Relationship Between Innovation led HR Policy, Strategy and Firm Performance

This research examines the relationship between innovation-led strategy and innovation-led HR policy (hereafter, management initiatives), and innovation performance. Our research model is theorised and tested in the Vietnamese context, based on servant leadership theory and componential theory of creativity. We draw upon constructs of management initiatives, servant leadership, employee creativity, and firm innovation to hypothesize serial mediation mechanisms linking management initiatives to firm performance. Using a multilevel sample of 56 service firms, we conduct multilevel path analyses. We find that (1) servant leadership mediates the relationship between management initiatives and employee creativity; (2) the relationship between servant leadership and firm innovation is mediated by employee creativity; and (3) firm innovation mediates the relationship between employee creativity and firm market performance. We conclude by discussing both theoretical and practical implications.