Although innovation has long been identified as a source of competitive advantage, how Human Resource (HR) innovation enables firms to deliver superior performance remains an area of ambiguity. In particular the types of HR innovations undertaken and HR innovations’ suggested link with firm performance and competitive advantage have received limited attention in the literature. With a view to develop deeper understanding of the nature of HR innovation, a qualitative approach was adopted in this study. The data collected from senior HR professionals of nine large scale manufacturing and service firms in Australia suggests that HR innovations differ in its type, degree of change (incremental to radical),and nature of outcomes (proximal and distal). HR innovation was found to drive (direct impact) and facilitate (indirect impact) firm-level transformations, leading to competitive advantage. This paper provides valuable insights for managers pursuing HR innovation-related competitive advantage and contributes to theory and future research.
Keywords: HR innovation, radical, incremental, competitive advantage
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