Research Policy 48 (2019) 103791

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Research Policy
journal homepage: www.elsevier.com/locate/respol

Driving innovation: Public policy and human capital T

a,⁎ b c
Helena Lenihan , Helen McGuirk , Kevin R. Murphy
a
Department of Economics, Kemmy Business School, University of Limerick, Ireland
b
Department of Economics, Kemmy Business School, University of Limerick and Hincks Centre for Entrepreneurship Excellence, School of Business, Cork Institute of
Technology, Ireland
c
Department of Work and Employment Studies, Kemmy Business School, University of Limerick, Ireland

ARTICLE INFO ABSTRACT

Keywords: Human capital, the set of skills, knowledge, capabilities and attributes embodied in people, is crucial to firms’
Innovation capacity to absorb and organize knowledge and to innovate. Research on human capital has traditionally focused
Human capital on education and training. A concern with the motivationally-relevant elements of human capital such as em-
Human resource systems ployees’ job satisfaction, organizational commitment, and willingness to change in the workplace (all of which
Innovation policy
have been shown to drive innovation), has often been overlooked in economic research and by public policy
Policy program
interventions to date. The paper addresses this gap in two ways: First, by studying firms’ human resource systems
that can enhance these elements of human capital, and second, using the results of this research as a springboard
for a public policy program targeted at elements of human capital that have been ignored by traditional edu-
cation and training interventions. Using a sample of 1070 employee-managers in Ireland, we apply a series of
probit regressions to understand how different human resources systems influence the probability of employee-
managers reporting the motivationally-relevant elements of human capital. The research: (1) Finds that re-
spondents in organizations with certain human resource systems are more likely to report motivationally-re-
levant elements of human capital. Specifically, employee-managers in organizations with proactive work
practices and that consult with their employee-managers increase the predicted probability of reporting that
they are satisfied with their job, willing to change, and are committed to the organization; (2) Highlights the
need to consider the role of policy interventions to support the motivationally-relevant elements of human
capital; (3) Proposes a new policy program offer to support the motivationally-relevant elements of human
capital in order to increase firms’ innovation activity.

1. Introduction
Innovation is a well-recognized determinant of growth, and it is a
challenge for both academics and practitioners to understand why and
how firms innovate (Montalvo et al., 2006). Human capital, the set of
skills, knowledge, capabilities, and other attributes embodied in people
that can be translated into productivity (Abel and Gabe, 2011; Fulmer
and Ployhart, 2014), is crucial to firms’ capacity to absorb and organize
knowledge and to innovate (Protogerou et al., 2017; Teixeira and
Tavares-Lehmann, 2014; Subramaniam and Youndt, 2005).
Traditionally, economists have defined human capital largely in
terms of knowledge and intellectual capital. It is now widely recognized
that this focus on knowledge does not fully capture the domain of
human capital (Arvanitis and Stucki, 2012; Bell, 2009). In the last 20
years, the human capital concept has evolved significantly, and current
conceptions of human capital include a wide range of human attributes
that are relevant to job performance and productivity, ranging from
personality traits, work attitudes and values (Ployhart and Moliterno,
2011) to characteristics such as creativity, wellbeing, self-efficacy and
resilience (Grimaldi et al., 2012, 2013; Madrid et al., 2017; Newman
et al., 2014; OECD, 2007; Tan, 2014).
The expansion of the domain of human attributes that define human
capital can be usefully understood with a taxonomy highlighting the
distinction between can do and will do attributes (Ployhart and
Moliterno, 2011; see also Chiaburu and Lindsay, 2008; Gibbons and
Weingart, 2001; Zhao and Chadwick, 2014). According to this tax-
onomy, some attributes contribute to employees’ ability to execute es-
sential job tasks. Classic exemplars of can do attributes include cogni-
tive ability, general knowledge, job knowledge and problem-solving
skills. Other human attributes influence willingness to exert effort, to
contribute ideas and to assist fellow colleagues. Classic exemplars of will
do attributes include job-related personality traits, work attitudes and

⁎
Corresponding author.
E-mail addresses: helena.lenihan@ul.ie (H. Lenihan), helen.mcguirk@cit.ie (H. McGuirk), kevin.r.murphy@ul.ie (K.R. Murphy).

https://doi.org/10.1016/j.respol.2019.04.015
Received 3 October 2017; Received in revised form 23 March 2019; Accepted 5 April 2019
Available online 04 June 2019
0048-7333/ © 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/BY/4.0/).
H. Lenihan, et al.
beliefs.
This can do/will do taxonomy is highly consistent with almost a
century of research on the determinants of human performance, re-
search that recognizes both ability and motivation as independent de-
terminants of job performance; for the most recent meta-analytic re-
view of the roles of motivation and ability, see Van Iddekinge et al.
(2018). There is considerable evidence that innovation and the success
of organizations, require behaviors that go beyond the usual role re-
quirements of jobs and depend substantially on employees’ motivation
and willingness to engage in these behaviors (Chiu, 2018; McGuirk
et al., 2015; Shalley, 1995; Menold et al., 2014). In particular, em-
ployees’ attitudes regarding both their jobs and their organizations
appear to be important determinants of their willingness to engage in
the work behaviors needed to support innovation (Allen et al., 2011;
Bateman and Organ, 1983; Cetin et al., 2015; Moorman, 1993; Zhao
and Chadwick, 2014; Coad et al., 2014; Kato et al., 2015). These per-
ceptions and attitudes about jobs and organizations comprise a criti-
cally important component of human capital that can be brought to
bear in fostering innovation in organizations.
Knowledge and job-related skills represent can do attributes; tan-
gible proxies for these attributes (e.g., level of education, amount of job
training) have been the traditional focus of public policy aimed at en-
hancing human capital (Becker, 1964; Cohen and Soto, 2007; Marshall
et al., 1993; Nistor, 2007). Despite growing evidence regarding the
importance of will do human capital attributes in business, there has
been an almost complete absence of public policy initiatives to address
these aspects of human capital. This is in large part because the targets
for public policy are less obvious when attempting to build will do at-
tributes. Policy interventions addressing the will do aspects of human
capital are a prime focus of the current paper.
In this study, we aim to address the following key questions: (1)
What human resource systems, policies, and practices of firms are
linked to motivationally-relevant (will do) human capital attributes,
such as employee-managers’ job satisfaction, commitment to their or-
ganization, and willingness to change? (2) What are the implications for
public policy in terms of policy instruments that can effectively pro-
mote the development and support of these human capital attributes?
As we describe below, both of these represent distinct contributions to
the empirical and policy-oriented literatures. This is achieved by de-
monstrating the empirical links between several organizational policies
and practices and will do elements of human capital that are relevant to
innovation. We then use this information as a springboard for a public
policy program intervention designed to help organizations assess and
tailor their policies and practices in ways that can facilitate the growth
of human capital to support the firm’s innovative capacity.
We focus on employee-managers, a cohort used in several innova-
tion studies (e.g., Leiva et al. (2011) and seen as key to innovation
(Fitjar et al., 2013). We argue for the importance of creating a firm-
level culture that hones human resource systems, thus promoting in-
novation. In this context, managers are key. Following Becker’s (1964)
and Oketch’s (2006) studies of the determinants of human capital as
measured by education, we seek to examine the determinants of mo-
tivationally-relevant elements of human capital. Understanding the
factors that underpin these human capital attributes is significant for
innovation theory development and is of practical value to policy ma-
kers and firms seeking to increase innovation activity.
The remainder of this paper is organized as follows: In section 2, we
set out the theoretical context of the research. In section 3, we explain
the data and methodology. In section 4, we present the empirical results
of the regression analyses. In section 5, we discuss policy supports and
implications for policy regarding the development of the motivation-
ally-relevant elements of human capital. We propose a new policy
program offer, with the ultimate aim of driving firm-level innovation.
Section 6 concludes and explores both the implications and the lim-
itations of our research.
2
Research Policy 48 (2019) 103791
2. Theoretical context of human capital and human resource
systems
Interest is growing in measuring human capital beyond education
and training (e.g., Perdreau et al., 2015; Arvanitis and Stucki, 2012).
However, there are challenges to measuring human capital’s motiva-
tionally-relevant elements, such as work attitudes or motivation
(Coronado et al., 2008); measuring these elements is an attempt to
make visible what is invisible (Kramer, 2008). These challenges may
explain why, in economic research and public policy, researchers fre-
quently overlook these elements of human capital.
Our analysis focuses on three elements of human capital that appear
to be the most directly relevant to understanding employee-managers’
willingness and motivation to contribute to innovation in work orga-
nizations. These elements are employee-managers’ job satisfaction,
commitment to their organization, and willingness to change in the
workplace.
2.1. How motivationally-relevant elements of human capital provide a
foundation for innovation
The first element of human capital we focus on, job satisfaction, is
defined as individuals’ wellbeing or level of contentment in relation to
their job (Judge and Kammeyer-Mueller, 2012). Job satisfaction sup-
ports a number of firm-level functions, including formulation of
knowledge and problem-solving strategies (Judge and Kammeyer-
Mueller, 2012; Whitman et al., 2010). Individuals who are highly sa-
tisfied with their jobs are more likely to engage in behaviors necessary
for successful motivation, for example, they are motivated to exert extra
effort, take risks, learn new skills, and contribute unique ideas to their
organization (Bowling, 2010; Organ and Ryan, 1995; Weikamp and
Göritz, 2016). In contrast, individuals who are less satisfied by their
jobs (e.g., because they find their job stressful) are less likely to engage
in behaviors necessary for successful innovation (Eatough et al., 2011;
LePine et al., 2002).
The second element of human capital we focus on is employee-
managers’ identification with and commitment to their organization
(Mowday et al., 1981; Williams and Anderson, 1991). A wide range of
work attitudes can contribute to firms’ performance (Melesse, 2016).
Constructs such as organizational identification and commitment
are particularly relevant to understanding innovation because in-
novative behavior is often risky; these risks are more readily under-
taken by individuals who both trust and care for the success of their
organization (Dalal, 2005; George and Bettenhausen, 1990; LePine
et al., 2002; O’Reilly and Chatman, 1986; Organ, 1988; Organ and
Ryan, 1995).
Finally, the third element of human capital we focus on is will-
ingness to change. A number of studies examine the role of employees’
willingness to change (e.g., to change the level of technology, skills and
responsibility required to improve how work is done) in determining
organizational success (Pulakos et al., 2000, 2002; van den Berg and
van der Velde, 2006) and employees’ orientation toward innovation
(Montalvo et al., 2006). Willingness to change is found to influence the
adoption or rejection of innovations (Agarwal and Prasad, 1998).
2.2. Human resource systems connected to the motivationally-relevant
elements of human capital
Although organizations cannot directly control the perceptions and
attitudes of workers (Colarelli and Arvey, 2015), they can decisively
influence these perceptions and attitudes by how they interact with
their workforce. In particular, there is clear evidence (summarized
below) that well-managed human resource systems have a strong effect
on the probability of employees being satisfied, committed, and willing
to make the changes, take the risks, and exert the extra effort that in-
novation requires.
H. Lenihan, et al.
Human resource systems in organizations deal with recruiting,
hiring, training, evaluating, rewarding, and sometimes sanctioning
workers (e.g., through redundancies, disciplinary processes, and ter-
minations). These systems provide important information to employees,
ranging from orientation and organizational socialization to perfor-
mance feedback (Cascio, 2012). This information, together with other
outcomes of these human resource processes (e.g., rewards), influence
the perceptions and attitudes of employees.
A substantial body of research links the quality of human resource
systems with employee attitudes, perceptions, and beliefs. For example,
there is evidence that human resource systems that provide timely
performance feedback enhance employees’ a) success at adapting to
changing conditions and b) their willingness to adapt and change their
workplace behavior to create new products and processes (Pulakos
et al., 2000, 2002). Piening et al. (2013) note that when organizations
provide incentives to employees (e.g., training, opportunities for salary
increase and advancement), they are likely to respond with favourable
perceptions and behaviors. If implemented effectively, well-constructed
human resource programs and practices are likely to cause employees
to view themselves as operating a social exchange relationship char-
acterized by mutual trust, respect, and support (Evans and Davis, 2005;
Kehoe and Wright, 2013). In turn, this positive relationship is likely to
motivate employees to engage in a range of behaviors that encourage
and support innovation.
Human resource practices that provide information and support to
employees appear to contribute especially to the encouragement of
innovation. Cohen and Levinthal (1990) refer to the importance of
absorptive capacity, which includes the contributions made by in-
dividuals and also an organization’s capacity to exploit these con-
tributions. Such high-involvement practice is of growing interest in the
organizational performance and human resource management litera-
tures (Böckerman et al., 2012). There is evidence linking aspects of
high-quality human resource systems to specific work attitudes, in-
cluding job satisfaction (Gould-Williams, 2003), organizational com-
mitment (Allen et al., 2003; Meyer and Smith, 2000; Whitener, 2001),
and willingness to change (Pulakos et al., 2000, 2002).
However, to date, there are few relevant studies in the context
emphasized in this paper – studies that span numbers of organizations
and that examine data in a specific national context (in this paper,
Ireland). Most studies cover firms in the North American region. As a
result, the current study makes unique and valuable contributions to
the literature in two distinct ways.
First, there is abundant evidence that work attitudes and reactions
to organizational practices vary across cultures (Aycan et al., 2000;
Erez, 1997; Hofstede, 2001). We show that the proposed relationships
between organizational practices and work attitudes hold in the specific
culture for which a set of policy interventions is designed.
Second, we propose firm-level policy interventions (i.e., helping
organizations identify and implement appropriate human resource
practices). It is important to demonstrate these links between human
resource practices and work attitudes in samples that include multiple
firms. To summarize, our analysis of literature linking human resource
policies to job attitudes leads to the hypothesis:
H1. The adoption of efficient and effective human resource systems is
positively related to will do, motivationally-relevant elements of
employee-managers' human capital
With regards to a role for public policy, many organizations, espe-
cially small ones, lack the knowledge and expertise to either a) reliably
assess work attitudes or b) identify human resource practices relevant
to these attitudes and apply the most current research (Cassell et al.,
2002; de Kok and Uhlaner, 2001; Kroon et al., 2013; Matlay, 1999).
Public policy interventions can help by making the required resources,
expertise, and knowledge widely available to organizations, providing
direct support for their innovation efforts.
Based on the literature reviewed above, one would expect
3
Research Policy 48 (2019) 103791
employee-managers who show higher levels of the motivationally-re-
levant elements of human capital (e.g., job satisfaction, organizational
commitment, willingness to change) to be more likely found in firms
with human resource systems focused on developing these attributes.
Given the importance of innovation in the Irish economy (DJEI, 2017),
a strong case can be made for developing public policy interventions
designed to assist organizations in identifying, developing, and im-
plementing the types of human resource systems that support innova-
tion.
In the context of the current research, we examine human resource
systems under the headings of proactive work practices, consultation,
frequency of information delivery from management, work arrange-
ments, and alternative pay and conditions. This is discussed in more
detail in Section 3.
3. Testing the proposed relationships – data and methodology
This section discusses the source of the dataset and methodology for
testing the proposed relationships between firm factors (i.e., effective
human resource systems) and the will do, motivationally-relevant ele-
ments of human capital. The context of our empirical analysis is
Ireland. Ireland is a fitting case study: it is a small open economy
(population 4.7 m; workforce c. 2 m.) with a clear enterprise policy
commitment to boost job creation and innovation (DJEI, 2017). How-
ever, we believe a thorough understanding of motivationally- relevant
human capital attributes can apply to different country contexts, mer-
iting further research. It can apply on the understanding that innova-
tion systems can vary significantly, as Fagerberg (2016) has demon-
strated. It should also be borne in mind that human resource systems
(and associated will do human capital elements) can also vary sig-
nificantly by economy.
3.1. Source of the data employed
Ireland’s National Centre for Partnership and Performance (NCPP)
Workplace Survey 2009, (which includes employees, not self-employed
entrepreneurs) provided the information used in our analysis. The
NCPP dataset provides information on public and private organizations.
However, the current research analyses only information on private
organizations (firms).
This focus is because private firms are the main source of innovation
(Sørensen and Torfing, 2012). The dataset includes information on in-
dividual employee-managers working for private firms in Ireland in
2007–2008 (62% of NCPP observations). It includes employees’ atti-
tudes and experiences and firm-specific details. Furthermore, we ac-
knowledge NCPP (2009) data is limited in the absence of multiple re-
sponses from firms. We conducted a descriptive analysis on firm, and
employees’ characteristic, comparing the refined NCPP (2009) dataset
and the original dataset. For example, in the original dataset, 57% of
private firms employ less than 50 people (small firms); in our dataset,
53% are small firms.
3.2. Description of data used in analysis
We used 1070 observations gathered during 2007–2008. Among
employee-managers, 43.5% had third-level degrees or higher and the
average age was 41 years. As expected, the highest number of firms
(38% of observations) are in the Dublin (capital city) region. Tables 1
and 2 and Appendices A and B provide further details.
3.2.1. Dependent variables
To capture employee-managers’ will do, motivationally-relevant
human capital attributes, we used 21 separate measures under three
broad headings: job satisfaction, organizational commitment, and
willingness to change in the workplace. Table 1 presents the 21 vari-
ables as dependent variables. We measure job satisfaction (eight
H. Lenihan, et al. Research Policy 48 (2019) 103791

