The International Journal of Human Resource Management,

Vol. 24, No. 1, January 2013, 208–226

Commitment-based HR practices, different types of innovation

activities and firm innovation performance
Canan Ceylan*

Department of Business Administration, School of Social Sciences, Uludag University, Bursa, Turkey
Research on human resource (HR) practices and innovation has increased in the
strategic HR management literature over the last decades. Scholars suggest that
commitment-based HR practices contribute to innovation performance of the firm.
However, prior research puts little emphasis on the causal linkages among commitment-
based HR practices, different types of innovation activities and firm innovation
performance. This article opens the black box of the relationship between HR
management and firm performance by examining the causal relationships among a
bundle of commitment-based HR practices (i.e. a commitment-based HR system),
different types of innovation activities and firm innovation performance. On the basis of
a survey of 103 Turkish firms, empirical results show that a commitment-based HR
system has a positive effect on process, organizational and marketing innovation
activities. Furthermore, a commitment-based HR system mainly affects organizational
innovation activities and shows that these innovation activities are the core drivers of
process and marketing innovation activities, leading to higher rate of product innovation
activities. Subsequently, product innovation activities enhance firm innovation
performance, emphasizing their determinant role.
Keywords: commitment; firm innovation performance; human resource practices;
innovation activities; Turkish firms

Introduction
Innovation is vital for a firm’s sustainability in today’s competitive business environment.
To be innovative, firms need to adopt different types of innovation activities pertaining to
all aspects of the organization rather than a single innovation activity (Damanpour 1991).
Implementing specific management practices are important for the successful adoption of
different types of innovation activities in a firm (Damanpour 1991). In this regard,
human resource (HR) practices can contribute to the success of innovation activities
(e.g. Brockbank 1999; Looise and Van Riemsdijk 2004). Through HR practices with
commitment orientation, firms can develop tacit knowledge, skills and capabilities of their
human resources (e.g. Tsui, Pearce, Porter and Hite 1995; Delery and Doty 1996; Lepak and
Snell 1999, 2002) to contribute innovation activities. These HR practices are generally
characterized by a bundle of strategic HR practices such as selection that focus on building
internal labor markets and the selection of external candidates who fit the firm, formal
participation programs, trainings and performance appraisals that emphasize human
capital development, career development and mentoring, and teamwork and compensation
practices that focus on group or firm performance (e.g. Collins and Smith 2006).
In the strategic HR management (SHRM) literature, HR practices with commitment
orientation appear to be related to firm innovation performance (e.g. Collins and Smith

*Email: ccanan@uludag.edu.tr

ISSN 0958-5192 print/ISSN 1466-4399 online

q 2013 Taylor & Francis
http://dx.doi.org/10.1080/09585192.2012.680601
http://www.tandfonline.com
 The International Journal of Human Resource Management 209

2006; Chen and Huang 2009; Lopez-Cabrales, Pérez-Luño and Valle-Cabrera 2009;
De Winne and Sels 2010). Several authors have suggested that a bundle of HR practices
have a positive impact on firm innovation performance, more than any of the individual HR
practices (e.g. Schuler and Jackson 1987; Laursen and Foss 2003; Jiménez-Jiménez and
Sanz-Valle 2005). Following this argument, this study examines a bundle of commitment-
based HR practices (Collins and Smith 2006) as a ‘commitment-based HR system’.
SHRM literature has suggested that commitment-based HR practices do not affect firm
performance directly but that several intermediate outcomes play a role in the link between
HR practices and firm performance (e.g. Huselid 1995; Delery and Doty 1996; Becker and
Huselid 2006; Collins and Smith 2006). Empirical studies in SHRM literature emphasize
that HR practices with commitment orientation enhance firm performance through its
effect on innovation activities (Jiménez-Jiménez and Sanz-Valle 2008). However, prior
research puts little emphasis on the causal linkages among commitment-based HR
practices, different types of innovation activities and firm innovation performance.
In the SHRM literature, there is evidence that HR practices affect different types of
innovation activities. However, the majority of these studies examine the effect of HR
practices by including some types of innovation activities. For example, several studies
indicate the contribution of HR practices on the product and technical innovation activities
(e.g. Shipton, Fay, West, Patterson and Birdi 2005; Shipton, West, Dawson, Birdi and
Patterson 2006; Walsworth and Verma 2007; Chen and Huang 2009); on the process
innovation activities (e.g. Walsworth and Verma 2007; De Saá-Pérez and Dı́az-Dı́az
2010); and on the organizational innovation activities (e.g. Chen and Huang 2009).
Therefore, further research is needed on the relationship between commitment-based HR
practices and different types of innovation activities in a broad context.
Furthermore, studies on HR practices and innovation activities do not sufficiently
consider the relationships between different types of innovation activities, although
innovation literature has shown that there are various relations among innovation types.
Several scholars argued that different types of innovation activities may complement and
drive other types (e.g. Damanpour and Evan 1984; Damanpour, Szabat and Evan 1989;
Damanpour and Gopalakrishnan 2001; Bierly, Damanpour and Santoro 2009). Hence, this
study examines causal linkages between different types of innovation activities.
On the basis of the arguments above, this study opens the black box of the relationship
between HR practices and firm performance. The paper contributes to the literature by
examining the causal relationships among a bundle of commitment-based HR practices
(i.e. a commitment-based HR system), different types of innovation activities and firm
innovation performance. The purpose of the present study is to test hypotheses on these
causal relationships. The assumption is that commitment-based HR practices may have
impact on a broader array of innovation activities, that complex relations between
innovation activities may influence product innovation activities and finally that product
innovation activities may affect firm innovation performance. This paper draws on theory
from SHRM and innovation literature. The findings of the study contribute to the HRM
literature about the impact of HR systems.
The paper proceeds as follows. The next section examines theory from SHRM and
innovation literature. To highlight arguments and contributions as those set out above,
commitment-based HR practices are theoretically linked to different types of innovation
activities that may drive firm innovation performance. Next, the research hypotheses are
developed and tested on a sample of Turkish manufacturing and service companies. This is
followed by a presentation of the findings of the empirical study. The last section includes
a discussion of the findings, the limitations and suggestions for future research.
210 C. Ceylan

