Organizational Innovation Capability: Integrating Human Resource Management Practice, Knowledge Management, and Individual Creativity

Abstract

Despite the work of several researchers in revealing organizational innovation capability, research that integrates human resource management practice (HRMP) and the knowledge management (KM) model in building creativity is still underdeveloped. Therefore, this study examines the nexus between HRMP, KM, and creativity, and its influence on organizational innovation capability in small and medium enterprises (SMEs). This study analyzes data collected from 405 respondents from the managerial level of 135 woodcraft SMEs in Indonesia by employing the partial least square SmartPLS 3.2.7 method. The results show that HRMP, KM , and creativity significantly influence organizational innovation capability. Meanwhile, KM has no significant influence on organizational innovation capability. Another important finding is that creativity is a double mediator in the mediation mechanism tested in this research. Furthermore, this research helps managers to: optimize HRMP when seeking creative employees to boost innovation capability; develop analytical skills to improve KM practices; and realize that KM not only signifies knowledge acquisition, but also greatly establishes metacognitive strategies for adopting, disseminating, and creating new ideas. This research also discusses the associated limitations.