Table 1 Table 2
Summary of questions used for the dependent variables from National Centre Summary of variables used to estimate factors promoting the motivationally-
for Partnership and Performance Workplace Survey (2009). relevant attributes of human capital.
Agree with Description of independent variables Summary statistics
the statement
Human Resource Systems
Job Satisfaction Proactive Work Practices Cronbach’s alpha - 0.79 (8
In general, I am satisfied with my present job 94% items)a
I am satisfied with my physical working conditions 95% Frequency of receiving information Cronbach’s alpha - 0.84 (7
I am satisfied with my hours of work 86% from management items)a
I am satisfied with my earnings from my current job 74% Consultation Cronbach’s alpha - 0.78 (4
My job is secure 68% items)a
I work under a great deal of pressure (R) 70% Forms part of Pay and Conditions at Binary (Yes)
I never seem to have enough time to get everything done in my 53% work -
job (R) 1. Regular increment 44%
I often have to work extra time, over and above the formal 61% 2. Employee share options, profit sharing 28%
hours of my job to get through the job or help out (R) or gain sharing
Organisational Commitment 3. Bonus schemes 51%
I am willing to work harder than I have to in order to help this 91% 4. Merit/performance related 35%
organisation succeed pay
My values and the organisation’s values are very similar 86% 5. Non-monetary performance 16%
I am proud to be working for this organisation 93% incentives
I would turn down another job with more pay in order to stay 53% Firm’s Work Arrangement -
with this organisation 1. Is working from home in normal working hours used 34%
I feel very little loyalty to the organisation I work for (R) 88% in your workplace?
I would take almost any job to keep working for this 40% 2. Are flexible hours/flexitime used in your 49%
organisation workplace?
Willingness to accept change in workplace over next 2 3. Are job sharing/week on-week off etc., used in your 25%
years – workplace?
-increase in the responsibilities you have 87% 4. Are part-time hours used in your 61%
-increase in the pressure you work under 59% workplace?
-increase in the level of technology or computers involved in 92% 5. Are regular performance reviews or appraisals used in 70%
your work your workplace?
-being more closely supervised or managed at work 52% Control Variables
-increase in the level of skills necessary to carry out your job 93% Mean Std. Dev Min Max
-having to work unsocial hours 46% Respondent’sb Age 41.07 10.207 17 66
-increased responsibility for improving how your work is done 93% Respondent’s : b
Binary (Yes)
- Education (third level) 43%
Note: (R) indicates reverse-scored questions. Firm Size (Small - < 50 53%
In the original NCPP (2009) survey, the variables above were presented as employees)
Likert Scales. In the current study, they have all been transformed to binary Firm’s regional location (cost 38% (Dublin)
variables. The binary dependent variables take the following values: one if the of living)
employee-manager agrees with the statement (values 4 and 5 in the Likert
Source: NCPP (2009).
scale); otherwise, zero. a
Further details of these variables, including means and standard deviations,
are presented in Appendix A.
b
variables), organizational commitment (six variables), and willingness Refers to employee-managers.
to change in the workplace (seven variables). Each variable is theore-
tically linked to the respective will do elements of human capital and questions from the NCPP dataset to measure job satisfaction. In-
discussed below. tuitively, some of the measures used are positively related to job sa-
The NCPP dataset provides these 21 questions in the form of Likert tisfaction whilst others are negatively related. For example, if an em-
scale. However, the distribution of responses to items measuring sa- ployee-manager indicates they are satisfied with their earnings or are
tisfaction, commitment, and willingness to change tended to cluster in satisfied in their job, then we can expect a positive relationship with job
such a way that they create distributions that were essentially binary. satisfaction. On the other hand, if a respondent indicates that they agree
For example, in our item measuring satisfaction with hours worked, with the statements that they never seem to have enough time to
employee-managers tended to be either agree/strongly agree or dis- complete their job, work under a great deal of pressure and often work
agree with the statement of I am satisfied with my hours of work. As such, extra time, we reverse-score the responses. The reverse-scoring of these
we recoded satisfaction with hours of work in binary form, where “1″ three questions ensures that all high scores reflect higher levels of job
indicates satisfaction and ‘0″ indicates dissatisfaction. We applied this satisfaction. That is, if the respondent marked “5″ in NCPP, we marked
binary transformation to all 21 dependent variables. The binary de- it in our study as “1″, and marked “4″ to “2″.
pendent variables take the following values: one if the employee- We then applied the binary transformation, as described earlier.
manager agrees with the statement (values 4 and 5 in the Likert scale);
otherwise, zero. Our use of multiple dependent variables is similar to 3.2.3. Organizational commitment
the methodology employed by Fitjar and Rodriguez-Pose (2011). Dating back to the work of Pinder (1984) and Porter et al. (1974),
organizational commitment is considered as a strong belief in the or-
3.2.2. Job satisfaction ganization, acceptance of its goals and values, willingness to exert effort
Job satisfaction has been extensively studied and is considered a on behalf of the organization, desire to stay with the organization, and
multidimensional construct: it measures employees’ attitudes to overall contribute to the organization’s improvements, growth, and pro-
job satisfaction, physical working conditions, working hours, rewards ductivity. The current study captures such commitment using six
(earnings), job security, and attitudes to the challenges and stress questions related to employee-managers’ commitment to the organi-
caused by job activities (Abelha et al., 2018; Moon and Jung, 2018; zation; these are presented in Table 1. Similar to Jiao and Zhao (2014)
González et al., 2016; Banerjee-Batist and Reio, 2016; Hrnjic et al., and Dayan et al. (2016), we reverse-scored the only negatively phrased
2018). To capture such multidimensional attitudes, we employ eight question from the NCPP dataset. This variable is linked with

4
H. Lenihan, et al.
organizational commitment: I feel very little loyalty to the organisation I
work for. If the respondent marked “5″ in NCPP, we marked it in our
study as “1″, and marked “4″ to “2″. We then applied the binary
transformation, as described earlier.
3.2.4. Willingness to change
Employee-managers’ willingness to accept change in the workplace
has long been related to broad mindedness and openness (Mignonac,
2008); hence, as discussed in Section 2, such managers are more open
to dealing with change, and will do type attributes. Dayan et al. (2016)
employ questions about managers’ openness to trying new things and
their willingness to be flexible, pursue new opportunities, and take new
challenges. In our research, we capture willingness to change using
seven variables such as, willingness to increase; responsibility, pressure,
level of skill, technology usability, working unsocial hours.
3.3. Independent variables
Effective human resource systems are most often described in terms
of bundles of related policies and practices that help to assess, develop,
retain, reward and communicate with employees (Brewster et al., 2004;
Cascio, 2012; DeNisi and Smith, 2014; Huselid, 1995; Murphy et al.,
2018; Noe et al., 2011). In this study, we were able to measure several
aspects of effective human resource management systems described in
this literature. We employed a total of 13 variables:
• Three scaled variables: proactive work practices, frequency of in-
formation, and consultation. Each has a 0.8 Cronbach’s Alpha score of
reliability. Appendix A details each individual question related to
these independent variables; it also includes the mean and standard
deviation. Appendix B reports the factor analysis, confirming the
unidimensionalty of our scales.
•
Two classes of variables under two headings, work arrangements and
pay and conditions.
The first variable, proactive work practices, can measure the strength
of the firm’s willingness to incorporate information from external
sources, work in teams and respond to changes in the external en-
vironment (Johnson, 2001). Some of the eight items on this scale could
be taken as direct indicators of innovation (e.g., People in my organi-
sation are always searching for new ways of looking at problems; This or-
ganisation is prepared to take risks in order to be innovative; New ideas are
readily accepted in my workplace) but the scale is not solely or even
primarily oriented to innovation per se, but rather to a suite of human
resource practices that include collaboration, working in teams, scan-
ning the environment for new opportunities and responding to changes
in the environment.
The second variable, frequency of receiving information from
management (7 items), captures an organization’s communication with
employees on a range of topics – from new product development to staff
reductions. It is assumed that the workplace has a reporting structure
because the respondents are employee-managers (NCPP, 2009).
The third scaled variable, consultation, captures four items related to
consultation with employee-managers. For example, it captures con-
sultation with employee-managers before decisions are taken, com-
munication of reasons why changes occur, and whether attention is
paid to their views or opinions.
The final two classes of variables are work arrangements and pay and
conditions. Work arrangements include five binary variables capturing
the firm’s use of arrangements such as working from home, flexible
hours, and part-time job sharing. The final class of variables, pay and
conditions at work (5 binary variables), include firms’ offerings of reg-
ular increments, bonus schemes, and merit/performance-related pay.
5
Research Policy 48 (2019) 103791
3.4. Controls
Other variables that may impact on employee-managers’ motiva-
tionally-relevant human capital are controlled for in the models. We
include the following control variables:
• Firm size: Idson (1990) observed lower levels of job satisfaction in
larger establishments and suggests this can be largely explained by
the inflexibility of larger work environments.
• Employee-managers’ age: Finegold et al. (2002) found employees’ age
had a significant effect on their willingness to change and commit-
ment to the organization.
• Employee-managers’ level of formal education: Formal education is
commonly included in the human capital literature (e.g. Becker,
1964; Protogerou et al., 2017).
• The cost of living: Some authors found that the cost of living may
influence job satisfaction and was a reason for older employees to
make changes in their job (e.g., Idson, 1990; Finegold et al., 2002).
With respect to the last variable, the cost of living: due to data lim-
itations, we employ the regional location of the firm as a proxy for the
cost of living experienced by employee-managers. Given that the cost of
living in the Dublin region is the highest in the country (CSO, 2018), we
use the Dublin region as a reference point in the model. Table 2 presents
summary statistics for the independent variables including details of the
control variables.
To test the goodness-of-fit of the control variables in our models, we
conducted a Bayesian information criterion (BIC) and Akaike information
criterion (AIC) test. We found the addition of the four control variables
resulted in a marginal change to the test results.
Therefore, it is appropriate to include the four variables (Kass and
Raftery, 1995).
3.5. Estimating drivers of motivationally-relevant elements of human capital
Our estimations use a series of probit regressions1 . A total of 21
models are estimated to capture the effect of human resource systems
on a range of specific measures of these will do elements of human
capital constructs. The equation is as follows:
Motivationally-relevant elements of human capitali = α0 + α1Inti +
α2Contij + εi
Where firm i’s motivationally-relevant elements of human capitali refers
to employee-managers’ job satisfaction, commitment to their organization,
and willingness to accept change (the 21 variables described in Table 1).
The independent variable Inti refers to the firm’s human resource sys-
tems. Contij controls for the individual, firm size, and regional location.
In order to test for multicollinearity, we carried out two tests
common in the literature: inter- predictor correlation test and variance
inflation factors (VIF) (Thompson et al., 2017). The inter-predictor
correlation test found one instance of high correlation (between re-
spondent’s tenure at the organization and respondent’s age), resulting
in the tenure variable being omitted from the analysis. The data was
also subjected to variance inflation factors (VIF); the results show all
variables were less than 10, indicating multicollinearity was not an
issue (Hair et al., 1995). Based on this result and on relevant theory, we
believe our variables represent distinct constructs.
We limited potential endogeneity issues by including only pre-
determined independent variables (Naz et al., 2015). To verify that our
results were robust with respect to endogeneity, we applied the
1
The choice of a probit model over a logit model is an issue of concern to
researchers (Childers, 2011, p.51), although Childers considers it a “personal
choice”. Following her (2011) suggestion, we experimented with the two
models and found similar results.
H. Lenihan, et al.
estimator proposed and applied by Lewbel (2012). This estimator is an
increasingly used robustness test when it is possible that some variables
are endogenous (e.g. Heim et al., 2017; Liu et al., 2016 and Camagni
et al., 2016). It generates instrumental variables (IV) from hetero-
scedasity; it controls for potential endogeneity of our variables (i.e. the
human resource systems) that, in turn, allows us to cross check our
results. As sufficient instruments are not available, we estimate each
equation with the generated instrumental variable technique. Overall,
the use of Lewbel’s generated instruments allows us to conclude that the
sign and magnitude of the coefficients estimated for our firm-level
variables are retained2 . As we note in the results section (4), statistical
controls can help in minimizing endogeneity, but they do not fully re-
solve questions of causality. The interpretation of our findings in terms
of the likely causal direction of the flow from human resource policies
to will do attributes and potentially to subsequent increases in innova-
tion depends on a mix of empirical finding, past literature and logical
argument.
4. Results
Based on the theory presented in Section 2, our empirical analysis
attempts to provide evidence that links the effect of human resource
systems to the probability of supporting the will do, motivationally-re-
levant elements of human capital. The results reveal that the predicted
probability of employee-managers reporting will do elements of human
capital is higher in firms with effective human resources systems
measured by proactive work practices and consultation.3 However, in
the case of frequency of information, pay and conditions, and work
arrangements, the results are mixed and many of the variables reveal no
significant relationship to the will do elements of human capital. Taking
each of the three will do elements of human capital analyzed here (job
satisfaction, organizational commitment, and willingness to change) we
provide commentary and present detailed results in Table 3a and b.
Before moving to detailed analyses of the three will do constructs
studied here, it is useful to comment broadly on the hypothesis tested in
this study. Every measure of job satisfaction and organizational com-
mitment used in this study is related (after taking into account control
variables included in our probit analyses) to one or more measures of
proactive work practices, frequency of information sharing, consulta-
tion, pay and conditions and/or work practices. Similarly, all of the
measures of willingness to change, with the exception of willingness to
be more closely supervised are related to one or more measures of
proactive work practices, frequency of information sharing, consulta-
tion, pay and conditions and/or work practices. However, it is im-
portant to note that there is considerable variability in the relationships
between specific human resource policies and measures of satisfaction,
commitment and willingness to change. In most cases, there are some
policies that are linked with these will do constructs and others that are
not. Thus, while our general proposition that the human resource
practices studied here are related to satisfaction, commitment and
willingness to change received support, there are a number of re-
lationships detailed in Table 3a and b and described below that are
nonsignificant and some that are in the opposite direction than ex-
pected.
2
Due to limited space, full details of results are available from the authors on
request.
3
It should also be noted that a variety of analytic methods can be applied to
these data. For example, at an earlier stage of this research the dependent
variables were grouped into scales. Application of this method yielded very
similar results, but presented our findings in a form that made their concrete
interpretation more difficult, for example, by obscuring which practices affect
which will do measures. Full details of results are available from the authors on
request.
6
Research Policy 48 (2019) 103791
4.1. Job satisfaction
The positive coefficients of firms’ proactive work practices indicate
that these practices are likely to influence employee-managers’ job sa-
tisfaction. For example, we find that greater use of human resource
systems is linked to an increased probability (at the 1% level of sig-
nificance) that employee-managers are satisfied with their present job,
hours of work, level of earnings, and they are secure in their job ceteris
paribus. Furthermore, proactive work practices are associated with an
increased probability of having employee-managers who are satisfied
with their physical working conditions (at the 5% level of significance).
A greater frequency of information is negatively associated with an
increased probability of employee-managers’ job satisfaction with
working hours and job security. However, greater levels of consultation
by firms is linked to an increased probability of employee-managers
being satisfied with their present job, physical working conditions,
hours of work, earnings, indicating their job is secure and that they do
not have to work under pressure and they have enough time to com-
plete their work. All of these indicate an increase in job satisfaction.
As expected, employee-managers working in organizations offering
pay and conditions such as pay increments and bonus schemes are as-
sociated with an increased probability that they are satisfied with their
earnings. Similarly, firms offering increments show increased prob-
ability that employee-managers are satisfied with their job security at
the 1% level of significance. Our results also reveal that firms’ use of
increments (as part of pay and conditions) is associated with an in-
creased probability that employee-managers feel they do not work
under a great deal of pressure and seem to have enough time to com-
plete their work (indicating an increase in job satisfaction).
Our results also show that the use of particular human resource
systems such as working from home (part of work arrangements) is
associated with an increased probability that employee-managers are
satisfied with their earnings, but not satisfied with their job security.
We find working from home type arrangements is associated with an
increased probability of employee-managers indicating they work
under pressure, never have enough time and often work extra time.
Firms using flexitime arrangements is associated with an increased
probability that employee-managers are satisfied with their physical
working conditions and hours of work, but is linked to an increased
probability that such managers feel they do not have to work under
pressure and they have enough time to complete their work (indicating
an increase in job satisfaction). Part-time type work arrangements is
associated with an increased probability that employee-managers feel
their job is secure. In the case of firms that appraise performance, our
results find a link to a decreased probability that their employee-
managers are satisfied with their earnings, but feel secure in their job at
a 10% level of significance. However, firms that use appraisals are as-
sociated with a decreased probability that employee-managers feel they
do not work under pressure, have enough time to complete their work,
and do not have to work extra time (indicating a decrease in job sa-
tisfaction).
With respect to the control variables, small firms (less than 50
employees), are linked to a decreased probability of employee-man-
agers being satisfied with their earnings. Older employee-managers are
associated with an increased probability of indicating that they are
satisfied with their present job and hours of work. Finally, employee-
managers in organizations located in Dublin (the capital city region), a
proxy for cost of living, are linked to a decreased probability that they
have enough time to complete their work.
4.2. Organizational commitment
Organizational commitment as a measure of will do human capital
includes employee-managers’ willingness to help the organization to
succeed, to have values very similar to those of the organization, to be
proud to work for the organization, and to stay with, and be loyal to the
 Table 3
(a) Results from multiple probit regressions (Job Satisfaction). (b) Results from multiple probit regressions (Organizational commitment and Willingness to change in the workplace).
(a)
Job Satisfaction
H. Lenihan, et al.

