The Implications of Knowledge-Based HRM Practices on Open Innovations for SMEs in the Manufacturing Sector

Mohammad Muein Rasheed Shahin, Chin Wei Chong, Adedapo O Ojo
Interdisciplinary Journal of Information, Knowledge, and Management  •  Volume 18  •  2023  •  pp. 521-545

The main aim of this study was to investigate the impact of knowledge-based Human Resources Management (HRM) practices on inbound and outbound open innovation in Jordanian small and medium enterprises (SMEs).

SMEs in Jordan lack tangible resources. This insufficiency can be remedied by using knowledge as a resource. According to the Knowledge-Based View (KBV) theory, which posits knowledge as the most valuable resource, SMEs can achieve open innovation by implementing knowledge-based HRM practices that enhance the utilization of knowledge and yield competitiveness.

This study adopted the quantitative method employing descriptive and exploratory approaches. A total of 500 Jordanian manufacturing SMEs were selected from 2,310 manufacturing SMEs registered lists, according to the Jordan Social Security, by using random sampling. The study’s instrument was a questionnaire that was applied to these SMEs. There were 335 responses that were deemed useful for analysis after filtering out the replies with missing values; this corresponded to a response rate of 67%. The paper utilized structural equation modeling and cross-sectional design to test hypotheses in the proposed research model.

This study advocates the assumption of the role of KBV in improving innovation practices. This study contributes to the existing strategic HRM research by extending the understanding of knowledge-based HRM practices in the context of SMEs. Thus, this study contributes to the understanding of innovation management by demonstrating the role of knowledge-based HRM practices in boosting inbound and outbound OI practices, thereby enhancing innovation as an essential component of firm competitiveness.

The findings revealed the positive impact of four knowledge-based HRM practices on inbound and outbound open innovation in Jordanian manufacturing SMEs. These practices were knowledge-based recruitment and selection, knowledge-based training and development, knowledge-based compensation and reward, as well as knowledge-based performance assessment.

This study is expected to help the stakeholders of SMEs to re-shape the traditional HRM practices into knowledge-based practices which improve managerial skills, innovation practices, and the level of the firm’s competitiveness.

This study serves as a significant contribution to the research field of innovation practices by building a new association between knowledge-based HRM practices and inbound and outbound open innovation.

The study emphasizes the vital role of knowledge-based HRM practices in enhancing the knowledge and social skills of the human capital in SMEs in Jordan, thus improving the country’s social and economic development.

Future research could build on this study to include service SMEs. It could also employ a longitudinal study over the long run which would allow for a deeper analysis of the relationships of causality, offering a more comprehensive view of the effect of knowledge-based HRM on open innovation. Furthermore, future research could examine the sample of investigation before and after implementing the knowledge-based HRM practices to provide stronger evidence of their influence on inbound and outbound innovation.

knowledge-based HRM practices, open innovation, inbound open innovation, outbound open innovation
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