Theory and hypotheses

The relationships between different types of innovation activities

Innovation is considered as a means of changing an organization (Damanpour 1996). From
this perspective, innovation is defined as ‘adoption of an internally generated or purchased
device, system, policy, program, process, product or service that is new to the adopting
organization’ (Damanpour 1991, p. 556). This definition includes a variety of innovation
types encompassing all organizational parts (e.g. Damanpour 1991, 1996). Scholars use the
concept of innovation in different ways, and some overlaps exist among concepts of
different types of innovation activities in the literature. Several scholars stress that
distinguishing among innovation types is necessary to understand how to adopt innovation
activities in organizations and which factors play a role as determinants (Damanpour 1991).
This study follows the typology of innovation of the Oslo Manual (OECD 2005) that is
based on a large amount of data collected in the number of countries for many years. Four
types of innovation activities are distinguished and these refer to a firm’s wide variety of
innovation activities; product, process, organizational and marketing innovation activities.
In this study, these innovation types are defined as follows: product innovation activities
refer to the implementation of new or significantly improved goods or services; process
innovation activities refer to the implementation of new or significantly improved
production or delivery methods; marketing innovation activities refer to the
implementation of new marketing methods; and organizational innovation activities
refer to the implementation of new management practices and organizational methods
(OECD 2005). These four types of innovation activities deal with various changes of
different aspects and operations of an organization.
Organizational innovation activities such as new management practices, processes,
techniques and new organizational structures (Birkinshaw, Hamel and Mol 2008) may
help to improve the firm’s capability to implement various innovation activities.
Organizational innovation activities may facilitate the initiation and adoption of
innovation activities in processes (Damanpour and Evan 1984; Armbruster, Bikfalvi,
Kinkel and Lay 2008). To develop new processes such as new production or supply
methods, knowledge and skills of various functions are needed and organizational
innovation activities can help to change and apply new processes by increasing various
functions’ capacity (e.g. Boer and During 2001).
Organizational innovation activities can be linked to marketing innovation activities
(Schubert 2010) and can facilitate responses to changes in the market (Armbruster et al.
2008). Hence, changes in marketing methods may become vital to adapt to a new market
situation. Several empirical studies show that a firm’s capabilities of managing and
implementing management processes or practices (e.g. inter-functional coordination, total
quality management (TQM), information management) affect its capabilities for
marketing innovation activities (e.g. Chaston 1998; Naidoo 2010; Merrilees, Rundle-
Thiele and Lye 2011).
Process, organizational and marketing innovation activities may have an impact on
product innovation activities (e.g. Damanpour and Evan 1984; Damanpour and
Gopalakrishnan 2001; Varis and Littunen 2010). Process innovation activities may
increase flexibility and efficiency of production or delivery processes and lead to cost
reductions, and in turn support product development efficiency and product
commercialization (e.g. Damanpour and Gopalakrishnan 2001; OECD 2005).
Organizational innovation activities can lead to reduced administrative costs, workplace
satisfaction and access to external knowledge, and in turn facilitate product innovation
 The International Journal of Human Resource Management 211

activities (e.g. Damanpour and Evan 1984; OECD 2005). Marketing innovation activities
can help firms to enter new markets, thereby increasing success of product innovation
activities (e.g. OECD 2005; Schubert 2010; Varis and Littunen 2010).
On the basis of these arguments, following hypotheses are proposed.
Hypothesis 1a: The more organizational innovation activities are likely to result in
more process innovation activities.
Hypothesis 1b: The more organizational innovation activities are likely to result in
more marketing innovation activities.
Hypothesis 1c: The more organizational innovation activities are likely to result in
more product innovation activities.
Hypothesis 1d: The more process innovation activities are likely to result in more
product innovation activities.
Hypothesis 1e: The more marketing innovation activities are likely to result in more
product innovation activities.

Commitment-based HR practices and innovation activities

SHRM literature has shown that commitment-based HR practices enhance innovation
activities (e.g. Shipton et al. 2006; Walsworth and Verma 2007; Chen and Huang 2009;
De Saá-Pérez and Dı́az-Dı́az 2010). The benefits of commitment-based HR practices are to
provide career development and long-term growth opportunities, and to increase group
motivation and social interactions (e.g. Arthur 1992, 1994; Delery and Doty 1996; Tsui,
Pearce, Porter and Tripoli 1997; Lepak and Snell 1999, 2002; Collins and Smith 2006).
Thus, HR practices help to create knowledgeable and capable employees and motivate
them to socially interact while performing their day-to-day tasks (e.g. Cabrera and Cabrera
2005; Collins and Smith 2006; Camelo-Ordaz, Garcı́a-Cruz, Sousa-Ginel and Valle-
Cabrera 2011). Employees’ knowledge, skills and abilities can influence the development
of new processes, procedures, practices and methods related to all of the firm’s activities.
Employees at any level has a great potential to generate new and novel ideas and solutions
to the problems connected with firm activities (Shalley and Gilson 2004). In this regard,
HR practices can enhance human capital creativity by building an adequate work
environment (Mumford 2000; Dul, Ceylan and Jaspers 2011) and promote them to be
involved in innovative activities (e.g. Dorenbosch, Van Engen and Verhagen 2005).
Previous studies indicate that individual HR practices with commitment orientation
influence different types of innovation activities. For example, training and performance
appraisal focused on staff development and team working support product innovation
activities (Shipton et al. 2006). Selection based on a candidate’s future potential, training
and performance appraisal focused on staff development, employee participation, team
working and compensation practices enhances process innovation activities (Shipton et al.
2006; Walsworth and Verma 2007; Chen and Huang 2009). Selection based on a
candidate’s future potential, employee participation and performance appraisals focused
on staff development enhances organizational innovation activities (Chen and Huang
2009). Besides, while several studies argue the role of marketing innovation activities in
the firm’s success (e.g. Eastlack, Jr., Di Benedetto and Chandran 1994; McNichol 2005),
literature review shows that there is very little evidence of a link between HR practices and
marketing innovation activities. As an example, Chaston (1998) finds a link between HR
practices and the firm’s innovative marketing styles. To my knowledge, no studies have
examined the relationship between commitment-based HR practices and marketing
innovation activities.
212 C. Ceylan

Based on the perspective of complementarities of HR practices (Laursen and Foss

2003), an HR system that includes a bundle of commitment-based HR practices affects
different types of innovation activities, more than individual HR practices. Few studies
support that commitment-based HR system affects innovation activities. For example, De
Saá-Pérez and Dı́az-Dı́az (2010) find that a commitment-based HR system increases
process innovation activities. Contrarily, recent research has shown that a commitment-
based HR system has no significant direct effect on product innovation activities (Lopez-
Cabrales et al. 2009; De Saá-Pérez and Dı́az-Dı́az 2010). In addition, there is a lack of
empirical evidence regarding organizational or marketing innovations. However, as it is
explained above, commitment-based HR practices may have direct effect on process,
organizational and marketing innovation activities. On the basis of the above analysis, the
following hypotheses are proposed.
Hypothesis 2a: A higher use of a commitment-based HR system is likely to result in
more process innovation activities.
Hypothesis 2b: A higher use of a commitment-based HR system is likely to result in
more organizational innovation activities.
Hypothesis 2c: A higher use of a commitment-based HR system is likely to result in
more marketing innovation activities.

Product innovation activities and firm innovation performance

Introducing new products to the market is an important key driver of firm performance
(Ernst 2002). These may increase firm’s innovation performance in terms of the
percentage of sales derived from new products. A number of empirical studies has shown a
positive relationship between product innovation activities and firm innovation
performance (e.g. Langerak, Hultink and Robben 2004; Prajogo 2006; Wolff and Pett
2006). Product innovation activities can bring greater financial prosperity to a firm.
The rationale behind this idea is that product innovation activities depend on markets and
customers (Damanpour 1991). If a new product is successful in the market, it may gain
several advantages such as a premium price and a greater market share (Damanpour and
Gopalakrishnan 2001). These arguments lead to the following hypothesis.
Hypothesis 3: The more product innovation activities are likely to result in more firm
innovation performance.
Based on the theory, the structural model was developed to test causal relationships
between a commitment-based HR system, different types of innovation activities and firm
innovation performance. Figure 1 illustrates the structural model and the causal
relationships to test all hypotheses simultaneously in a model.

Methodology and analysis

Data collection and sample
Data were gathered from the member database of the Industrialists’ and Businessmen’s
Association of Bursa, the second oldest and biggest business association in Turkey. Two
hundred and seven firms that were at least four years old (the observation period is three
years for ensuring comparability and capturing respondent firms’ innovation activities
(OECD 2005)) were asked to participate in a questionnaire survey. The questionnaire was
sent to the representing member of the firm by e-mail, accompanied by an invitation letter
from the president of the association. Periodic reminders and telephone follow-ups
 The International Journal of Human Resource Management 213

Process innovation
activities

H2a H1d
H1a

H2b H1c H3
Commitment-based Organizational Product innovation Firm innovation
HR system innovation activities activities performance

H2c H1b H1e

Marketing innovation
activities

Figure 1. The structural model of the relationships.

