3.3 HRM and Innovation
Human resource management practices have an effect on staffs’ learning and behavioral changes. The basic role
of HRM is to get talented individuals who own the essential skills, proficiency, and readiness to work with
joint-ventures. Furthermore, the compensation system has an important part in motivating employee to develop
work which enables employees to take part in the organisation (Hewitt-dundas, 2006). Several experts have the
same viewpoint indicating that human resource management has an effect on innovation and firm performance.
There is evidence, resulted from the academic literature review, indicating a relationship between human
resource management and innovation. Jiménez-Jiménez & Valle (2005) clarifies this relationship suggesting that
the company using innovative strategies sought to hire staff from the outside, and was interested in training,
rewards, participation, performance evaluation, and internal career opportunity. Yuan Li, Yongbin Zhao and Yi
Liu (2006) conclude the results: (1) Human resource management had an effect on innovative technology and
caused top incorporated performance. (2) Training had a direct effect on technological innovation. (3) Material
incentives had a negative relationship with technological innovation. (4) Non-material incentives had a positive
relationship with technological innovation. Ling and Nasurdin (2010) suggest that the (1) Training had a direct
relation with innovative product, innovative procedure, and innovative administration. (2) Performance
evaluation had an effect on administrative innovation. Eventually, Strategic human resource management had a
direct effect on technology innovation and indirect through knowledge management (Chen & Huang, 2009).
This study, in agreement with the studies demonstrated above, presents a proposal for the following thesis:
H3. Human resource management has a positive effect on organisational innovation