I am satisfied with my…

present job physical working hours of work earnings My job is Work under Never have Often work extra
conditions secure pressure (R) enough time (R) time (R)
Proactive work practices 0.375*** 0.184** 0.191*** 0.174*** 0.172*** −0.068 −0.036 −0.031
(0.086) (0.074) (0.056) (0.052) (0.048) (0.048) (0.045) (0.046)
Frequency of −0.055 −0.030 −0.059* −0.038 −0.067** −0.046* −0.033 −0.012
information (0.042) (0.043) (0.032) (0.028) (0.027) (0.027) (0.025) (0.026)
Consultation 0.111*** 0.188*** 0.094*** 0.108*** 0.126*** 0.108*** 0.085*** 0.040
(0.042) (0.043) (0.034) (0.031) (0.030) (0.032) (0.029) (0.030)
Pay & Conditions
Increments 0.137 0.027 0.152 0.294*** 0.405*** 0.275*** 0.138* 0.065
(0.130) (0.141) (0.102) (0.092) (0.086) (0.085) (0.081) (0.083)
Share options −0.068 −0.145 0.071 −0.059 0.003 −0.084 0.111 −0.087
(0.161) (0.184) (0.122) (0.113) (0.105) (0.105) (0.099) (0.102)
Bonus schemes 0.315* 0.132 −0.029 0.306*** 0.131 −0.037 −0.047 −0.026
(0.176) (0.182) (0.121) (0.106) (0.100) (0.100) (0.097) (0.097)
Merit/performance 0.030 0.187 −0.108 0.156 −0.001 −0.026 −0.021 −0.068
(0.186) (0.207) (0.123) (0.110) (0.104) (0.102) (0.097) (0.099)
Non-Monetary incentives −0.172 −0.174 0.063 −0.080 0.028 0.051 −0.082 −0.030
(0.200) (0.204) (0.141) (0.127) (0.119) (0.117) (0.109) (0.115)
Work Arrangements
Home working −0.077 0.085 −0.028 0.242** −0.180* −0.229** −0.235*** −0.482***
(0.171) (0.169) (0.114) (0.103) (0.095) (0.096) (0.090) (0.093)
Flexitime 0.068 0.315* 0.182* 0.025 0.041 0.311*** 0.161* 0.117
(0.152) (0.162) (0.106) (0.096) (0.089) (0.089) (0.085) (0.087)

7
Job share 0.017 −0.087 0.106 0.101 0.002 −0.102 −0.104 −0.006
(0.166) (0.179) (0.128) (0.113) (0.103) (0.103) (0.097) (0.100)
Part-time hours 0.093 −0.159 −0.168 0.004 0.240*** 0.024 0.010 0.094
(0.143) (0.150) (0.105) (0.093) (0.087) (0.089) (0.083) (0.085)
Appraisals used 0.082 0.237 0.011 −0.180* 0.191* −0.322*** −0.261*** −0.187*
(0.156) (0.161) (0.123) (0.107) (0.103) (0.101) (0.098) (0.099)
Controls
Firm Size (small) 0.016 0.040 −0.078 0.131** −0.068 −0.024 0.067 −0.026
(0.086) (0.084) (0.058) (0.052) (0.049) (0.049) (0.047) (0.048)
Respondent's age 0.013* 0.005 0.019*** 0.006 −0.005 0.005 −0.002 −0.000
(0.007) (0.006) (0.005) (0.004) (0.004) (0.004) (0.004) (0.004)
Respondent's 3rd level −0.090 −0.115 0.069 0.026 −0.137 0.001 0.032 −0.177**
Education (0.142) (0.144) (0.106) (0.093) (0.089) (0.088) (0.084) (0.085)
Firm Location (Dublin) 0.011 0.016 −0.002 0.016 0.009 0.009 −0.056*** −0.026
(0.028) (0.029) (0.020) (0.018) (0.017) (0.016) (0.016) (0.016)
Constant 0.996*** 1.253*** 0.432 −0.159 0.355 −0.629*** 0.208 0.124
(0.355) (0.346) (0.270) (0.236) (0.222) (0.234) (0.218) (0.224)

Wald chi2(17) 54.04 60.49 56.12 96.78 94.39 63.39 42.22 61.88
Pseudo R2 0.148 0.154 0.067 0.088 0.075 0.049 0.028 0.046
Log pseudo likelihood −182.277 −185.856 −409.575 −552.548 −625.612 −628.542 −719.203 −677.385

(continued on next page)

Research Policy 48 (2019) 103791
 Table 3 (continued)

(b)
Organization- Willingness
H. Lenihan, et al.

al (Org.) to change in
commitment the
workplace

Help the org. Values are Proud to Stay with the Little Loyalty Keep working Increase Increase work Increase Closely Increase level Work Improve how
to succeed similar to Org. work for Org. Org. to the Org. (R) for Org. responsib pressure Tech/ supervised of skills unsocial work is done
ility computer hours
Proactive work 0.183*** 0.497*** 0.470*** 0.297*** 0.167*** 0.281*** 0.128** 0.129*** −0.068 0.043 0.131* 0.102** 0.081
pract. (0.065) (0.067) (0.074) (0.048) (0.063) (0.048) (0.057) (0.046) (0.062) (0.044) (0.068) (0.045) (0.066)
Frequency of 0.059* −0.021 0.013 −0.012 −0.012 −0.037 −0.039 −0.050* 0.084** −0.002 0.079** 0.013 0.067*
information (0.036) (0.035) (0.039) (0.026) (0.034) (0.026) (0.033) (0.026) (0.039) (0.025) (0.036) (0.025) (0.038)
Consultation 0.081** 0.179*** 0.136*** 0.141*** 0.199*** 0.027 0.119*** 0.133*** 0.010 0.035 −0.046 0.079*** 0.035
(0.038) (0.036) (0.041) (0.030) (0.036) (0.030) (0.035) (0.030) (0.044) (0.029) (0.041) (0.030) (0.040)
Pay & Conditions -
Increments −0.105 0.231** 0.076 0.105 −0.038 0.136 0.020 −0.083 −0.266** 0.008 −0.188 −0.036 −0.150
(0.117) (0.116) (0.146) (0.083) (0.112) (0.084) (0.105) (0.083) (0.126) (0.081) (0.127) (0.081) (0.125)
Share options 0.241 −0.138 −0.319* 0.010 −0.257** −0.044 −0.273** 0.065 0.203 −0.151 −0.118 −0.142 −0.169
(0.156) (0.134) (0.171) (0.102) (0.129) (0.102) (0.133) (0.101) (0.189) (0.098) (0.165) (0.098) (0.161)
Bonus 0.077 −0.124 −0.059 0.005 0.160 −0.036 0.370*** 0.303*** 0.356** 0.084 −0.007 −0.021 0.367**
schemes (0.143) (0.131) (0.165) (0.099) (0.132) (0.098) (0.132) (0.098) (0.157) (0.096) (0.155) (0.096) (0.162)
Merit/performance 0.147 0.019 −0.118 0.037 0.263* −0.250** 0.014 −0.107 0.469** −0.122 0.310* −0.054 −0.017
(0.155) (0.133) (0.164) (0.100) (0.144) (0.100) (0.133) (0.099) (0.194) (0.097) (0.162) (0.097) (0.172)
Non-Monetary −0.008 −0.052 0.289 −0.199* 0.049 0.228** 0.236 0.110 −0.383** −0.012 −0.058 −0.009 −0.027
incentives (0.181) (0.150) (0.217) (0.112) (0.162) (0.115) (0.167) (0.114) (0.184) (0.110) (0.178) (0.110) (0.192)
Work Arrangements -
Home working 0.225 −0.005 −0.067 0.106 0.059 −0.109 0.051 −0.031 0.103 −0.037 −0.096 0.165* 0.135

8
(0.142) (0.121) (0.146) (0.092) (0.123) (0.092) (0.120) (0.091) (0.151) (0.089) (0.140) (0.089) (0.155)
Flexitime −0.047 0.053 0.190 0.074 −0.020 0.007 0.105 0.004 0.046 0.010 0.238* 0.084 −0.120
(0.125) (0.121) (0.147) (0.087) (0.114) (0.087) (0.107) (0.086) (0.136) (0.084) (0.129) (0.084) (0.136)
Job share −0.007 −0.015 −0.219 0.011 0.008 0.009 0.083 −0.020 −0.132 −0.104 0.045 −0.034 0.384**
(0.145) (0.137) (0.157) (0.102) (0.137) (0.101) (0.131) (0.098) (0.158) (0.097) (0.157) (0.097) (0.190)
Part-time hours 0.143 −0.048 −0.048 0.100 0.225** −0.144* −0.050 −0.118 0.304** 0.008 −0.032 −0.017 0.231*
(0.120) (0.115) (0.138) (0.085) (0.113) (0.085) (0.106) (0.085) (0.129) (0.083) (0.126) (0.083) (0.126)
Appraisals used −0.061 −0.007 0.131 0.056 −0.051 0.069 −0.025 0.004 0.221 −0.053 0.046 −0.042 0.117
(0.137) (0.128) (0.148) (0.100) (0.133) (0.100) (0.122) (0.099) (0.139) (0.098) (0.140) (0.099) (0.143)
Controls
Firm Size (small) −0.014 −0.029 −0.074 −0.123** −0.058 −0.110** 0.198*** 0.127*** 0.122 −0.018 0.049 0.064 0.035
(0.065) (0.066) (0.076) (0.048) (0.061) (0.048) (0.062) (0.048) (0.075) (0.046) (0.079) (0.046) (0.073)
Respondent's age −0.003 0.019*** 0.011* 0.008* 0.011** −0.003 −0.02*** −0.009** −0.015** −0.015*** −0.021*** 0.007* −0.012*
(0.006) (0.006) (0.006) (0.004) (0.005) (0.004) (0.005) (0.004) (0.006) (0.004) (0.006) (0.004) (0.007)
Respondent's 3rd level 0.026 −0.427*** −0.081 −0.295*** −0.099 −0.364*** 0.020 −0.084 0.083 −0.162* 0.038 −0.087 0.143
education (0.121) (0.111) (0.134) (0.086) (0.114) (0.087) (0.112) (0.085) (0.128) (0.083) (0.128) (0.084) (0.134)
Firm Location 0.023 −0.024 −0.012 −0.019 −0.018 −0.030* 0.000 0.002 0.036 0.026* 0.045* 0.006 0.056**
(Dublin) (0.022) (0.021) (0.026) (0.016) (0.020) (0.016) (0.020) (0.016) (0.024) (0.016) (0.026) (0.016) (0.025)
Constant 1.320*** 0.876*** 1.548*** −0.023 0.892*** 0.423* 1.481*** 0.391* 1.312*** 0.781*** 2.132*** −0.467** 1.462***
(0.295) (0.296) (0.345) (0.226) (0.304) (0.223) (0.281) (0.223) (0.331) (0.222) (0.362) (0.218) (0.357)

Wald chi2(17) 57.33 144.16 84.42 127.41 85.41 86.43 74.27 71.73 72.57 34.60 39.47 39.19 51.13
Pseudo R2 0.090 0.210 0.205 0.096 0.116 0.066 0.101 0.052 0.143 0.025 0.086 0.027 0.097
Log pseudo likelihood −285.467 −344.152 −216.061 −669.049 −332.289 −673.250 −370.094 −685.151 −241.616 −722.702 −238.829 −719.719 −235.921

Note: (R) indicates reverse-scored questions.

