Influence of Strategic HRM and Entrepreneurial Orientation on Dynamic Capabilities and Innovation in Small- and Medium-Sized Enterprises

Ho, Marcus
Soo, Christine
Tian, Amy
Teo, Stephen TT
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Journal Article
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SAGE Publications

In small- and medium-sized enterprises (SMEs), adopting a strategic human resource management (SHRM), approach can improve dynamic capabilities and promote greater innovation. However, most research on this topic is theoretical and focuses on large firms with well-established formal and mature human resource management systems and access to significant resources. Using a resource-based view framework, we investigate how entrepreneurial orientation (EO) enhances the SHRM–dynamic capabilities relationship in SMEs. Using time-lagged data from 456 SMEs in Australia, our results confirm that SHRM has an indirect positive association with innovation through its impact on dynamic capabilities. Additionally, EO has an indirect positive association with innovation through its impact on dynamic capabilities. Our results also show that EO moderates the positive relationship between dynamic capabilities and innovation such that the relationship becomes stronger as EO increases. This study’s results have theoretical and practical implications for the role of SHRM and EO in developing dynamic capabilities and innovation in SMEs.

3503 Business Systems In Context , 35 Commerce, Management, Tourism and Services , 3507 Strategy, Management and Organisational Behaviour , 9 Industry, Innovation and Infrastructure , 1503 Business and Management , 1505 Marketing , Business & Management , 3505 Human resources and industrial relations , 3507 Strategy, management and organisational behaviour
International Small Business Journal: Researching Entrepreneurship, ISSN: 0266-2426 (Print); 1741-2870 (Online), SAGE Publications. doi: 10.1177/02662426231201761
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