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Improving innovation performance through knowledge acquisition: the moderating role of employee
retention and human resource management practices
Armando Papa, Luca Dezi, Gian Luca Gregori, Jens Mueller, Nicola Miglietta,
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Armando Papa, Luca Dezi, Gian Luca Gregori, Jens Mueller, Nicola Miglietta, (2018) "Improving innovation performance
through knowledge acquisition: the moderating role of employee retention and human resource management practices",
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DOI 10.1108/JKM-09-2017-0391 © Emerald Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j
possessed by firm employees (Chesbrough, 2003). Most importantly, people inside the
organization are called to search for external knowledge and integrate it with the internal
knowledge to improve processes and products (West and Bogers, 2014). Moreover, the
innovation culture is spread among employees as a key intangible resource that moves
action towards creativity and shared beliefs (Barney, 1986; Vrontis et al., 2016a). For these
reasons, it is reasonable to infer that human resource management (HRM) – namely all the
decisions made by the management of a firm that affect the relationship between the firm
and its employees (Beer, 1984) – could affect the capacity of acquiring and managing
knowledge properly. This could stimulate an “open” innovation culture within firms. In fact,
studies within the HRM domain found that certain practices foster knowledge management
and innovation processes (Ichniowski et al., 1997; Laursen and Foss, 2003; Michie and
Sheehan, 2003; Darroch, 2005; du Chatenier et al., 2007, 2010). In addition to this,
acquiring or sourcing external knowledge may provoke many internal tensions, requiring
cultural and HRM efforts and practices. Despite this, there has been scarce interest in the
intra-organizational aspects of open innovation so far (van de Vrande et al., 2010; Petroni
et al., 2012; Chesbrough et al., 2014; Bogers et al., 2017a, 2017b), and on internal factors
and antecedents that help in the pursuit of knowledge acquisition and open innovation
strategies (Van Beveren, 2002).
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Therefore, this paper aims to contribute to leading literature addressing the research gap
aforementioned by shedding more light on the issue concerning the human aspect of open
innovation. In particular, it investigates whether knowledge acquisition (one the main
aspects of the open innovation paradigm) leads to higher levels of innovation performance
through higher levels of HRM. Regarding HRM – which represents a valuable contribution of
this paper – the empirical analysis focuses on employee retention and HRM practices. First,
from a resource-based view perspective, talents and knowledge workers are intangible
resources that are essential to achieving competitive advantage; these workers are driven
by commitment (Muffatto, 1998; Michie and Sheehan, 2003), which is a prerequisite for
innovation culture. Second, evidence exists that HRM practices foster knowledge sharing
and innovativeness (Lazzarotti et al., 2015), and, thus, we hypothesized that it also fosters
the knowledge acquisition process.
To reach the goal of this paper, this research applied a quantitative methodology involving
OLS regression analyses to test several hypotheses (developed under the open innovation
and HRM lens) on a sample of Italian firms operating in a wide array of sectors. Findings
indicated that knowledge acquisition has a positive and significant effect on innovation
performance and, most importantly, employee retention and HRM practices moderate the
above relationship.
The remainder of the paper is organized as follows: Section 2 proposes the theoretical
backbone of the paper regarding open innovation and knowledge acquisition. Also, Section
2 develops hypotheses relating to the moderating effect of employee retention and HRM
practices on the relationship between knowledge acquisition and innovation performance.
Section 3 explains the methodology of this study while Section 4 presents the OLS
regression test of the hypotheses and the related results. Section 5 presents a concluding
discussion identifying managerial implications and issues for upcoming research.
process is explained through the number of external sources of knowledge involved and the
depth of each external relationship (Laursen and Salter, 2006).
Therefore, firms develop competitive advantages through knowledge exploitation and
exploration both within and outside the firm’s boundaries (Campanella et al., 2017; Vrontis
et al., 2017). On one hand, internal departments and employees are pushed to find new
solutions and develop new products to meet customers’ needs (Vrontis et al., 2016b). On
the other hand, internal departments and employees struggle to find knowledge that is
externally provided by the customers through not only customer engagement techniques,
from other market-based sources such as suppliers and distributors, but also from scientific
partners such as universities (Fabrizio, 2007; Tardivo et al., 2017).
