WOLLO UNIVERSITY COLLEGE OF BUSINESS

AND ECONOMICS DEPARTMENT OF

MANAGEMENT, MASTER OF BUSINESS ADMONSTRATION (MBA)
HUMAN RESOURCE MANAGEME (HRM) ARTICLE REVIEW INDIVIUAL
ASIGNMENT

Title:Flexible Human Resource Management And Firm Innovativeness: The

Mediating Role Of Innovative Work Behavior

Journal of HUMAN RESOURCE MANAGEMENT

Ali Javed • Muhammad Anas • Muhammad Abbas • Atif ijaz Khan

BY
Abdurohman Ayaliew Yimam (MBA Extension Students)
ID. No.SGSE/0453/14

Submitted to Dr.Mulugeta Chane

Jan, 2023
Dessie, Ethiopia

ABSTR ACT

The paper examines the relationship between Flexible HRM, innovative work behaviors, and Firm
innovativeness. They developed a theoretical framework that links the constructs together. Creative work
behaviors, Flexible HRM along with its three sub-dimensions (HR practices flexibility, Employee skill
flexibility and Employee behavioral flexibility), and Firm innovativeness along with its three sub-
flexible human resource management; innovative work behaviors; firm innovativeness; high technology
company's dimensions (Product innovation, Process innovation, and administrative innovation) are
interlinked. They used 153 samples collected from the top and middle managers of high technology
companies, and the data was analyzed whose findings proved that flexible HRM positively impacts
innovative work behaviors. Further, innovative work behaviors positively impact firm innovativeness.

1 INTRODUCTION

The digital age and knowledge economy have shaped heavy changes in the corporate world. (Chen
& Li, 2015). Organizations now face tough competition in the dynamic, uncertain, transforming, and
complex environment (Sanz-Valle & Jiménez-Jiménez, 2005).
The study's primary purpose was to examine the relationship between Flexible human resource
management, innovative work behaviors, and firm innovativeness. In addition to the empirical analysis
of their relationship, the paper will also attempt to explain how Flexible human resource management
shapes innovative work behaviors and how innovative work behaviors enhance firm innovative
capabilities. The study tended to answer the following research questions
1) Does FHRM enhance the innovative work behaviors of the employees of the organization?
2) Do innovative work behaviors contribute to enhancing firm innovative capabilities?
3) Does FHRM enhance firm innovativeness?
4) Do innovative work behaviors intermediate the relationship between FHRM and firm
innovativeness?
2 THEORETICAL INSIGHTS AND HYPOTHESIS DEVELOPMENT
Flexible HRM is an essential element of strategic HRM; it's the internal capability of firms and is
considered the prerequisite for sustained competitive advantage (Kozica & Kaiser, 2012). Flexible
human Resource investigates how firms can quickly and effectively adjust according to environmental
changes (Chen & Li, 2015). Wright and Snell (1998) identified that Flexible HRM has three sub-
dimensions: employee behavior flexibility, employee skill flexibility, and HR practice flexibility.
Employee skills flexibility refers to how an organization can utilize employees' skills in di fferent
situations and reassign them quickly (Wright & Snell, 1998). it's about creating an environment that
promotes diverse learning of skills and enhances their flexibility to adopt versatile skills so that they can
take any task and perform in every situation.
Employee Behavioral flexibility refers to the degree to which an organization can adjust, enrich,
autonomies, and support employees' diverse behaviors and their psychology of dealing with different
circumstances (Sanchez, 2011). Behavior flexibility provides value in terms of two ways. First, the ability
of employees to deal with different situations effectively enables firms to reduce the resistance to
change and the cost associated with that resistance. (Lepine et al., 2000). Secondly, it allows the firm to
deal with various problems appropriately without hiring new employees with new skills to deal with
changing environments (Battarchya et al.,.2005).
HR practice flexibility is defined by Bhattacharya et al. (2005) as the degree to which HR practices
of organizations can be quickly and effectively adapted and applied across di fferent situations,
businesses, or departments
Innovative work behaviors are believed to be essential in dealing with incremental and
transformational changes and achieving the organization's competitive advantage (Jannsen,
2000).Jannsen (2000) referred to iWB as a three multistage process idea generation, idea promotion,
and idea realization. iWB began with the idea generation stage, creating a new and valuable idea that
comes under any domain or area (Jannsen, 2000). The next stage of iWB is idea promotion, where
employees who generate novel ideas look for support for their novel idea by discussing it with colleagues,
bosses, or even friends (Scott & Bruce, 1994; Kanter, 1988). The idea after generation has been sold. Idea
realization is the final stage of iWB, converting novel ideas into effective outputs (Pukienė, 2016). The idea
then becomes a prototype, reality, or model which can be touched, experienced, and brought into use
(Kanter, 1988).
Firm Innovativeness is defined in literature as "the adoption of an idea or behavior, whether a
system, policy, program, device, process, product or service, that is new to the adopting organization"
(Damanpour et al., 1989). Utterback & Abernathy (1975) mentioned three dimensions of firm
innovations.
1) Product innovation- Creating and commercializing new products to meet the needs or wants of
customers (Golparakarishnan, 2001).
2) Process innovation- Creation of new processes or modifications of existing processes, methods, or
techniques in the firm (Leonard &Waldman, 2007).
3) Administrative innovation- Placing effective routines and procedures in the firm administrative
delivery, services, and support units (Brunsson et al.,.2000).
According to (Bhattacharya et al., 2005), employees having behavioral flexibility are more engaged in
non-routine behaviors such as risk-taking, change, and creativity. He further argued that employees
with more adaptable qualities can adjust themselves in every novel and complex situation more
appropriately and can effectively support the implementation of change.
Hypothesize med by researchers