***, ** and * indicate significance at the 99%, 95% and 90% significance level respectively.
Research Policy 48 (2019) 103791
H. Lenihan, et al.
organization.
In our analysis, greater use of proactive work practices is associated
with an increased probability that employee-managers are committed
to the organization; all measures of organizational commitment are
positively related with the use of proactive work practices. However,
greater frequency of receiving information from management is not
linked to most measures of organizational commitment, with the pos-
sible exception of a willingness to help the organization succeed (sig-
nificant at the 10% level). On the other hand, there are strong and
positively significant links between levels of consultation and organi-
zational commitment. In particular, a greater level of consultation is
associated with an increased predicted probability (at the 1% level of
significance) of the following: employee-managers help the organiza-
tion succeed; their values are very similar to the values demonstrated
by the organization; they are proud to work for the organization; they
will stay with the organization and they are loyal.
Our results also show organizations’ use of share options to be as-
sociated with a decreased probability that employee-managers are
proud to work for the organization and are loyal. However, our results
reveal that, if a firm offers merit/performance related pay, this is linked
to an increased probability of employee-managers indicating their
loyalty to the organization; but a decreased probability that they re-
main working for the organization. We find that the use of non-mone-
tary incentives has mixed effects, increased commitment to staying with
the organization but decreased interest in working for this organization.
With respect to an organization’s work arrangements, providing part-
time hours also has mixed effects, and is associated with an increased
probability of employee-managers loyalty (at the 5% level of sig-
nificance) but a decreased probability of their commitment to continue
working for the organization (at the 10% level of significance).
For the control variables, employee-managers working in small
firms (less than 50 employees) are associated with a decreased prob-
ability of turning down another job with more pay in order to stay with
the organization. Similarly, in small firms, employee-managers are
linked to an increased probability of taking almost any job in the or-
ganization to keep working there (at the 5% level of significance). Older
employee-managers are associated with an increased probability of
having values similar to their organization, to be proud to work for
their organization, to stay with the organization, and indicate loyalty to
the organization. Employee-managers having a third level education is
associated with a decreased probability of their commitment to the
organization. Firms located in the Dublin region are linked to a de-
creased probability of employee-managers taking almost any job to
keep working for the organization (at the 10% level of significance).
4.3. Willingness to accept change
The third and final element of will do motivationally relevant human
capital captured by this research reveals that organizations providing
greater proactive work practices are associated with an increased
probability that employee-managers are willing to accept change in the
workplace. Such change comes in the form of increased responsibility
(at the 5% level of significance), work pressure (at the 1% level of
significance), level of required skills (at the 10% level), and a will-
ingness to work unsocial hours (i.e., to change their work hours from
‘normal’ working hours (at the 5% level)).
In cases where firms provide greater frequency of information to
employee-managers, this is associated with a decreased probability that
such managers are willing to increase the pressure they work under (at
the 10% level of significance). However, such firms are associated with
an increased probability of their employee-managers willingness to use
technology, to increase their level of skills, and to improve how their
work is done (at the 10% level of significance). Furthermore, a greater
level of consultation is linked to an increased probability that em-
ployee-managers are willing to increase their level of responsibility at
work, to increase their work pressure, and to work unsocial hours (all at
9
Research Policy 48 (2019) 103791
the 1% level of significance).
In the case of pay and conditions, firms offering increments is as-
sociated with a decreased probability that employee-managers are
willing to increase their use of technology in the workplace. Firms of-
fering share options is associated with a decreased probability that
employee-managers are willing to increase responsibility in the work-
place (at the 5% level of significance). Our results also show that firms
offering bonus schemes is linked to an increased probability that em-
ployee-managers are willing to increase their levels of responsibility,
increase the work pressure, increase the use of technology, and improve
how work is done.
Firms that offer merit/performance-based pay and conditions show
an increased probability that employee-managers are willing to in-
crease technology and the level of skills required to carry out their
work. If a firm offers non-monetary incentives as part of pay and con-
ditions, then this is linked to a decreased probability that employee-
managers are willing to increase the use of technology in the workplace
(at the 5% level of significance). We find that ‘working from home’ type
arrangements are associated with an increased probability that em-
ployee-managers are willing to work unsocial hours (at the 10% level of
significance).
Similarly, firms offering flexitime work arrangements is associated
with an increased probability that employee-managers are willing to
increase their level of skills required in the workplace, at the 10% level
of significance. This is also the case when firms offer job share ar-
rangements. In firms that offer these arrangements, this is associated
with an increased probability that employee-managers are willing to
improve how their work is done. Also, in the case of firms offering part-
time hours, employee-managers are more willing to increase the level of
technology in the workplace (at the 5% level of significance). Firms that
offer part-time hours are associated with an increased probability of
their employee-managers’ willingness to increase the use of technology
in the workplace and improve how work is done.
For the control variables, there is an increased probability, at the
1% level of significance, that small firms have employee-managers who
are willing to increase their responsibility and the pressure they work
under. Similar to the other elements of motivationally-relevant human
capital, age and education are linked to an increased willingness to
change. We find that, if a firm increases the number of older employee-
managers in the workplace, then there is a decrease in the probability of
increased levels of responsibility and levels of work pressure. There is
also a decrease in the probability of the use of technology, levels of
supervision, and levels of required skills. In addition, there is a de-
creased probability that older employee-managers will improve how
work is done (at the 10% level of significance). Employee-managers
having a third level education decreases the probability of their will-
ingness to be closely supervised or managed at work, (at the 10% level
of significance). Finally, the location of the firm, a proxy for cost of
living, is associated with employee-managers’ willingness to change.
Firms located in Dublin are associated with an increased probability
that employee-managers are willing to increase how closely they are
supervised, their level of skills, and improve how work is done.
However, this location decreases the probability of employees-man-
agers willing to work unsocial hours.
4.4. Summary of empirical findings
Our results find that firms providing human resource systems, such
as greater use of proactive work practices and greater levels of con-
sultation with employee-managers are associated with an increased
probability of job satisfaction, organizational commitment, and will-
ingness to change of such managers. Our results also find that bonus
schemes (as part of pay and conditions) are linked to an increased
probability of motivationally-relevant human capital, as measured by
job satisfaction and willingness to change. It should however, be ac-
knowledged that some of the human resource systems variables reveal
H. Lenihan, et al.
mixed results. For example, we find frequency of information, job share
and flexitime (part of work arrangements) to have no significant re-
lationship to the majority of the will do elements of human capital. In
some cases human resource systems variables (e.g. the receipt of share
option as part of pay and conditions) even have a negative impact.
The general proposition that more effective human resource prac-
tices are likely to lead to more positive work attitudes is well estab-
lished in the literature, but the results presented here are nevertheless
highly informative. One of the dominant themes in the last 10 years of
research on human resource management is the importance of con-
textualization (Cheng, 1994; Cooke, 2018; Jackson and Schuler, 1995;
Johns, 2017, 2018; Larsen and Brewster, 2000; Ployhart et al., 2006;
Tsui, 2006; Von Glinow et al., 2002). Contextualization is particularly
important in research on human resource management systems because
of persistent differences in the way these systems are developed and
used across nations and regions of the world (Lazarova et al., 2008).
General knowledge about principles of human resource management is
always valuable, but this search for generalizable knowledge can
sometimes lead to a fruitless search for universal best practices. It is
very possible that the human resource practices that are most effective
for supporting will do elements of human capital in the particular
context studied here (companies operating in Ireland) will be different
in other contexts. Thus, there is considerable value in teasing out the
specific mixes of human resource policies that might be most useful in
specific settings.
Our results suggest that some of the human resource practices stu-
died here are related to satisfaction, commitment and willingness to
change and others are not. In particular, proactive work practices, in-
formation sharing and consultation have wide-ranging effects. Policies
aimed at increasing rewards sometimes have beneficial effects on sa-
tisfaction, but in some instances can lead to decreased commitment.
Similarly, policies that are often put forward as employee benefits (e.g.,
offering opportunities for flexitime and working from home) can
sometimes lead to perceptions of job insecurity and increased feelings
of pressure.
It will be important in future analyses to determine whether the
relationships shown in Table 3a and b hold up in replications. It is likely
that future studies will provide guidance for narrowing the list of
human resource policies that are consistently linked with the job atti-
tudes studied here. Our detailed empirical analysis of the variables that
support motivationally-relevant elements of human capital highlights
the importance of human resource systems (detailed in Sections 2 and
3). In this regard, our policy recommendations are based on an as-
sumption that organizational policies have a causal impact on the
motivationally-relevant elements of human capital. Yet, it is often
prohibitively difficult to demonstrate causality on the basis of the type
of survey data analyzed here (Cook and Campbell, 1979). This is in
large part because these data often fail to satisfy the requirement that
proposed causes must be assessed prior to supposed effects. Wunsch
et al. (2010) and Cox (1992) argue that knowledge of the content area
allows one to make inferences based on the plausibility of causal ar-
guments in various directions. The assumption that organizational
practices are the cause of rather than the effect of employee attitudes
and perceptions is widely supported in research in human resource
management (Cascio, 2012; Murphy et al., 2018). Thus, we justify the
assumption that the causal direction flows from workplace policies to
work attitudes, rather than from attitudes to work policies (e.g., that
increases in job satisfaction cause organizations to adopt work policies
such as increased information sharing) on the basis of both logic and
existing theory. That is, our results are consistent with our interpreta-
tion that the human resource systems of the organization are likely to
influence workplace attitudes and beliefs.
Finally, one more potential confound in the causal interpretation of
our results should be noted. As noted earlier in this section, several
items on the proactive work practices scale refer to activities that could
be thought of as innovation per se (e.g., People in my organisation are
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Research Policy 48 (2019) 103791
always searching for new ways of looking at problems) whereas others
refer to personnel practices that are not directly linked to innovation
(e.g., My employer encourages employees to work in teams in order to im-
prove performance). The factor-analytic results shown in Appendix B
give us reason for confidence in interpreting this scale in terms of a
suite of related human resource practices rather than in terms of a mix
of innovation and proactive human resource management, but never-
theless, the presence of innovation items in this scale should be con-
sidered when drawing causal inferences.
Given this background, the following discussion of the policy im-
plications focuses on the role of policy in influencing firm-level factors
to support motivationally-relevant elements of human capital. This is
on the understanding that the policy’s overall objective is to drive firm-
level innovation. In particular, the empirical findings linking organi-
zational policies and practices with will do elements of human capital
