Human resource management and innovation in the Canary Islands: an ultra-peripheral region of the European Union

Abstract

This study attempts to answer the question about how firms in an ultra-peripheral region innovate to compete in a global market when they often seem not to have the basic conditions to innovate identified in the literature. On that line, and based on the notion that firms in ultra-peripheral regions must recognise the value of their human capital in order to overcome the limitations typical of their social and geographical context, this research aimed to analyse the relationship between the human resource (HR) policy and innovation in an ultra-peripheral region of the European Union, namely the Canary Islands. The objective of this study is to identify the HR-related internal factors that can affect the innovation capability of firms. In particular, this paper considers the HR management policy, the formalisation of that policy in an HR plan, and job stability. To achieve this goal, an empirical study of 157 Canarian firms was carried out and arrived at the conclusion that high commitment human resource management (HRM) has a positive influence on organisational innovation in processes. The results also show that the formalisation of the HR policy in a plan, and job stability also increases innovation in processes.

Keywords:

• human resource management
• innovation
• ultra-peripheral region

Acknowledgements

This work has benefited from the ‘Promotion of Business Research in the Canary Islands Universities Program’ of Fyde-Caja Canarias and the Treasury Council of the Canary Islands Government for the 2008 subvention research programme. The authors are grateful for the reviewers’ comments as they improve the quality of the paper.

Notes

1. Firms considered ‘micro-firms’ according to the Commission on European Communities (CEC) Recommendation 361/2003, and Cooperatives are excluded.

2. SABI is a database of INFORMA D&B, which provides financial information on businesses and their owners of Spanish and Portuguese firms.

3. In identifying high-commitment HR practices, this paper considers those that are most commonly included in the empirical works (Arthur 1994; Becker and Gerhart 1996; Wood and de Menezes 1998; Guest 2001) although their number is limited due to restrictions of space on the questionnaire.

4. This algorithm has the advantages that the identified groups are less influenced by the existence of atypical data, and that both the internal homogeneity of each group and the heterogeneity between the groups are optimised.

5. Everitt, Landau and Leese (2001) consider that this index is one of the best to solve the problem of determining the number of clusters, in that the greater the value of the index, the greater the difference between groups.

6. The knowledge assets taken into consideration are: the acquisition of R&D activities, the internal generation of those activities, the registration of patents or utility models, payments for licences, participation in congresses, the monitoring of products, services and processes developed by competitors, collaboration with other firms, the hiring of personnel with professional experience, the hiring of recent graduates, the preparation of manuals of internal procedures and the acquisition of elements incorporating technological innovations.

7. The count data refer only to variables with whole, non-negative values and reflect the number of times that an event occurs in a determined period of time.