generated 108 firms. To solve the missing data problem, non-response questions were
answered during follow-up telephone interviews and e-mails with the company
representative. Of the 108 questionnaires, valid and complete questionnaires were
obtained from 103 firms (response rate 49.8%) covering various industrial sectors: the
automotive industry (29%), the textile industry (25%), the service industry (17%), the food
industry (8%) and other industries (22%). About 56% of the companies were small and
medium-sized enterprises (SMEs) with fewer than 250 employees (range 3 –249), and
44%were large-sized enterprises (range 250 – 7500 employees). The mean company age
was 26.9 and ranged from 4 to 83 years.
The key informant approach is performed to obtain data at the firm level (Kumar, Stern
and Anderson 1993). Key informants in each participating firm were those who had
enough knowledge about the firm’s activities (e.g. company owners or senior managers in
smaller firms; department managers or specialists in larger firms). It is verified whether the
appropriate person answered the questions during a follow-up telephone interview.
The common method bias may be limited in the present study. First, questions related
to dependent and independent variables were filled by different people in the majority of
the firms. In addition, follow-up telephone interviews were made with the company
representatives. Second, Harman’s one-factor test was used to examine whether the
common method variance was a problem (Podsakoff and Organ 1986). The principal
component factor analysis on all the measurement items yielded seven factors with
eigenvalues greater than 1 that account for 64% of the total variance, and the first factor
explained only 28.5% of the variance. No single factor emerged from the factor analysis,
and one general factor did not account for the majority of the covariance in the variables.
Common method variance in the data was relatively limited. The problems with common
method variance are reduced by data-gathering process and Harman’s one-factor test.
Measures
Commitment-based HR system
The present study adopted items from Collins and Smith (2006) to assess a commitment-
based HR system. The system represents three sub-dimensions including 16 items to measure
firm-level commitment-based HRM practices: selection, incentives, and training and
development policies (Collins and Smith 2006). Information about the commitment-based
214 C. Ceylan

HR system was gathered from the HR manager or HR specialist (or from the senior manager
or company owner in smaller firms) in each participating firm.
Following the approach of several SHRM researchers (e.g. Huselid 1995; Lepak and
Snell 2002), a commitment-based HR configuration was operationalized as a formative
index, with a combination of HR practices determining the overall level of HR construct
(e.g. Edwards and Bagozzi 2000; Diamantopoulos and Winklhofer 2001; Jarvis, MacKenzie
and Podsakoff 2003). It is proposed that commitment-based HR practices are composed of
several different facets. Although one can look at each facet as being a separate construct, at
a more abstract level, they are all integral parts of HR policies, hence a multidimensional
construct (Jarvis et al. 2003) and a bundle of HR practices (McDuffie 1995).
Informants were asked to rate the extent to which they agreed that the firm had used
specific HR practices to manage white-collar workers in last three years, on a five-item
scale from 1 (strongly disagree) to 5 (strongly agree). Finally, the item scores were
averaged to form the commitment-based HR system index (Lepak and Snell 2002). A high
score indicates a high use of commitment-based HR practices; a low score indicates a low
use of commitment-based HR practices (Collins and Smith 2006).

Innovation activities
The study measured four types of innovation activities (i.e. product, process, organizational
and marketing innovation activities) adopted from ‘The European Community Innovation
Survey 2008’ (OECD 2005). To avoid confusion about how respondents understand
innovation concepts, each type of innovation activity was defined using specific examples
based on the Oslo Manual (OECD 2005).
Information about innovation types was gathered from staff members who could
provide information on firm’s innovation activities (e.g. a manager or specialist in,
for example, the R&D, production, marketing or quality assurance department; or from a
senior manager or company owner in smaller firms). Informants were asked to assess the
extent to which the firm had introduced innovation activities in last three years, on a
five-item scale from 1 (no extent) to 5 (great extent). Innovation constructs are employed
as reflective measures assuming the direction of causality running from latent construct to
indicators (Edwards and Bagozzi 2000; Diamantopoulos and Winklhofer 2001).

Product innovation activities. A two-item scale was used to measure the extent to which
the firm introduced new or significantly improved goods and services to the market during
the last three years (CR ¼ 0.85).

Process innovation activities. A three-item scale was used to measure the extent to which
the firm introduced new or significantly improved methods of manufacturing or producing
goods or services; new or significantly improved logistics, delivery or distribution
methods for inputs and goods or services; and new or significantly improved supporting
activities for processes during the last three years (CR ¼ 0.91).

Organizational innovation activities. A three-item scale was used to measure the extent to
which the firm introduced new business practices for organizing procedures; new methods
of organizing work responsibilities and decision making; and new methods of organizing
external relations with other firms or public institutions during the last three years
(CR ¼ 0.87).
 The International Journal of Human Resource Management 215

Marketing innovation activities. A four-item scale was used to measure the extent to which
the firm introduced significant changes to the aesthetic design or packaging of a good or
service; new media or techniques for product promotion; new methods for product
placement or sales channels; and new methods of pricing goods or services during the last
three years (CR ¼ 0.92).

Firm innovation performance

Two items were used to estimate the percentage share of total turnover derived from
product innovation activities (OECD 2005): the share of new or significantly improved
goods and services introduced during the last three years that were new to the market; and
the share of new or significantly improved goods and services introduced during the last
three years that were only new to the firm. The sum of the proportions of turnover due to
product innovation activities equals firm innovation performance. Data were collected
from the firm’s financial specialist (or from the senior manager or company owner in
smaller firms) in each participating firm.

Control variables
Control variables have been included in the study to capture other potential firm-specific
and environment-specific effects that may influence firm innovation performance.
Based on earlier studies (e.g. Damanpour 1991; Hitt, Hoskisson and Kim 1997;
Sorensen and Stuart 2000; Evangelista and Mastrostefano 2006; Gumusluoglu and Ilsev
2009), firm age, firm size and industrial sector are included in the statistical analyses.