 H1: Flexible human resource management is positively related to innovative work behaviors
 H2: Innovative work behaviors are positively related to firm innovativeness.
 H3: Flexible human resource management is positively related to firm innovativeness.
 H4: Innovative work behaviors mediate the relationship between flexible human resource
management and firm innovativeness.
 Figure 1: Theoretical framework

The model shows the relationship between Flexible human resource management, innovative work
behavior, and Firm innovativeness. The model depicts that Flexible HRM impacts creative work
behavior, and innovative work behaviors lead the firm toward innovativeness. Further, it also shows a
direct relationship between FHRM and firm innovativeness.
Theories that support our Hypothesis and model are Resource based view, Dynamic capability
theory, and Behavioral Perspective.

3 METHODOLOGY AND MEASURES

As the paper is quantitative, the researchers collected the data from high technology firms
operating in Pakistan, which have formally established Human resource management and at least 100
employees. They chose high technology firms as a target population because our paper focuses on
innovation and Flexible HRM. The research instrument was a questionnaire designed on like scale from
1-5 rating scale.1=Strongly Disagree, 2= Disagree, 3=Neutral, 4= Agree, and 5=Strongly Agree.
Data were collected from 14 high-tech companies operating in Lahore from different industries, i.e.,
telecommunication, IT, textile, home appliances, and services. Since our unit of analysis is the firm level, only
top and middle managers were chosen as the respondents. It was a paper-based survey in which
questionnaires were handed over equally among the selected companies (i.e.20,
questionnaires/company). After three weeks, 153 usable questionnaires were returned to us from the
companies, with a response rate of 54.6%.
FHRM: To measure FHRM, we used a scale developed by Bhattacharya et al. (2005) with three sub-
dimensions (employee skill flexibility, employee behavior flexibility and HR practices flexibility) and have
collectively 16 items. Firm Innovativeness: to measure firm innovativeness, we adopted a scale
developed by Manu (1992). it includes three sub-dimensions (Product innovativeness, process
innovation, and administrative innovativeness) and
has nine items.
Innovative work behavior: The scale developed by Scott and Bruce (1994) has been used with five
items to measure creative work behaviors.

