How HR can inspire the teamwork that allows innovation to flourish

Helen Shipton, Doris Fay, Michael West, Jeremy Dawson

Research output: Contribution to specialist publication or newspaperArticle


Innovation is vital if organisations are to deal effectively with social and economic change. Yet few studies have looked at the relationship between teamworking and innovation – or, indeed, other organisational outcomes. Our research aimed to fill this gap by exploring the extent to which team-based working in small- and medium- sized manufacturing organisations predicted product innovation.
The results show that levels of innovation are higher in organisations using work-based teams than in those with alternative structural arrangements. We also found that effective HRM practices, such as sophisticated selection, induction, appraisal, training and remuneration management, created an environment that allowed teams to excel.
The study drew on a variety of sources, including data on organisational-level innovation gathered through a postal survey. Respondents gave estimates of the number of new or adapted products developed in the past two years. They also detailed the percentage of production workers involved in making the new products; sales turnover accounted for by these products; and how far production processes had been changed to accommodate the innovations.
We measured HRM effectiveness and the extent of teamworking via interviews with the relevant HR or production manager. We then rated each organisation on a scale of one to five, according to how effective its HRM practices were. We also examined the percentage of staff at management and shopfloor levels engaged in teamworking.
The research design was longitudinal, in that the data on product innovation was collected six months to a year after the main questionnaire on teamworking was conducted. Other studies addressing these questions have tended to be cross-sectional, measuring both variables at the same time. Longitudinal studies generally make a stronger case for causality.
Perhaps of most theoretical significance is the finding that teamworking combined with effective HR systems explains more of the variance for product innovation than teamworking alone. This is in line with J Richard Hackman (1990), who argued that organisational context affected team performance in various ways – for example, through offering a framework for the administration of reward and the exchange of knowledge and through promoting learning-oriented beliefs. Our work supports these ideas.
This study also has practical implications. Increasing the number of teams may be an important step in determining the extent to which they can innovate on a sustained basis. Organisations should therefore consider what HRM practices are most likely to foster team innovation. They might, for example, explore how helpful it would be to develop team-based appraisal and better designed teamworking training.
Developing support structures that enable teams to achieve outstanding performance may present a challenge, but our results suggest that such an approach will be worth the effort.

Key points:
• The greater the percentage of staff working in teams, the higher the level of innovation.
• This applies to both management and production teams.
• Where sophisticated and effective HRM practices are in place, the relationship between team-based working and product innovation becomes more pronounced.
• Both cross-sectional and longitudinal analyses show strong relationships between team-based working and product innovation.
Original languageEnglish
Specialist publicationPeople Management
Publication statusPublished - 13 Jul 2006


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