Analysis
Partial least squares (PLS) analysis (Wold 1982; Lohmöller 1989; Tenenhaus, Vinzi,
Chatelin and Lauro 2005) was applied to analyze the path model. This was done for the
following reasons: (1) PLS path modeling (PLS-PM) is adequate for causal modeling
applications to make predictions based on causal relationships (Henseler, Ringle and
Sinkovics 2009); (2) the present model includes formative as well as reflective measures
since the PLS-PM allows the estimation of structural equation modeling that consists of
either formative or reflective measurement models (e.g. Chin 1998a; Henseler et al. 2009;
Reinartz, Haenlein and Henseler 2009; Sosik, Kahai and Piovoso 2009); (3) the present
study’s sample size set is relatively small (N ¼ 103). PLS-PM offers advantages for reliable
model estimation in small samples (e.g. Henseler et al. 2009; Reinartz et al. 2009; Sosik et al.
2009). The path model was developed and tested applying the statistical software
application, SMARTPLS 2.0 (Ringle, Wende and Will 2005) to measure the causal model.

Results
The path model evaluation was carried out in two phases (Henseler et al. 2009): the
measurement model and the structural model.

Test of measurement models

First, validity and reliability of study’s constructs were evaluated (MacKenzie, Podsakoff
and Jarvis 2005). With respect to innovation activities’ constructs, item loadings were
greater than 0.70 and highly significant ( p , 0.0001). In addition, indicators of each
construct were highly correlated, reflecting the same underlying construct. Second, the
scores of an innovation activity’s component are correlated with all other innovation
216 C. Ceylan

activities’ indicators in its own block (Chin 1998a). The standardized loadings for each
block of indicators were loaded higher in a class of its own type of innovation activity than
indicators for other types of innovation activities. The standardized loadings ranged from
0.74 to 0.90 ( p , 0.0001), which are above the threshold of 0.70 (Chin 1998a). Composite
reliabilities (CR) ranged from 0.85 to 0.92, which exceed the suggested threshold of 0.70 or
above (Nunnally and Bernstein 1994). The average variance extracted (AVE) for each
measure was above 0.70, which is above the acceptable threshold of 0.50; this AVE score
determines that 50% or more variance of the indicators account for (Fornell and Larcker
1981). These findings suggest that constructs of innovation types are reliable, valid and
unidimensional.
Next, the validation of commitment-based HR system construct is assessed. The check
for multicollinearity is needed since this can arise in formative measures as it causes
parameter estimation problems (Diamantopoulos, Riefler and Roth 2008). To detect
multicollinearity, variance inflation factors (VIFs) and tolerances are assessed for each
construct component using SPSS 15.0 for Windows. The VIFs of indicators ranged from
1.22 to 3.0; the average was 1.9. Tolerances ranged from 0.33 to 0.82. All VIFs
and tolerances were in acceptable threshold levels (VIF , 3.3, tolerance . 0.20)
(Diamantopoulos and Siguaw 2006; Menard 1995). The above findings indicate that
multicollinearity does not seem to be problematic. Also, path coefficients were greater
than 0.200 (except one; 0.123), which exceeded the suggested threshold of 0.100 or 0.200
(Lohmöller 1989; Chin 1998b). Construct components were kept in the scale on the basis
of statistical outcomes as well as the theoretical basis of a bundle of HR practices that
constitute a commitment-based HR system (Jarvis et al. 2003; Henseler et al. 2009).
Furthermore, the author evaluated the construct intercorrelations and their confidence
intervals (MacKenzie et al. 2005). For innovation activity measures, the AVE of each
construct was higher than the square of the multiple correlations between the latent
constructs. As shown in Table 1, the largest correlation was between process innovation
activities and organizational innovation activities (r ¼ 0.61), which is less than the square
root of the AVE for process (0.77) and organizational (0.70) innovation activities. For a
commitment-based HR system construct, intercorrelations between a commitment-based
HR system and all other constructs were less than 0.70 and significant at p . 0.01 level,
which indicates that all constructs have less than half of their variance in common.
In conclusion, constructs seem to behave as expected and differ significantly from one
another (Fornell and Larcker 1981).

Test of structural model

All hypotheses were tested simultaneously through PLS-PM method since it allows all
hypotheses in a model to be tested. Figure 2 illustrates the path model and the
measurement results with the standardized path coefficients and the adjusted R 2 values.
Table 2 demonstrates the path model results and Table 3 presents a summary of findings of
all hypotheses.
Findings indicate that the model explains 46.5% of the variance in process innovation
activities, 20.1% in organizational innovation activities, 37.7% in marketing innovation
activities, 44% in product innovation activities and 25.8% of the variance in firm
innovation performance. The R 2 index of the variables demonstrated a satisfactory level
of predictability, which exceeded the suggested threshold of 0.1 (Falk and Miller 1992).
In addition, Stone-Geisser’s Q 2 were measured using blindfolding procedures (Tenenhaus
et al. 2005). All Q 2 values ranged above the threshold value of zero (between 0.13 and
Table 1. CR, AVE and squared correlations of all constructs.

