Hiring, Developing, and Organizing Individual Employees for New Product Development versus Product-related Service Innovation

This study examines how manufacturing firms should organize their human resources by maximizing the value of individual employees for different forms of innovations. In particular, it examines the hiring, developing, and structural organization of human resources for optimizing different innovation outcomes. An analysis of 335 survey responses of the multi-topic and multi-country European Manufacturing Survey (EMS) results in a number of interesting findings. First and foremost, although there are commonalities in organizing employees in flexible team arrangements for new product development versus product-related service innovations, there are also important differences between these. In particular, whilst the educational level of employees has a significant and positive effect on new product development success, hiring highly educated individuals has a significant and negative effect on new product-related service development success. At the same time, while investing in individual training programmes is beneficial for new-product related services, such programmes have no impact on new product development. Combining our findings on these differences, it seems that in order to maximize the value of human resource hiring and developing practices for new product development success; organizations will find it more beneficial to invest predominantly in employees with the highest possible educational level, whilst for product-related service innovations; employees with more general skills should be hired. For the latter case, these employees’ individual careers must be developed internally once hired. The paper therefore carries important implication for the innovation management literature and related human resource practices at different organizational levels.