Impact and Interaction of Determinants on Innovation as a Competence: An Empirical Study

Introduction

It has been argued that the success of today’s businesses increasingly depends on their intellectual assets, as opposed to their tangible resources (Sveiby, 1997; Stewart, 1997). Intangible assets, which typically are not reported on balance sheets because they are difficult to measure, are increasingly being recognized as critical to the innovation process. Among other things, these assets include attitude, knowledge and skills of the workforce. According to ASTD (American Society for Training and Development), these assets are termed as competencies and are areas of personal capability that enable people to achieve outcomes effectively in their jobs. When companies explicitly define the competencies they need, develop methods and provide tools for assessing those; they can more easily and objectively manage performance of their employees.

Several organizational disciplines have attempted to find ways to leverage these assets. Human resource development practices are the primary means by which firms can influence and shape the skills, attitudes, and behavior of individuals to do their work and thus achieve organizational goals. From a strategic management point of view, the question has been how organizations are able to use these assets to secure a persisting competitive advantage (Mohanty1999).

The strategic management literature recognizes innovation as a critical enabler for firms to create value and sustain competitive advantage in the increasingly complex and rapidly changing environment (Subramaniam & Youndt, 2005). Firms with greater innovativeness will be more successful in responding to changing environments and in developing new capabilities that allow them to achieve better performance (Montes et al., 2004). In fact, innovation is seen as the core organizational competency of the 21st century and is required not only to compete and grow but to survive in a global economy. However, to date it has been approached in a piecemeal fashion often linked solely to the organizational processes and New Product Development (NPD) processes. Innovation initiatives tend to depend heavily on employees' knowledge, expertise, and commitment as key inputs in the process (Mohanty, 2003; Chung-Jen Chen & Jing-Wen Huang, 2009) and organizational ecosystems. Only by embracing an integrated innovation framework organizations will be able to compete on a global platform. Innovative thinking has been structured by Mohanty (2003) as having multiple dimensions and has been accepted by many HRD consulting firms for training and development.

Strategic management research has usually not been focused on concrete instruments that deal with the measurement of individual competencies. Traditional human resource development instruments (like job analysis, selection, training and the like) have been in use in organizations for years. However, their use has recently been criticized for neglecting the strategic connection. It has also been questioned whether these instruments are able to cope with the new productivity challenge in the knowledge-based economy, namely to enhance the innovativeness of the knowledge workers who now make up a large share of the workforce (Elkjaer 2000). More recently knowledge management has introduced new perspectives. Being driven by innovative Information Technology (IT) applications, the goal has been to enhance access, sharing, use and creation of knowledge in organizations. However, just providing employees with a better access to available information or to communication channels has not always produced better outcomes. Instead people’s ability to make use of and apply knowledge they are generating is becoming a key issue. Michellone and Zollo (2000) argue that “the very paradox of knowledge is that firms possess knowledge only if they are able to transform it, and the primary ability to transform knowledge resides in people and their competencies.” It appears that academia and practitioners have struggled with the question of how to better measure and leverage human competencies in organizations. They have approached the question from different perspectives and have used different techniques to deal with it.