Latent variables Mean SD 1 2 3 4 5 6 7 8 9 10 11 12

1. Innovation performance 52.69 29.72 n.a.
2. Product innovations 3.27 1.08 0.43** 0.74
3. Process innovations 3.35 0.99 0.37** 0.59** 0.77
4. Organizational innovations 3.13 0.95 0.20* 0.44** 0.61** 0.70
5. Marketing innovations 2.81 1.10 0.31** 0.55** 0.57** 0.54** 0.74
6. CBHRS* 3.67 0.51 0.29** 0.32** 0.47** 0.41** 0.42** n.a.
7. Agea 3.08 0.70 2 0.20* 0.03 20.01 0.07 0.04 0.05 n.a
8. Sizea 5.24 1.50 2 0.05 0.12 0.15 0.14 0.06 0.24 0.36** n.a
9. Sector1a 0.23 0.42 2 0.14 2 0.00 20.15 20.14 0.03 20.05 0.02 0.12 n.a
10. Sector2a 0.26 0.44 2 0.06 2 0.10 20.04 20.02 20.05 20.09 20.02 20.23* 2 0.33** n.a
11. Sector3a 0.11 0.31 0.03 2 0.07 0.04 0.12 0.08 0.12 0.07 0.08 2 0.19 2 0.21* n.a
12. Sector4a 0.13 0.33 0.05 0.14 0.07 0.07 0.18 0.08 0.00 20.31** 2 0.21* 2 0.23* 2 0.13 n.a
CR n.a. 0.85 0.91 0.87 0.92 n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Notes: Significance at **p . 0.01, *p . 0.05 (two-tailed); the square root of AVE is shown as bold numbers on the diagonals; CR is composite reliability; *CBHRS: Commitment-
Based HR System; Sector 1: Automotive versus textile, Sector 2: Automotive versus other, Sector 3: Automotive versus food, Sector 4: Automotive versus services. n.a.: not applicable.
a
Single indicator construct.
The International Journal of Human Resource Management
217
218 C. Ceylan

Process innovation
activities
2
(R = 0.465)

0.333** 0.438*** 0.388**

0.449***
Commitment-based
0.486*** Organizational 0.037n.s Product innovation Firm innovation
innovation activities activities performance
HR system 2 2 2
(R = 0.201) (R = 0.440) (R = 0.258)

0.278* 0.396*** 0.313**

Marketing innovation
activities
2
(R = 0.377)

Figure 2. The structural model and the results of path model estimation. Notes: Path coefficients:
***p , 0.001 level, **p , 0.01 level, *p , 0.05. n.s. non-significant. To simplify illustration,
control variables are not shown in the model.

0.33), indicating that the variables have predictive relevance for firm innovation
performance, thus confirming the overall model’s predictive relevance.
The value and the significance of the individual path coefficients (ß) are assessed using
bootstrapping to provide an empirical validation of the theoretically assumed relationships
between variables (Henseler et al. 2009). The hypotheses were tested for the relationship
between organizational innovation activities, and process and marketing innovation
activities (H1a and H1b). Both hypotheses are supported as well. Confirming H1a and
H1b, organizational innovation activities positively and significantly influence process
innovation activities (ß ¼ 0.438, t ¼ 5.332, p , 0.001) and marketing innovation
activities (ß ¼ 0.396, t ¼ 4.226, p , 0.001) (Table 2). This finding indicates that
organizational innovation activities support processes and marketing innovation activities.
Next, the hypotheses were tested for the relationship among organizational, process
and marketing innovation activities, and product innovation activities (H1c, H1d, and
H1e). There is partial support for these hypotheses. With regard to H1d, positive and
significant relationships are found between variables: process innovation activities affect
product innovation activities (ß ¼ 0.388, t ¼ 3.111, p , 0.01). With regard to H1e,
positive and significant relationships are found between variables: marketing innovation
activities affect product innovation activities (ß ¼ 0.313, t ¼ 2.704, p , 0.01). However,
no support is found for the relationship between organizational innovation activities and
product innovation activities. Specifically, organizational innovation activities have no
significant effect on product innovation activities; the factor loading is near zero and
non-significant (ß ¼ 0.037, t ¼ 0.360). Thus, H1c is not confirmed. These findings show
that process and marketing innovation activities support product innovation activities.
Furthermore, it is hypothesized that a commitment-based HR system enhances
different types of innovation activities (H2a, H2b and H2c). There is support for these
hypotheses. As can be seen in Table 2, a commitment-based HR system is significantly and
positively related to process innovation activities (ß ¼ 0.333, t ¼ 2.677, p , 0.01),
organizational innovation activities (ß ¼ 0.486, t ¼ 4.425, p , 0.001) and marketing
innovation activities (ß ¼ 0.278, t ¼ 1.960, p , 0.05), confirming H2a, H2b and H2c.
 The International Journal of Human Resource Management 219

