Over the past few years, worldwide social and economic chaos from the pandemic has caused many organisations, including large multinational enterprises (MNEs), to struggle to remain competitive. Increasing innovation performance in any organisation is complicated and in multinationals this quest can be even more difficult.
One of the key forms of innovation that is particularly important for any organisation is that of open innovation. Open innovation refers to the process of collecting, sharing, analysing and using ideas, research, knowledge and insights from outside of the organisation. These knowledge sharing and sourcing (KSS) activities at the employee level tend to drive performance at the organisational level.
Higher levels of engagement in open innovation tend to increase organisational performance by providing the knowledge to develop novel products and services, business models and so on and help to expand their markets. Strategic management practices are needed, however, to develop the right mindset that values open innovation.
Open innovation mindset and strategic human resources management
Employees’ opinions and perceptions of open innovation tend to impact how receptive they are to participating in innovative activities. An open innovation mindset is a collection of positive values, beliefs, and attitudes that increase an individual’s willingness to engage in knowledge sharing and sourcing, which supports open innovation.
This way of thinking is a highly valuable dynamic capability. Knowledge sharing helps organisations redesign and build their competencies for responding to rapidly changing markets during uncertain times. The last few years have been extremely chaotic and organisations that value and foster open innovation tend to do better in such circumstances than those with low levels of open innovation capability.
Previous studies on strategic human resources management
Previous studies have found that strategic human resources management practices are critical in this endeavour, such as:
- Creating semi-autonomous work teams that encourage flat power hierarchies with greater shared responsibility
- Job rotation that allows employees periodically to change responsibilities
- Increased information sharing within and between teams
- Performance management systems for tracking employee performance
- Reward and incentive schemes that promote collaboration in external and internal research and development work teams
These practices have been found to encourage an open innovation mindset and greater employee engagement.
Previous research looking at outcomes of strategic human resources management, open innovation and an open innovation mindset have found that:
- Employees’ personality characteristics combined with strategic human resources management practices impact how well organisations implement open innovation.
- Strategic human resources management that is pro open innovation has been found to improve employee knowledge acquisition and increase innovative performance.
- Organisations need to integrate the external sources of knowledge for more effective open innovation. This requires transformation capabilities and flexibility.
- A shared open innovation mindset is essential to motivate external high-quality partners to engage in joint knowledge sharing.
- The open innovation mindset has strong connections to the entrepreneurial mindset.
- Integrating external knowledge into organisations can be disruptive to work processes and require changes to the established work culture.
- Work culture and leadership strategies determine the success of open innovation practices.
A new study
A new study by researchers from RMIT University in Australia has looked at the impact of strategic human resources management (SHRM) practices on multinational organisational open innovation performance.
The study found that:
- Strategic human resources management practices, such as selective hiring, training and especially rewards and incentives to engage in knowledge sharing and sourcing, significantly improve an organisation’s open innovation capability and encourage increased cross-boundary collaboration with external partners.
- Such practices were also found to increase general performance and promote an open innovation mindset.
- An open innovation mindset increases the impact of strategic human resources practices in developing organisational open innovation capabilities.
Based on these findings, researchers recommend:
- Organisations need to invest in strategic human resources practices, such as:
- selective hiring
- Organisations should incentivise employees to develop strong relationships with external partners for knowledge exchange.
- As the global economy recovers from the pandemic, multinational organisations should use strategic human resources practices to increase an open innovation mindset among employees.
Engelsberger, A., Halvorsen, B., Cavanagh, J., & Bartram, T. (2022). Human resources management and open innovation: the role of open innovation mindset. Asia Pacific Journal of Human Resources, 60(1), 194-215.
Disclaimer: This is a research review, expert interpretation and briefing. As such it contains other studies, expert comment and practitioner advice. It is not a copy of the original study – which is referenced. The original study should be consulted and referenced in all cases. This research briefing is for informational and educational purposes only. We do not accept any liability for the use to which this review and briefing is put or for it or the research accuracy, reliability or validity. This briefing as an original work in its own right and is copyright © Oxcognita LLC 2016-2019. Any use made of this briefing is entirely at your own risk.
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