(known drivers of innovation) provides a basis and justification for
proposing public policy interventions to assist organizations build ca-
pacity to diagnose their own policies and practices and to implement
policies and practices that provide the strongest support for innovation.
5. Can policy support the development of the will do,
motivationally-relevant elements of human capital?
The results presented in this study provide general support for the
hypothesis that human resource policies and practices of an organiza-
tion are likely to influence motivationally-relevant elements of human
capital, elements that are critical to driving firm-level innovation. In
particular, they provide information in an Irish context that proactive
work practices and consultation, have clear potential for supporting
important will do aspects of human capital.
In discussing policy implications, and based on our earlier findings
that some of the human resources systems variables analysed, support
motivationally-relevant human capital, our aim in this section is to
provoke conversation and debate among the academic and policy
making communities alike regarding the factors that support these
elements of human capital. In moving from empirical analysis to ave-
nues of exploration for policy makers, we wish to highlight that de-
velopments in policy, prescriptions, and implications need to be based
on sound empirical analyses. In this section, we explore policy’s po-
tential role with respect to the promotion and development of the will
do, motivationally-relevant elements of human capital with a particular
focus on Ireland.
In the context of innovation policy, Bell (2009, p.37) suggests that
“hardly any attention is given to measures for fostering the creation of
non-R&D innovation capabilities in and by industrial firms”. Montresor
and Vezzani (2016) describe investing in intangibles for innovation as
an example of change in policy focus. It should be acknowledged from
the outset that, when making policy suggestions, we do not assume the
“…unproblematic and straightforward translation of these into the
formulation of innovation policies” (Flanagan et al., 2011, p.704).
Nevertheless, there is clear potential for public policy to make a
meaningful contribution to the development of innovation in organi-
zations and to the conditions that support innovation. It is important to
note that the cost of public funds is high and that any public policy
intervention that involves the allocation of scarce resources to private
firms needs to demonstrate that its (potential) social value outweighs its
opportunity costs (Leibowicz, 2018; Lenihan, 2011). The policy inter-
vention described below provides organizations with assistance in kick-
starting their own processes for building aspects of human capital that
have traditionally been ignored, taking advantage of the public sector’s
unique ability to offer organizations assistance and expertise in ana-
lysing and improving their own policies and practices, with an aim
toward building aspects of human capital needed to support innovation.
Turning to the specific case of Ireland, a review of Irish innovation
policy documents shows that there was a complete absence of any re-
ference to the will do elements of human capital before 2008. For
H. Lenihan, et al.
example, the 2004 report from the Irish Enterprise Strategy Group re-
fers solely to can do type attributes in the form of education and
training (e.g., p. 26 of the report). Similarly, the Irish government’s
Strategy for Science, Technology and Innovation (DETE, 2006) only
highlights the importance of the can do type attributes of human capital
where it outlines the need to “develop coherent programmes for placing
S&E graduates…The Teaching Company Scheme…assists interaction
between firms and higher education institutes, based on the placement
of recent graduates in firms to develop innovation processes” (p. 42).
A 2008 policy document Building Ireland’s Smart Economy is still very
much concerned with the can do attributes of human capital. However,
it begins to shift its thinking somewhat in the direction of acknowl-
edging the will do attributes of human capital. The document refers to
"building the innovation or ‘ideas’ component of the economy through
the utilisation of human capital-the knowledge, skills and creativity of
people-and its ability and effectiveness in translating ideas into valu-
able processes, products and services" (Department of the Taoiseach,
2008, p.7).
In a Forfás (2009) report Skills in Creativity, Design and Innovation,
there is also this marginal shift. The report refers to “The com-
plementary skills needed by people with specialist skills to enable them
to be creative and to perform effectively as innovators” (p.3) and also
makes reference to “…measures required to develop skills required for
innovation in the workplace” (p.3). This theme continues in subsequent
reports, for example, a 2010 policy report of the Irish Innovation
Taskforce refers to “…engendering cultures and attitudes which are
supportive to innovation…” (p. 24) and also makes reference to “…
creative minds into the centre of innovative businesses” (p.77).
The 2015 Innovation 2020 report from the Irish government places a
clear upfront emphasis on education as highlighted by the following
quotation “We will support the full continuum of talent development
from primary through to Postdoctoral research…” (p.7). However, it is
not until page 35 that the document engages in a discussion of soft
skills, what we term in the current paper will do elements of human
capital; it outlines a “focus on complementary skills, such as critical
thinking, creativity, entrepreneurship and these will be essential to
Ireland’s continued success” (p. 35). The Department of Business, En-
terprise and Innovation (DBEI, 2018, p. x) has recently re-emphasised
this point, noting that investments by the Irish government to “upskill
and reskill” employees in the workplace should focus on “delivering the
skills, competences and abilities for the 21st Century where colla-
boration, problem solving and creativity is prized”. However, neither of
these policy reports refer to how such complementary skills will be
achieved, for example, through policy interventions.
To summarize the Irish case based on a thorough review of policy
documents, one could reasonably conclude that a prime focus on the
can do elements of human capital as a driver of firm-level innovation
still prevails. However, there is a small though increasing acknowl-
edgement in policy documents of the importance of developing will do
elements of human capital in workers. What is also evident in the Irish
case is that there is a clear absence of discussion on how policy in-
itiatives or instruments might be employed by policy makers to pro-
mote or support the development of such will do human capital attri-
butes. There is this absence despite the rhetoric of an increasing policy
focus with respect to the will do elements of human capital.
5.1. Justification of public policy support for innovation
Promotion of innovation is regarded as a driver of economic growth
(Dolfsma and Seo, 2013) and competitive advantage at the national,
industry, and firm level. What is good for innovation tends to be good
for growth, thus justifying public policy intervention in the presence of
market failures.
Over time, policy focus has shifted from market failure (grounded in
neo-classical theory) to systemic failure (grounded in evolutionary/
systemic approaches). As a result, the rationale for intervention has
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Research Policy 48 (2019) 103791
changed (e.g., Laranja et al., 2008; Gustafsson and Autio, 2011).
Approaches like Systems Innovation (SI) and National Systems of
Innovation (NSI) involve complex, non-linear information exchange
mechanisms that determine the success of innovation (Woolthuis et al.,
2005; Edquist and Hommen, 2006). Woolthuis et al. (2005) argue that,
in the case of SI, systems failures justify government intervention. These
failures include infrastructural, institutional, and capabilities failures
(the latter being particularly relevant to the will do attributes of human
capital); actors include demand entities, firms, knowledge institutes,
and third parties.
Warwick (2013) explains systems failures as arising from interac-
tions between institutions in firms’ learning and operating environ-
ments. Institutional failure relates to problems with formal written laws
governing institutions; soft institutional failure (most relevant to the
will do elements of human capital) relates to problems inherent in firms’
culture and values.
However, as outlined by Haapanen et al. (2014), government fail-
ures can undermine policy instruments aimed at overcoming market/
systemic failures. The authors argue that sufficient rationale for policy
intervention should exist at all times (taking account not only of
market/systemic failures but also government failures).
Public policy is frequently operationalized through the use of policy
instruments. According to Smits and Kuhlmann (2004), policy instru-
ments are increasingly systemic.
This development is natural, given the move away from overcoming
market failures towards overcoming systemic failures. We employ the
term ‘policy instrument’ to mean “techniques of governance, which…
involve the utilization of state resources, or their conscious limitation,
in order to achieve policy goals” (Howlett and Rayner, 2007, p.2).
5.2. Justifying public support for the will do elements of human capital
To ensure effective policy support for the will do elements of human
capital, it is necessary to examine the sources of problems that policy
proposes to address. According to the European Entrepreneurial Region
report (EU, 2015), policy and innovation initiatives should aim to en-
hance human capital. In relation to human resource systems (such as
work arrangements/practices) that support the will do elements of
human capital’s contribution to innovation, our findings indicate po-
tential firm-level systems failure.
We reframe Woolthuis et al.’s (2005) framework to include firm-
level systems failure. Soft institutional and capabilities failures best
explain the combined failures of actors (e.g., knowledge institutions,
firms and employees) and rules/system (e.g., organizational culture,
laws and values). Such firm-level systems failures highlight a potential
role for public policy supporting the will do elements of human capital
(again, with the ultimate aim of driving firm-level innovation and al-
ways bearing in mind that there is an opportunity cost when using
public funds). Public policy can address systems failures in two ways:
strengthen/preserve existing systems or create new systems (Carlsson
and Jacobsson, 1997). Based on the above framework, we assert the
need for policy support for the will do elements of human capital to
target both the firm and the individual. It should promote culture
change across the workforce and in firms that do not provide human
resource systems outlined in Sections 2 and 3. According to the systems
failure approach, policy support will enhance opportunities and cap-
abilities for innovation (Metcalfe, 2005). This thinking ties in well with
a classic contribution to the literature on science, technology and in-
novation policy whereby, Lundvall and Borras (2005) advocate for a
mode of policy intervention to support firm-level innovation which
“takes into account that competence is unequally distributed among
firms” (p. 611), thus justifying a role for policy intervention.
As highlighted earlier, a focus on the will do elements of human
capital in Ireland, although increasing somewhat of late, has not been a
consistent or indeed prime policy focus of innovation policy in Ireland.
A review of policy and related documents in a number of developed
H. Lenihan, et al.
economies (e.g. Australia, Sweden, UK, Singapore, New Zealand,
Denmark - de Rassenfosse et al. (2011); OECD (2015, 2017, 2018);
European Commission (2017,2018a,2018b); BIS (2011,2016);
Australian Government (2015,2017); NPCEC (2012); New Zealand
Government (2012, 2018); Christensen (2014), Alex and Petrina
(2017); Costa et al. (2018) suggest that Singapore and the UK place
greater weight on the will do elements of human capital (with the ul-
timate aim of driving firm-level innovation) than other developed
countries (BIS, 2011, 2016).
Interestingly, Singapore promotes productivity and an innovative
mindset while the UK aims to develop complementary non-technical
innovations, including intangible human capital assets (Singapore
Government, 2014; BIS, 2011). The case of Singapore is of particular
interest from a will do human capital perspective because, even as far
back as 2003, policy documents in Singapore highlighted the need for
employees to have a mix of hard (can do) and soft skills (will do) coupled
with a clear focus on having underlying supportive human resource
systems and practices (e.g., the Economic Review Committee (MTI,
2003)). The MTI report makes reference to setting up a “HR Centre of
Excellence within the Singapore Business Federation to drive excellence
in HR practices in the private sector” (p. 166). The report also makes
explicit reference to the enhancement of human capital management:
“We need our organisations to consciously enable workers to be at their
best, and at the same time, build and expand their capabilities to be-
come more productive, more resilient, able to tap their creativity and
initiative, and bring forth new innovation” (p. 174).
Recent reports such as those on the future of the Singaporean
economy (MTI, 2017) also emphasize that workers need to develop
deep skills to stay relevant and that firms must be able to organize
people and ideas to create value. Specifically, referring to human re-
source systems and practices, the 2017 report refers to getting com-
panies “to take a bigger role in developing workers. The Government
should help build up companies’ leadership and human resource (HR)
management capabilities so that more companies will recognise the
importance and have the knowhow to develop their employees” (p. 24).
