to a
situation or problem. (Kilgour, 2006, p. 82). Employee innovation generally requires the
generation of novel ideas that reports the current employee situation. (Fichman & K& Kemerer
emerer, 1997). The main foundation for creativity is the ‘‘generative process’’ (Leung, Maddux,
Galinsky, & Chiu, 2008) that would result in a wider range of options for consideration. The new
sources of data, knowledge, and viewpoints improves the potential for employee innovation
through increasing the number of thoughts of different categories and mental images accessible
for alteration and recombination. At the employee level, research shows that employees with
wider variety of knowledge, information and viewpoints are more innovative than others. (Rodan
& Galunic, 2004) and are better able to develop and conform new methods and processes into
their ongoing operations (Fichman & Kemerer, 1997).
The study focuses on employee innovation because the innovation has been strongly highlighted
as a driving force for economic and social development. Employee innovation captures the
extent to which unique and useful ideas or different solutions for different problems are applied
(Mumford, 2011). However, innovation normally includes two stages: the generation of novel
ideas and second is the implementation of these ideas (Anderson, Poto vcnik, & Zhou, 2014).
While the first stage of idea generation is more dependent on the employee or individual
knowledge, information and skills, while different employee factors also contribute to the
implementation of these novel ideas (Axtell et al., 2000). As Baer (2012) claims that these novel
ideas are positive predictors of employee innovation but the successful innovation contains more
than just novel or creative ideas. In some other words, producing suggestions does not inevitably
improve the employee innovation without the successful implementation of creative ideas.
Due to the increasing global competition and ever more the environmental instability,
employee’s ability to innovate is getting more and more vast, as one key factor that ensure their
success is innovation (Cohen and Levinthal, 1990; Leonard-Barton, 1995; Brown and
Eisenhardt, 1997; McGrath, 2001; Tsai, 2001). The main thing is that, by introducing the new
products and new technology the employees are able to diversify, acclimate and reinvent their
selves (Shoonhoven et al., 1990). While the research has accumulated a lot of different
information about the relationship between HR practices and employee innovation, that are
measured in financial terms (Dyer and Reeves, 1995; Huselid, 1995; Macduffie, 1995; Bae and
Lawler, 2000; Hutchinson et al., 2003), our information about the extent to which HRM practices
enhances the employee innovation is still relatively scarce. Innovation could be called the
intentional introduction and application within an employee of ideas, procedures, products or
processes, new to the unit of adoption, planned to meaningfully benefits the employee in a new
way (West and Farr, 1990). According to Roper and Love (2004), innovation is an endless,
evolutionary process that involves the application and re-application of current as well as new
scientific information. However, companies could find it challenging to innovate on a continued
basis (Department of Trade and Industry, 2000; Katila and Ahuja, 2002). Some scholars also
suggest that a company could achieved the innovation by ensuring that all their members or
employees of the employee are both interested and have all the necessary skills to support
change (Paton and McCalman, 2000).