Table 2. PLS model results: path coefficients’ values, t-values and the R 2 values of the constructs.
Standardized coefficients t-values
Hypothesized links
Organizational innovation activities ! process innovation activities 0.438*** 5.332
Organizational innovation activities ! marketing innovation activities 0.396*** 4.226
Organizational innovation activities ! product innovation activities 0.037n.s. 0.360
Process innovation activities ! product innovation activities 0.388** 3.111
Marketing innovation activities ! product innovation activities 0.313** 2.704
Commitment-based HR system ! process innovation Activities 0.333** 2.677
Commitment-based HR system ! organizational innovation activities 0.486*** 4.425
Commitment-based HR system ! marketing innovation activities 0.278* 1.960
Product innovation activities ! Firm innovation performance 0.449*** 5.046
Control variables (Non-hypothesized relationships)
Age ! process innovation activities 20.074n.s. 0.839
Size ! process innovation activities 0.075n.s. 0.594
Sector 1 ! process innovation activities 20.112n.s. 1.309
Sector 2 ! process innovation activities 20.045n.s. 0.480
Sector 3 ! process innovation activities 20.068n.s. 1.015
Sector 4 ! process innovation activities 20.007n.s. 0.115
Age ! organizational innovation activities 0.027n.s. 0.184
Size ! organizational innovation activities 0.089n.s. 1.167
Sector 1 ! organizational innovation activities 20.082n.s. 0.972
Sector 2 ! organizational innovation activities 0.040n.s. 0.587
Sector 3 ! organizational innovation activities 0.073n.s. 0.759
Sector 4 ! organizational innovation activities 0.061n.s. 0.787
Age ! marketing innovation activities 20.019n.s. 0.228
Size ! marketing innovation activities 0.041n.s. 0.432
Sector 1 ! marketing innovation activities 0.203* 2.095
Sector 2 ! marketing innovation activities 0.129n.s. 1.292
Sector 3 ! marketing innovation activities 0.106n.s. 0.847
Sector 4 ! marketing innovation activities 0.233^ 1.928
Age ! product innovation activities 0.009n.s. 0.145
Size ! product innovation activities 0.028n.s. 0.306
Sector 1 ! product innovation activities 20.049n.s. 0.005
Sector 2 ! product innovation activities 20.083n.s. 0.864
Sector 3 ! product innovation activities 20.130n.s. 1.854
Sector 4 ! product innovation activities 0.016n.s. 0.294
Age ! firm innovation performance 20.192* 2.028
Size ! firm innovation performance 20.069n.s. 0.545
Sector 1 ! firm innovation performance 20.190n.s. 1.871
Sector 2 ! firm innovation performance 20.122n.s. 0.921
Sector 3 ! firm innovation performance 0.003n.s. 0.022
Sector 4 ! firm innovation performance 20.095n.s. 0.640
Goodness-of-fit statistics
R 2 of process innovation activities 0.465
R 2 of organizational innovation activities 0.201
R 2 of marketing innovation activities 0.377
R 2 of product innovation activities 0.440
R 2 of firm innovation performance 0.258

Notes: Path coefficients: ***p , 0.001 level, **p , 0.01 level, *p , 0.05, ^p , 0.10. n.s.: non-significant.

Resulting from this, a commitment-based HR system contributes to different types of

innovation activities.
Although no evidence is found for the relationship between organizational innovation
activities and product innovation activities, this study’s findings produce interesting
results: (a) a commitment-based HR system affects organizational innovation activities
(ß ¼ 0.486, t ¼ 4.425, p , 0.001), (b) organizational innovation activities affect process
220 C. Ceylan

Table 3. Summary of hypotheses and empirical findings.

Hypothesized Expected Empirical
Hypothesis links relationship relationship
1a Organizational innovation activities ! process innovation 1 Significant
activities
1b Organizational innovation activities ! marketing innovation 1 Significant
activities
1c Organizational innovation activities ! product innovation 1 Not significant
activities
1d Process innovation activities ! product innovation activities 1 Significant
1e Marketing innovation activities ! product innovation activities 1 Significant
2a Commitment-based HR system ! process innovation activities 1 Significant
2b Commitment-based HR system ! organizational innovation 1 Significant
activities
2c Commitment-based HR system ! marketing innovation 1 Significant
activities
3 Product innovation activities ! firm innovation performance 1 Significant

innovation activities (ß ¼ 0.438, t ¼ 5.332, p , 0.001) and marketing innovation

activities (ß ¼ 0.396, t ¼ 4.226, p , 0.001); process innovation activities affect product
innovation activities (ß ¼ 0.388, t ¼ 3.111, p , 0.01), and marketing innovation activities
affect product innovation activities (ß ¼ 0.313, t ¼ 2.704, p , 0.01). These findings show
that a commitment-based HR system mainly affects organizational innovation activities,
and organizational innovation activities have a central role in supporting process and
marketing innovation activities, leading to higher product innovations.
Finally, a positive and significant relationship is found between product innovation
activities and firm innovation performance (ß ¼ 0.449, t ¼ 5.046, p , 0.001), confirming
H3. This finding demonstrates that product innovation activities enhance firm innovation
performance.
Firm age, firm size and industrial sector are controlled for in the path model. Firm age
is negatively related to firm innovation performance (ß ¼ 2 0.192, t ¼ 2.028, p , 0.05).
Moreover, the textile sector (ß ¼ 0.203, t ¼ 2.095, p , 0.05) and the service sector
(ß ¼ 0.233, t ¼ 1.928, p , 0.10) are positively related to marketing innovation activities.
The service sector is marginally significant on marketing innovation activities. No support
is found for firm size.