It also refers to encouraging and enabling firms to hire and advance
workers based on skills and competencies beyond academic grades or
qualifications.
Finally, the Singaporean 2017 report highlights the greater em-
phasis that will be placed on soft skills beyond those of a technical
variety, specifically making reference to the fact that “employers will
look increasingly to essential generic skills, such as social and colla-
borative skills” (p. 102). In particular, despite Singapore placing a
continued emphasis on the will do elements of human capital in policy
documents over many years, to our knowledge no specific policy in-
strument focuses on promoting or supporting the development of the
will do elements of human capital as a driver of firm-level innovation in
Singapore.
5.3. The unique role of public policy in supporting will do elements of
human capital
The previous sections made a general case that public policy has a
role in supporting innovation and that this support can and should go
beyond simply supporting can do elements of innovation-related human
capital, through education, training and the like. Showing that public
policy can support these aspects of innovation does not, however, al-
ways mean that public policy is the optimal or even an appropriate
vehicle for accomplishing this task. Public policy intervention should
take place whenever a lack of mechanisms impede organizations
themselves to develop these human resource practices for innovation.
As discussed earlier, policy intervention is justified where it can be
anticipated a-priori that there would be a sub-optimal level of positive
social benefit (in this case will do human capital that promotes in-
novation) in the absence of such intervention, whilst also being cog-
nizant of the costs associated with such intervention (Leibowicz, 2018).
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Research Policy 48 (2019) 103791
There are reasons to argue, however, that public policy not only plays a
role in this task (i.e. promoting the will do elements of human capital),
but that it plays a unique role, offering organizations resources they
would be unlikely to be able to bring to bear on their own. We would
argue that at the very least the initial push for organizations to get
involved in new ways of promoting the will do elements of human ca-
pital may need to come from government. Organizations can tend to be
slow to get involved in what they perceive as new, risky activities
where private returns on investment are not immediately obvious to
them4 . At all times the arguments we put forward here are against a
backdrop that public policy interventions should occur where there is
clear a-priori evidence that likely benefits of intervention will outweigh
the likely social costs (from both direct and opportunity cost perspec-
tives). As noted in Section 5.4 that follows, our proposal is that orga-
nizations themselves would bear 50 per cent of the costs associated with
the policy program intervention.
The public policy program described below is focussed on short
consultation with organizations to help them do things they are not well
situated to do on their own, particularly to make top-level and unbiased
expertise available to organizations to help them diagnose and solve
their own shortcomings with regard to developing human resource
strategies that will enhance the will do elements that are fundamental to
innovation. The intervention we propose is directed toward helping
organizations make the best use of available research and theory to
assess and improve their human resource policies, with a focus on
creating conditions favourable to the development of the will do ele-
ments of human capital described in this study (with the ultimate aim of
driving firm-level innovation). One of the challenges organizations face,
particularly small and medium-sized organizations, is that they are
unlikely to have the in-house expertise to adequately diagnose their
human resource policies and bring the most current research to bear in
helping to structure these policies to optimally enhance innovation
(Hewitt-Dundas, 2006; Madrid-Guijarro et al., 2009). As a result, many
organizations turn to consulting firms that may have the requisite ex-
pertise, but that also have a vested interest in promoting and selling the
particular products and services their firm offers (Block, 2013;
Pritchett, 2002). What public policy can do is to offer an honest broker
– i.e., a source of expertise and information that is not biased by a need
to promote particular products or approaches and that can assist or-
ganizations in making the best choices, informed by the best and most
current research. This is a unique service that is unlikely to be dupli-
cated in the private sector and that takes advantage of the public nature
of policy to offer solutions that are tailored to the needs of the orga-
nization, not to the needs of the consultants who hope to promote their
particular programs or products. Overtime and once organizations
begin to see the benefits that derive from a focus on the will do elements
of human capital to drive innovation and once such uncertainty is re-
duced, they themselves will in all likelihood start to invest directly (and
without government stimulus) thus removing the need for such a public
policy intervention. Indeed, as organizations themselves witness the
actual or potential benefits of creating conditions favourable to the
development of the will do elements of human capital, we anticipate a
likely transition from public to private efforts would work. We view the
public policy interventions we have outlined as a way of helping or-
ganizations to put themselves on a path that will most effectively en-
courage the will do elements of human capital and in turn innovation.
However, as we argue below, in the short term at least, a policy scheme
(such as we detail below) is likely to be necessary to encourage firms to
actively promote what they may initially regard as new and somewhat
risky elements of human capital (when compared to investing in tried
4
Czarnitzki and Toole (2007,2011) make a related point when they discuss
the effects of patents and subsidies on reducing uncertainty for firms so that
they increase R&D investment with a higher social return relative to private
return.
H. Lenihan, et al.
and tested traditional human capital elements such as those of educa-
tion and training). Organizations have been very successful in adapting
to the need to develop can do facets of human capital, ranging from
training in specific job tasks to education schemes designed to enhance
general knowledge and skills. There is every reason to believe that
organizations will follow a similar trajectory in developing will do as-
pects of human capital.
5.4. InnovativePeople4Growth
This section suggests a proposal for a new policy program offer to
develop/support the will do elements of human capital within firms. To
our knowledge, the offer is novel.5 Policy has a role to play in terms of
helping firms to identify and improve the capacity they already have.
Given the relative newness of a focus by firms on the will do elements of
human capital as a driver of firm-level innovation, there is a role for
government in terms of minimizing the risks and uncertainty (perceived
or real) to individual organizations. Whereas personality traits of in-
dividuals are largely unchangeable, many of the will do elements of
human capital along with the human resource systems to support such
human capital elements as specified in the current research can be
supported by policy interventions.
This research, like Lenihan (2004), does not recommend a complete
reconstruction of current innovation support instruments. Instead, it
suggests the need to:
• Recognize the will do elements of human capital as a competitive
resource, and the significance of firms’ human resource systems in
developing such will do elements of human capital.
• Explore the development of a will do human capital-centered pilot
program offer targeting individuals, and firms’ human resource
systems, to help firms encourage an innovative mindset among
employees. Firms should focus on creating a culture that fosters
employees’ job satisfaction, organizational commitment, and will-
ingness to change where innovation is everyone’s concern.
In a similar vein to discussions by Flanagan et al. (2011) about
‘policy entrepreneurship’ and ‘windows of opportunity’ for policy, we
argue that the instrument proposed here goes quite some way towards
answering the call in recent literature for systemic innovation policy
instruments (e.g. calls by Wieczorek and Hekkert (2012) and OECD
(2015)). It could reasonably be argued that the current paper represents
the first step on the road of policy entrepreneurship regarding the in-
troduction of a systemic policy instrument focused on the will do ele-
ments of human capital.
A pilot program offer6 would benefit policy makers. Innovation is by
its nature experimental; so too should policy interventions that support
it. Support for the will do elements of human capital may emerge di-
rectly through targeted policy interventions or indirectly through other
interventions.
Our proposed pilot offer, which we title InnovativePeople4Growth, is
based on our findings that the will do elements of human capital are
supported by certain firm factors.
InnovativePeople4Growth (detailed in Table 4) syncs with current
Irish policy promoting competitiveness, innovation, and improved
productivity in pursuit of economic growth (DJEI, 2017). We argue that
effective support necessitates an offer of complementary programs. A
5 to enhancing innovation-relevant human capital. First, it is focussed on
This conclusion results from a comprehensive review of international aca-
demic and policy making literature, which uncovered no similar offers.
6
Conducting a pilot program is common practice. ‘Innovation Vouchers’ were
piloted in the Netherlands in 2004 before a full roll out in 2006 (Cornet et al.,
2006). An example of this in the Irish case is the ‘Business Partners Pilot’-in-
troduced in 2009 on a small pilot basis resulting in a full roll out subsequently
on a much larger scale.
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Research Policy 48 (2019) 103791
good example is Enterprise Ireland’s Lean Business Offer (comprising
LeanStart, LeanPlus, and LeanTransform); it aims to increase perfor-
mance and competitiveness at individual-level and firm-level
(Enterprise Ireland, 2018a,b).
InnovativePeople4Growth has similarities to the Lean Business Offer.
It mirrors Lean Business Offer with respect to financial commitment by
firms and government, as well as level of involvement, participants, and
time allocation. It should also be noted that Lean Business Offer re-
cently received a positive program evaluation (DJEI, 2015) for its ef-
ficient and effective design; adopting it as a template in designing In-
novativePeople4Growth could save time and finances.
InnovativePeople4Growth incentivizes firms to promote the will do
elements of human capital as a competitive resource. The suite of in-
struments, taking a firm-level systems failure approach, increases in-
novation by improving employees’ opportunities, capabilities, and ef-
ficiencies. The offer is detailed as follows:
1 InnovativePeople4Growth Start involves a one-day consultation with a
facilitator appointed by a public agency (e.g., Enterprise Ireland) to
benchmark the firm’s focus on the will do elements of human capital.
2 InnovativePeople4Growth Lean Start Plus assists firms in under-
standing Lean tools and techniques as well as the value of the em-
ployees’ attitudes and perceptions with respect to innovation ac-
tivities.
3 InnovativePeople4Growth Change helps create conditions that develop
the will do elements of human capital, resulting in lasting support for
human capital.
4 InnovativePeople4Growth Review monitors developments and outlines
plans for continued promotion of the will do elements of human
capital.
Ideally, firms undertake all four InnovativePeople4Growth programs
to ensure maximum benefit. In addition, the programs are not restricted
to any particular firm size, sector, or ownership type (this can be
evaluated post program evaluations).
Developing the will do elements of human capital potentially im-
pacts the general workforce, thus strengthening system-wide cap-
abilities. Movement of people between employers, and other mechan-
isms such as spin-off dynamics and collaborative networks, helps
develop a national innovation mindset.
Like any new policy intervention, InnovativePeople4Growth requires
ex-ante, interim, and ex-post evaluation to ensure value for money/ac-
countability and support future improvements (Lenihan, 2011). Key
evaluation criteria need to be met, including cost-effectiveness, dis-
tributional equity, and political feasibility.
Most programs offered by Irish development agencies require fi-
nancial commitment by firms. With the Lean Business Offer, firms
generally supply 50% of overall program cost; the Irish government
agency pays the balance. We propose a similar approach for
InnovativePeople4Growth.
There is a role for government in putting the will do elements of
human capital on the agenda, in stimulating the activities of firms, and
in helping to coordinate those activities. There is also a potential role
for government to provide firms with access to the knowledge, re-
sources, and expertise needed to develop, implement, and monitor the
human resource systems that provide a basis for the will do elements of
human capital.
In sum, our proposed public policy program intervention has two
key features that distinguish it from several other potential approaches
an aspect of human capital that has been almost completely ignored by
public policy to date (Singapore and a lesser extent the UK being partial
exceptions) – the will do elements of human capital. We present ana-
lyses that will help organizations and policy makers focus their efforts
on human resource policies and practices that are most strongly linked
to these aspects of human capital, and we present a lean and efficient
H. Lenihan, et al. Research Policy 48 (2019) 103791