Several studies suggest that – although no firm can be considered totally open – some firms
tend to establish more external relationships, while others concentrate their efforts with one
or two intense ties (Laursen and Salter, 2006; Naqshbandi and Naqshbandi, 2016).
Therefore, despite the fact that little attention has been given to the link between open
innovation and strategy, the openness degree seems to be a strategic priority for innovating
firms. These management decisions about openness are essential for achieving
competitive advantage (Del Giudice and Maggioni, 2014).
With particular regard to knowledge acquisition (inbound open innovation), the breadth of
external sources of knowledge is associated with positive innovation performance in
literature. This helps firms develop new combinations of knowledge that are useful for being
innovative (Katila and Ahuja, 2002; Leiponen and Helfat, 2011), enriching the pool of
solutions available to solve innovation challenges endemic to the firm (Dahlander et al.,
2016). Moreover, firms that pursue widely and extensively inbound open innovation are
more likely to obtain more knowledge and technologies capabilities (Santoro et al., 2017b).
Therefore, we posit that:
H1. Knowledge acquisition is positively related to innovation performance
According to an early view, the HRM priority should be the creation of a safe environment
that aligns the organizational strategy and climate to the values of the employees via
motivation, incentives and education. The organizational strategy would also be aligned to
the empowerment of the human side of the enterprise that would foster organizational
development and improve organizational culture (McGregor, 1960). Therefore, from an
organizational perspective, this means that the management of people within the
organization must be an essential element of the firm’s ability to reach and realize its goals
(Yahya and Goh, 2002; Salampasis et al., 2015).
To date, there has been an increasing interest in understanding the strategic role of HRM
and the benefit for the firm and innovation performance. Accordingly, there is evidence of
positive effects of recruitment and selection, training, human resources (HR) planning,
rewards system and employee participation activities on higher productivity (Koch and
McGrath, 1996; Lazear, 1996); market performance (Delaney and Huselid, 1996; Hartog
and Verburg, 2004), overall performance (Pfeffer, 1998; Fey et al., 2000) and innovativeness
(Hoque, 1999; Andries and Czarnitzki, 2014).
Nevertheless, few studies investigated how HRM contributes to knowledge management
and to acquiring and integrating external knowledge through inbound open innovation.
Therefore, the link between knowledge acquisition and HRM remains unexplored in
literature. However, some studies suggest that firm’s innovation culture, its HRM and
employees’ characteristics influence the adoption of open innovation strategies and help in
pursuing them effectively (Harison and Koski, 2010; Salampasis et al., 2015; Bogers et al.,
2017).
A first important question in the management of HR for open innovation regards talents
(Chesbrough, 2003). This means that firms strive to find, recruit and retain best talents and
knowledge workers (Murray et al., 2016). This is hard to achieve; thus, firms sometimes
acquire knowledge possessed by talent involved in other firms.
Accordingly, global talent management is about systematically utilizing HRM activities to
attract, develop and retain individuals with high levels of human capital (e.g. competency,
personality, motivation) consistent with the strategic directions of the firm in a dynamic,
highly competitive and global environment (Tarique and Schuler, 2010). The hypothesis in
this paper is that the ability for recognizing useful external knowledge resides in the
employees’ capabilities and talent (Lewis and Heckman, 2006), given that talent plays a key
role in the relationships a firm has with its external stakeholders (Zhang et al., 2015).
Literature also recognizes that greater degrees of openness imply increasing organizational
and managerial complexity (Bader and Enkel, 2014) and certain HRM practices can help in
3. Methodology
3.1 Research sample and design
The paper aims to study the effects knowledge acquisition on innovation performance and
the moderating effect of HRM, in terms of HRM practices and employee retention, on the
abovementioned relationship. To do so, the research used a quantitative methodology
involving a sample of Italian firms operating in different sectors. In detail, firms within the
sample belong to a wide array of manufacturing and service industries such as ICT, food
and beverage, textile and automotive (Figure 2).