4 RESULTS AND ANALYSIS

Scale reliability was checked before any analysis, and Cronbach's alpha was reported (α = .829) for
the current study. Results and analysis have been done using descriptive statistics, regression,
correlation, and mediation analysis. Descriptive statistics were used to check the frequencies of age,
gender, sector, designations, variables' mean, Standard deviations, and their sub-dimensions. On the
other hand, regression was performed to check the impact of variables and prove the Hypothesis.

Furthermore, Descriptive statistics reported the frequencies of gender, designation, and experience.
Respondents include 120 males and 33 females. There were 119 middle managers and 34 top
managers. Regarding expertise, 98 respondents have 3-10 years of experience, 45 respondents have 11-
15 years of experience, and ten have more than 15 years of experience.
The result shows that Flexible HRM is significantly associated with innovative work behaviors with (r
= .374, p < .01) and Firm innovativeness with (r = .623, p < .01). Furthermore, creative work behavior is
significantly associated with firm innovativeness with (r = .352, p < .01).
Regression analysis was performed to check the impact and prove the Hypothesis. Before
performing regression analysis, the assumptions of regression analysis were reviewed, which were
acceptable according to the requirements. Further autocorrelation value was acceptable as the Durbin
Watson value was 1.638, closer to 2.
firstly regression analysis was performed by taking FHRM as an independent variable and
innovative work behavior as the dependent variable. Results (β =.736, p < .001) indicated that FHRM
positively and significantly impacts iWB, proving our first Hypothesis that
H1: Flexible human resource management is positively related to innovative work behaviors
Secondly, regression analysis was performed using iWB as independent, whereas Firm
innovativeness was the dependent variable. Results (β =.201, p < .001) show that innovative work
behavior positively and significantly impacts firm innovativeness, thus proving our second Hypothesis
that
H2: innovative work behaviors are positively related to firm innovativeness.
Thirdly we used FHRM as the independent variable while taking Firm innovativeness as the dependent
variable and performing regression analysis. Results of the study (β = .699, p <.001) present that
Flexible HRM positively and significantly impacts firm innovativeness, thus proving our third
Hypothesis that
H3: Flexible human resource management is positively related to firm innovativeness.
 Then, to check the fourth Hypothesis based on mediation, we performed mediation analysis using
the process macro plugin.
The result depicts that the Total effect of FHRM on Firm innovativeness (β = .6985, p = .000) and
indirect effect of FHRM on firm innovativeness after the induction of mediator innovative work
behavior (β = .0580, Ci = .01 to .31) which shows that mediator is good and significant. So it proves
our fourth Hypothesis that
H4: Innovative work behaviors mediate the relationship between flexible human resource management
and firm innovativeness.

5 DISCUSSION AND CONCLUSIONS

Our study examined the relationships between Flexible HRM, innovative work behaviors, and Firm
innovativeness. We discussed Flexible HRM in terms of dynamic capability, resource-based view, and
behavioral Perspective.
The results of our study fully supported all four hypotheses. We found that Flexible HRM enhances
innovative work behaviors in the employees, leading the organization towards enhanced firm
innovativeness. Results also proved that our mediator is a good mediator who mediates the relationships
between flexible HRM and firm innovativeness. The study answered all Hypotheses. Managers of
organizations have to realize the importance of flexible human resource management. They must
understand that to be innovative and mold their human resource management as flexible.
The study also has its limitations.
 Firstly, the analysis is relatively narrow and highly focused on proving the relationships
between variables. In addition, it does not involve demographic information in testing the
relationship.
 Secondly, our study involved only the central Hypothesis and did not include any sub-hypothesis.
Future researchers can also develop and test the sub-hypotheses by involving the sub-dimensions
of the variables.
 Thirdly, we selected the high technology companies which are fast and flexible; future researchers
can test them using the slow and status quo-loving companies to check whether their non-
flexibility in HRM impacts their innovative performance.
 Lastly, some firm level factors (i.e., organization culture) might a ffect the relationships, so
interested future researchers might test it by taking the moderator in the study.