HRM Practices and Innovation Capabilities in the Hotel Industry: Mediating Role of Human and Social Capital

Abstract

The objective of this study is to investigate the effect of human resource management (HRM) functions on innovation capabilities through mediation of intellectual capital. This study has also tried to examine the effect of HRM practices on both components of intellectual capital: human and social capital. This study has been carried in the hotel industry of Pakistan. A random sample of 300 hotel HR managers was collected in Lahore, Pakistan. Structural equation modeling is used to analyze the most important relationships. Findings show that HRM practices: recruitment and selection, training and development, and information technology are positively related to human and social capital. Moreover, findings reveal that there is positive relation between human and social capital, and innovation capabilities. Finally, findings show that human and social capital fully mediates the relation between HRM practices and innovation capabilities. These findings could be of greater importance for the companies working in hotel industry. This study could help the managers in realizing that firms can increase competitive advantage based on innovation by managing their intangible assets (human and social capital).