Discussion and conclusions

The purpose of this study is to examine the causal relationships between commitment-
based HR practices, different types of innovation activities and firm innovation
performance. The paper has drawn on theory from SHRM and innovation literature.
The results indicate that there are relationships among different types of innovation
activities. Specifically, organizational innovation activities have an impact on process and
marketing innovation activities. Furthermore, process and marketing innovation activities
have an effect on product innovation activities. Previous literature supports these findings
(e.g. Damanpour and Evan 1984; Damanpour and Gopalakrishnan 2001; Schubert 2010;
Varis and Littunen 2010). Contrarily, no support is found for the relationship between
organizational innovation activities and product innovation activities. This finding shows
that organizational innovation activities do not have a direct effect on product innovation
activities. Organizational innovation activities require internal diffusions and cover
company-wide changes in management practices, processes and organizational structures
(e.g. Damanpour and Evan 1984; Damanpour 1987; Boer and During 2001). Schubert
 The International Journal of Human Resource Management 221

(2010) also fails to find a significant relationship between organizational innovation

activities and product innovation activities. He finds that organizational innovation
activities are closer to marketing innovation activities that are vital in organization, but not
closely linked to product innovation activities (Schubert 2010).
Findings show that a commitment-based HR system has a positive and significant
effect on process, organizational and marketing innovation activities. This finding is in
line with previous studies indicating the contribution of commitment-based HR practices
on process and organizational innovation activities (e.g. Walsworth and Verma 2007;
Chen and Huang 2009; De Saá-Pérez and Dı́az-Dı́az 2010). However, there is no empirical
evidence for a link between a commitment-based HR system and marketing innovation
activities. This study consolidates the evidence of a commitment-based HR system and
marketing innovation activities link.
This study identifies different causal linkages to enhance product innovation activities.
The results show that a commitment-based HR system has a positive and significant effect
on organizational innovation activities, that organizational innovation activities have a
positive and significant effect on both process and marketing innovation activities, and
finally that process and marketing innovation activities have a positive and significant
effect on product innovation activities. These findings emphasize that organizational
innovation activities are the core driver of process and marketing innovation activities to
enhance product innovation activities, and that commitment-based HR systems mainly
influence organizational innovation activities. This result is not unexpected. SHRM
literature stresses that commitment-based HR practices directly affect social
organizational contexts (e.g. Collins and Smith 2006). Therefore, human capital may
directly contribute to the development of new management practices, organizational
structures, new processes or new marketing methods that are effective in enhancing
product innovation activities.
Findings show that product innovation activities have a positive and significant
relationship with firm innovation performance. This demonstrates that introducing new
products enhances a firm’s financial success derived from new products (e.g. Langerak
et al. 2004; Prajogo 2006; Wolff and Pett 2006). Also, findings stress that product
innovation activities are a key driver of firm innovation performance.
This paper contributes to the HRM literature in several ways. First, it shows that a
commitment-based HR system can affect a broader array of innovation activities in an
organization. Second, a commitment-based HR system enhances different types of
innovation activities and shows that these innovation activities lead to higher rate of
product innovation activities. Subsequently, product innovation activities enhance firm
innovation performance. This finding supports SHRM literature suggesting an indirect
effect of commitment-based HR practices on firm performance (e.g. Huselid 1995;
Delery and Doty 1996; Becker and Huselid 2006; Collins and Smith 2006).
Furthermore, there are complex linkages among different types of innovation activities.
On the basis of this result, causal linkages between different types of innovation
activities should be taken into account to understand the mechanisms between HR
systems and firm innovation performance. Moreover, different types of innovation
activities drive other types to influence firm innovation performance. This finding
supports the approach of complementarities among different innovation types
(e.g. Bierly et al. 2009). Consequently, this study opens the black box of the
relationship between HRM and firm performance by highlighting the causal linkages
between commitment-based HR systems, different types of innovation activities and
firm innovation performance.
222 C. Ceylan

Research limitations and future research

This study has several limitations. First, data are collected from a Turkish national context,
and from a specific sample of firms. This may limit the generalization of findings. Further
replication studies are needed in other firm populations and in other cultures, since cultural
differences may influence HR practices (Aycan 2005). Second, data are collected from
various industries. Hence, sector effects could not be controlled because the sample size
was relatively small. Future studies could focus on specific industries to check for
industry-specific effects. Third, the sample size is another limitation of the study. Before
making generalizations, findings should be confirmed in a larger sample. On the other
hand, several studies examining the HRM-innovation link have been conducted with
relatively small sample sizes (e.g. Cabello-Medina, López-Cabrales and Valle-Cabrera
2011; Camelo-Ordaz et al. 2011). Also, the advantage of partial least squares analysis is
that it is a reliable model estimation when the sample size is small (e.g. Henseler et al.
2009). Fourth, potential bias problem is possible in the study, although Harman’s one-
factor test indicates that this is not a problem. Despite many efforts to find different
respondents to measure different variables, in several small firms, the author could only
identify one respondent to answer the survey questions. Further studies can involve
different informants to measure the variables. Fifth, this study lacks objective firm
innovation performance measures. Obtaining financial data was very difficult because
such data are confidential in most companies. No published financial data were found
despite many searches on databases and company websites. Future studies could use
objective measures (e.g. document analysis) as suggested by several researchers
(e.g. Cabello-Medina et al. 2011). Finally, other unmeasured factors may affect
relationships. Future studies could include other variables such as strategy, organizational
structure, corporate culture, leadership, team processes and social networks in the model to
explain the causal linkages among a commitment-based HR system, different types of
innovation activities and firm innovation performance.
In conclusion, companies should apply commitment-based HR practices to facilitate
human capital development, to build and share tacit knowledge, and to contribute to the
successful initiation and adoption of different types of innovation activities, and
subsequently to the firm’s innovation performance.

Acknowledgement
The author thanks The Industrialists’ and Businessmen’s Association of Bursa (BUSIAD), and its
member companies for their support and help with collecting data.

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