Table 4
Overview of InnovativePeople4Growth policy program offer.
InnovativePeople4Growth

Programs/Activities Objectives/Intended Outcomes Existing/New program

1. InnovativePeople4Growth Start
Short in-firm consultancy » Assess level of existing supports at firm- level for the will do, New program
motivationally-relevant elements of human capital
2. InnovativePeople4Growth Lean Start Plus
7 days input from expert consultant on » Reduce costs and refine process Existing program plus: introducing the will do elements of
principles of Lean Business Offer » Introduce Lean skills human capital to management; developing strategy to
» Introduce mindset among all personnel that is focused on the will do implement supports for the will do elements of human
elements of human capital capital
3. InnovativePeople4Growth Change
Program introducing changes to » Introduce Lean principles; promote merits/value of focusing on the will New program
organizational structures do elements of human capital through supports for employees’ job
satisfaction, commitment to organization and willingness to change in the
workplace.
» Develop innovative mindset/culture where innovation is everyone’s
concern
4. InnovativePeople4Growth Review
Short in-firm consultancy » Review/assess changes/benefits of a focus on the will do elements of New program
human capital; identify possible future adjustments

set of policy interventions to make maximum use of this research.
Second, our proposed interventions are designed to have a time-limited
footprint. That is, these interventions consist mainly of time-limited
consultations designed to aid organizations in diagnosing their human
resource systems and making improvements in those systems in ways
most likely to foster innovation. Finally, these interventions represent a
set of efforts to help organizations help themselves. That is, they focus
on marshalling expertise and providing organizations with the tools and
information they need to build human resource systems that enhance
innovation. The proposed interventions do not require the public sector
to impose systems on organizations or to manage these systems. Rather
the proposed strategy represents a way to most effectively provide or-
ganizations with access to the information and expertise they require to
adequately diagnose and to design responses to shortcomings in their
own human resource systems.
6. Conclusions
In this paper, we examined empirically-supported public policy in-
terventions that can help firms develop and enhance motivationally-
relevant (will do) elements of human capital, elements that are required
to support firm-level innovation. Public policy targeted at increasing
human capital traditionally concerns itself with the can do attributes of
human capital (usually knowledge and skills), resulting in interventions
that involve education and training. The development of will do attri-
butes, such as attitudes and perceptions influencing employees’ will-
ingness to innovate, require different public policy interventions.
Our analysis, based on information retrieved from the Irish National
Centre for Partnership and Performance Workplace Survey (NCPP, 2009),
reports that firms providing human resource systems, such as greater
use of proactive work practices and greater levels of consultation with
employee-managers are associated with an increased probability of job
satisfaction, organizational commitment, and willingness to change of
such managers. We also report that bonus schemes (as part of pay and
conditions) are linked to motivationally-relevant human capital, as
measured by job satisfaction and willingness to change. It would be
remiss however, not to acknowledge that some of the human resource
systems variables reveal mixed results. For example, we report that
greater frequency of information, job share and flexitime (part of work
arrangements) have no significant relationship to the majority of the
will do elements of human capital. In some cases, human resource sys-
tems variables such as the receipt of share options as part of pay and
conditions have a negative impact.
By boundary-spanning the economics, innovation, and
organizational science literatures, our research provides valuable con-
tributions to theory, practice, and policy. From a theoretical perspec-
tive, our research makes two key contributions. First, our research ex-
tends the understanding of human capital and its supports, with the
ultimate objective being that of driving firm-level innovation. Our
findings concur with Cowling (2016) on the importance of building
firm-level capabilities in support of innovation activity. Our findings
help to bring some specificity to this literature by highlighting specific
human resource management policies and practices that can be em-
pirically linked to the motivational components of innovation.
Second, our research highlights the need to consider the role of
public investment in supporting the will do, motivationally-relevant
elements of human capital as a driver of firm-level innovation. In par-
ticular, we outline a program for developing and implementing inter-
ventions that give organizations the tools and knowledge needed to
support their employees’ motivation to innovate. We affirm Bell’s
(2009, p.50) call for greater focus on “broad magnitudes and trends of
the more important non-R&D components of innovative activity”, and
policy discussion “about the kind of innovation capability that is cre-
ated and accumulated”.
From the perspective of practice at the level of the organization, our
research suggests that firms’ innovation activity may benefit from
human resource systems such as proactive work practices, consultation
and bonus schemes (part of pay and conditions). These systems moti-
vate employees and support positive work attitudes such as job sa-
tisfaction, organizational commitment and willingness to change in the
workplace. Interestingly, one of the human resource systems we mea-
sure, frequency of information, does not appear to have much impact
on the probability of will do traits. This may suggest that among po-
tentially useful human resource systems, some appear to be more clo-
sely linked to will do traits than others.
From the perspective of policy implication, our research suggests
that public policy can support the development of elements of human
capital that have heretofore been largely ignored in debates about how
to support innovation in organizations. Literature examining the role of
public policy in human capital development has focused almost ex-
clusively on can do elements of human capital – specifically, knowledge
and skills (Becker, 1964; de Rassenfosse et al., 2011). Our results sug-
gest that public policies can aid firms as they identify, implement, and
monitor particular human resource management policies. These are the
policies that are empirically shown to enhance and develop both the
attitudes and beliefs necessary to support firm-level innovation.
A total overhaul of current programs is unnecessary. Instead, policy
should recognize the value of the will do elements of human capital and

14
H. Lenihan, et al. Research Policy 48 (2019) 103791

the importance of human resource systems in their development.
Market and systemic failures may also justify public support for the will
do elements of human capital.
Public policy interventions can help by making the necessary re-
sources, expertise, and knowledge available to organizations, so that
the organizations can focus on the will do elements of human capital. A
role for government exists in terms of minimizing the risks (whether
real or perceived) associated with firms investing in the will do elements
of human capital in their organizations. The ultimate goal is to drive
firm-level innovation.
We propose a new policy program offer (InnovativePeople4Growth)
to support the will do, motivationally-relevant elements of human ca-
pital in order to increase firms’ innovation activity. This offer in-
centivizes firms to promote the will do elements of human capital as a
competitive resource.
Regarding avenues for future research, such research might usefully
consider a broader range of variables that are likely to influence work
attitudes. For example, job satisfaction and related work attitudes are
strongly influenced by factors such as the design of jobs (e.g., oppor-
tunities for autonomy and meaningful work) and the quality of super-
visor-subordinate relationships (Hackman and Oldham, 1975; Judge
and Kammeyer-Mueller, 2012).
Of course, satisfaction, commitment, and the like are not the only
work attitudes that are likely to influence willingness to innovate.
Perceptions of justice have the potential to influence will do components
of human capital. A substantial literature deals with perceptions of
fairness and justice in procedural allocation of rewards and inter-
personal treatment (Colquitt et al., 2001; Cropanzano and Kackmar,
1995). More comprehensive datasets providing further information on
the impact of firm-level variation in these factors could allow future
research to extend and improve our work.
In this paper we have presented each program in our
InnovativePeople4Growth policy offer as a ‘stand-alone’ program, so that
firms can adopt an á la carte approach. However, the interaction be-
tween programs has potential as an effective policy instrument mix.
Further investigation and future research is merited to study the ef-
fective interactions between programs supporting the will do elements
of human capital. This could be based on Flanagan et al.’s (2011) multi-
level, multi-actor analysis, and/or Lanahan and Feldman’s (2015) ex-
amination of multi-level innovation policy in US small business in-
novation research programs.
This study relied on data from the NCPP (2009) survey. While this
survey provides reliable data that is national in scope, there are several
potential drawbacks in relying on archival data. First, the NCPP (2009)
survey includes only a single response per organization. It is possible
that different members of the same organization might have quite dif-
ferent perceptions and understandings of organizational policies and
that a multi-respondent survey might have provided higher levels of
external validity. Also, this survey was not specifically designed to
measure the key constructs in our study, that is, the determinants of will
do aspects of human capital relevant to innovation. The mapping of
survey items to these constructs is necessarily a matter of judgment and
therefore fallible.
Despite these limitations, our research represents an important step
forward for academics, policymakers, and firms in how they consider
and analyze the roles that the motivationally-relevant (will do) elements
of human capital, firms’ human resource systems, and public policy
interventions might play (with the ultimate aim of driving firm-level
innovation).
Conflict of interest
None.
Acknowledgements
This article has greatly benefited from the guidance of the Editor,
Maryann Feldman, and the valuable comments and suggestions of three
anonymous reviewers of this journal. Moreover, the authors would like
to thank Pablo Garrido-Prada, Kevin Mulligan, Mauricio Perez-Alaniz
and Justin Doran for helpful comments and discussions. Helen McGuirk
acknowledges Postdoctoral funding from the Irish Research Council
(GoIPD/2015/764). We are grateful also for comments on earlier ver-
sions of this paper from participants at the Lundvall Symposium,
Aalborg, Denmark and EU-SPRI Conference. The views expressed in this
paper, and any remaining errors or omissions, are our own.

Appendix A. Questions from NCPP (2009) survey used for the independent variables

Description of independent variables Mean Std. Dev. Min Max

Proactive work practices -

New ideas are readily accepted in my workplace 1.981498 0.660428 1 5
People in my organisation are always searching for new ways of looking at problems 2.044053 0.687375 1 6
Customer needs are considered top priority in my organisation 1.65815 0.719692 1 5
This organisation is prepared to take risks in order to be innovative 2.208811 0.816233 1 6
This organisation is quick to respond when changes need to be made 2.057269 0.725741 1 5
My employer encourages employees to collaborate with people in other organisations 2.369163 0.841138 1 6
This organisation is continually looking for new opportunities in a changing environment 1.886344 0.676083 1 5
My employer encourages employees to work in teams in order to improve performance 1.92511 0.727777 1 6
Frequency of receiving information from management on -
The level of competition faced by your employer 3.406162 0.790315 2 4
Plans to develop new products or services 3.322129 0.899567 1 4
Plans to introduce new technology 3.141923 0.966943 1 4
Plans to re-organise the company 2.981326 0.960737 1 4
Plans to change work practices e.g. work in teams 3.070962 0.942559 1 4
Information on sales, profits, market share 3.263305 0.854755 2 4
Plans for staff reductions 2.861811 1.030175 1 4
Consultation
How often are you and your colleagues consulted before 4.670485 1.271989 1 6
decisions are taken that affect your work?
If changes in your work occur, how often are you given the reason why? 4.993833 1.26371 1 6
If you have an opinion different from your 5.562115 0.941579 1 6
supervisor/manager can you say so?
If you are consulted before decisions are made, is any attention paid to your views or opinions? 4.929515 1.249466 1 6

15
H. Lenihan, et al. Research Policy 48 (2019) 103791

Appendix B. Factor Analysis for three independent variables

Variable Factor 1 Uniqueness

Proactive work practices

New ideas are readily accepted in my workplace 0.6981 0.5127
People in my organisation are always searching for new ways of looking at problems 0.7250 0.4743
Customer needs are considered top priority in my organisation 0.5682 0.6772
This organisation is prepared to take risks in order to be innovative 0.5980 0.6424
This organisation is quick to respond when changes need to be made 0.7236 0.4764
My employer encourages employees to collaborate with people in other organisations 0.4913 0.7587
This organisation is continually looking for new opportunities in a changing environment 0.7351 0.4597
My employer encourages employees to work in teams in order to improve performance 0.6392 0.5914
Frequency of information
The level of competition faced by your employer 0.6912 0.5223
Plans to develop new products or services 0.7596 0.4230
Plans to introduce new technology 0.7365 0.4575
Plans to re-organise the company 0.7475 0.4412
Plans to change work practices e.g. work in teams 0.7314 0.4650
Information on sales, profits, market share 0.6713 0.5493
Plans for staff reductions 0.5486 0.6990
Consultation
How often are you and your colleagues consulted before decisions are taken that affect your work? 0.8176 0.3315
If changes in your work occur, how often are you given the reason why? 0.8259 0.3179
If you have an opinion different from your supervisor/manager can you say so? 0.6510 0.5762
If you are consulted before decisions are made, is any attention paid to your views or opinions? 0.8097 0.3444

Note: Factor Analysis is used to evaluate scales and reduce large numbers of related variables to manageable numbers. The Kaiser-Meyer-Olkin
Measure of Sampling Adequacy (KMO) value was 0.86 (a value of > 0.05 indicates suitability for factor analysis) (Long and Freese, 2006)

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