Learning, innovation and high performance in knowledge-based firms

Although employee management research has established significant relations between high performance work systems (HPWSs) and financial and market performance, few studies have considered the important role of HPWS in other organizational functions such as learning and innovation. Whereas, according to literature, both innovation and learning which are of the most important factors for firm’s survival, generally result from employees’ behavior. Therefore, the purpose of this study is to explore potential impacts of HPWSs on organizational learning (OL) and innovation. A set of research hypotheses are tested using sample data collected from 112 employees of electricity distribution companies of Isfahan province. The proposed HPWS consists training and development, pay for performance, career development, participation in decision making, and job security, while innovation includes product, process and administrative innovation and OL is a four dimensional construct of knowledge acquisition, knowledge distribution, knowledge interpretation, and organizational memory. Partial least squares structural equation modeling (PLS-SEM) reveals that HPWS positively affects OL and innovation. Moreover, the research results show that there is an indirect effect of HPWS on innovation through OL.