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Figure 2 Sectors
late respondents (Kanuk and Berenson, 1975). To do so, the order of responses to the
survey was recorded and it was revealed to be non-significantly correlated with both firm
age and firm size; this suggested that concern regarding non response bias is minimal
(Hawes and Crittenden, 1984). We also found no substantial differences in either firm age or
firm size across industries. Data were processed through an OLS regression model,
following previous studies (Lichtenthaler, 2009; Parida et al., 2012).
3.2 Variables
With regard to innovation as a performance measure, it processes the ability of a firm of
developing new products or services (Laursen and Salter, 2006). In particular, it is taken
from previous studies in innovation management, and is calculated by using the percentage
of sales from new or significantly improved products and services on total sales of the firm
(Laursen and Salter, 2006; Brunswicker and Vanhaverbeke, 2015; Chen et al., 2016).
The independent variable is knowledge acquisition. To measure it, we used the concept of
search breadth, developed by Laursen and Salter (2006), by asking subjects to indicate
how many external sources of knowledge are exploited to innovate on a total of 16 sources.
As a result, a score of 0 indicates a closed innovation approach, while a score of 16
indicates a totally open approach to knowledge acquisition. The list of the external sources
of knowledge is provided in Table I.
The moderating variables, employee retention and HRM practices, were developed using
multi-item scales, according to relevant literature, to ensure their validity. Table II shows the
specific questions and items for each variable. In particular, we asked the respondent to
evaluate several statements with a seven-point Likert scale.
Finally, we assessed internal consistency of each variable measured through multi-item
(Cronbach’s alpha employees’ retention = 0.764; Cronbach’s alpha HRM practices =
0.841), which showed good results. Therefore, the average values of the items could be
used to develop the main variable.
Finally, several control variables were included in the models. First, the size of the firm can
affect the digital resources possessed and knowledge creation processes (Dewar and
Dutton, 1986). The number of employees represents the firm size. Second, the age of the
firm, namely the number of years since founding, is included in the models (Huergo and
Jaumandreu, 2004). Third, we controlled for R&D intensity, calculated as the share of
Employees’ retention The importance of retaining employees in the Ranft and Lord (2000)
top management
The importance of retaining employees in the Ranft and Lord (2000)
middle management
The importance of retaining employees in Ranft and Lord (2000)
manufacturing and operations
The importance of retaining employees in R&D Ranft and Lord (2000)
The importance of retaining employees in Ranft and Lord (2000)
finance, legal and other staff
HRM practices The importance of performance related rewards Chand (2010)
The importance of flexible work Chand (2010)
The importance of training and learning Chand (2010)
The importance of recruitment and selection Chand (2010)
investments in R&D to total revenues for the year, given that it could affect knowledge
creation and innovation within firms (Cohen and Levinthal, 1990; Bresciani et al., 2015;
Santoro et al., 2016).
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Further reading
Breiman, L. (1996), “Bagging predictors”, Machine Learning, Vol. 24 No. 2, pp. 123-140.
McGregor, D. and Cutcher-Gershenfeld, J. (2006), The Human Side of Enterprise, McGraw Hill
Professional.
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of information within bank and firm networks: the role of the intangibles on the access to credit”, Journal of
Knowledge Management, Vol. 18 No. 5, pp. 1036-1051.
Jens Mueller has worked with corporate leaders in more than 15 countries and firms such as
Wal-Mart, Philip Morris, HSBC, Unilever and KPMG. He contributes to many organizations
to help create effective performance strategies and good governance models and serves
as temporary advisor to the World Health Organisation’s Western Pacific division. As one of
the few double-doctorate staff at the University, he holds a PhD in Governance from the
University of Canterbury, a doctorate in Law from California, an MBA from Illinois, a Masters
in Advanced Management from Peter Ducker’s Claremont University and an LLM in
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