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How do high performance work systems influence organizational innovation in professional service firms?

Na Fu (Department of Management, Maynooth University, Maynooth, Ireland, AND, Leadership, Innovation and Knowledge (LINK) Research Institute, Dublin City University, Dublin, Ireland)
Patrick C. Flood (HRM and Organisational Psychology Group, Dublin City University, Dublin, Ireland)
Janine Bosak (HRM and Organisational Psychology Group, Dublin City University, Dublin, Ireland)
Tim Morris (Novak Druce Centre for Professional Service Firms, University of Oxford, Oxford, UK)
Philip O'Regan (Kemmy Business School, University of Limerick, Limerick, Ireland)

Employee Relations

ISSN: 0142-5455

Article publication date: 9 February 2015

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Abstract

Purpose

The purpose of this paper is to examine how a system of human resource management (HRM) practices, labelled high-performance work systems (HPWS), influences organizational innovation in professional service firms (PSFs). In this study, innovation in PSFs is seen as an indicator of firm performance and is calculated as the revenue per person generated from new clients and new services, respectively.

Design/methodology/approach

Quantitative data were collected from 195 managing partners, HR managers or experienced Partners in 120 Irish accounting firms. Hierarchical regression analysis was used to test the hypotheses.

Findings

The analysis results indicate strong support for the mediating role of employees’ innovative work behaviours in the relationship between HPWS and two types of PSFs’ innovation performance.

Practical implications

Managers need to effectively adopt and implement innovation-based HRM practices to encourage and support employees’ creative thinking and innovation. Through the adoption and utilization of these practices managers can enhance the firm’s innovation and its performance.

Originality/value

This study contributes to our understanding of the link between HRM and firm innovation by explicating a pathway between these variables. This study also generalizes consistent findings on the HRM-firm innovation relationship to a different context, i.e. PSFs.

Keywords

Acknowledgements

The authors would like to thank the Editor Professor Dennis Nickson, the anonymous reviewer, Professor Denise Rousseau at Carnegie Mellon University and Professor James Guthrie at University of Kansas for their valuable comments on drafts. Sincere thanks are given to Diarmuid Breathnach at Chartered Accountants Ireland for his great support in conducting this research project. The authors also would like to thank the DCU Business School Research Committee at Dublin City University for their financial support for this study. Thanks are due to Professor Marann Byrne, Dr Barbara Flood, Dr Ruth Mattimoe, Dr Mary Canning and Orla Feeney at DCU Business School Accounting Group for their valuable advice in developing the survey. The authors also thank the many HR managers and managing partners who completed the surveys.

Citation

Fu, N., Flood, P.C., Bosak, J., Morris, T. and O'Regan, P. (2015), "How do high performance work systems influence organizational innovation in professional service firms?", Employee Relations, Vol. 37 No. 2, pp. 209-231. https://doi.org/10.1108/ER-10-2013-0155

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited