The effect of strategic human resource management practices on organizational innovation: The mediational role of organizational learning capability

The main objective of this study was to empirically test the relationship between SHRM practices and organizational innovation and to examine the mediational role of organizational learning capability (OLC) in the relationship between these two constructs. To this end, a cross-sectional data was gathered from 197 manufacturing sector firms in two administrative areas in Ethiopia, Addis Ababa and Oromia. The research hypotheses were analyzed via multiple correlation analysis, structural equation modeling (SEM) and one way ANOVA. The results of correlation analysis show that SHRM practices are positively correlated with OLC (r=0.694, P<0.01) and organizational innovation (r=0.474, P<0.01). Organizational learning capability is also positively associated with organizational innovation (r=0.530, P<0.01). Moreover, SEM path analysis results indicate that SHRM practices caused a statistically significant positive effect on organizational innovation (β=0.396, P<0.01) and organizational learning capability (β=0.686, P<0.01). Organizational learning capability has positively affected organizational innovation (β=0.506, P<0.01). The mediational role of OLC in the relationship between SHRM practices and organizational innovation was assessed using AMOS software. The results reveal that the direct effect of SHRM practices on organizational innovation reduced from β= 0.396 (P < 0.01) to β1= 0.091 (P = 0.367 > 0.05) after including the mediator variable (OLC) into the model. This implies that, OLC mediated the relationship between the two constructs. Finally, One-Way ANOVA was used to test the mean difference between firms implementing high and low levels of SHRM practices in terms of organizational innovation. The results indicate that, the mean value of organizational innovation for firms implementing high level of SHRM practices (x̅ = 4,566) is higher than the mean value of those firms which implement lower level of such practices (x̅ = 3,467). Based on these findings, recommendations were suggested for practitioners and researchers who are interested to conduct related studies in the future.