DO SMEs BENEFIT FROM HRM-RELATED KNOWLEDGE PROTECTION IN INNOVATION MANAGEMENT?

In terms of innovation generation and management, creative employees are the most valuable resources in small firms. Thus, knowledge leaking and leaving are the major staff-related risks. Protecting HRM-related knowledge is one effective way of dealing with these challenges, although this is not always acknowledged by academics or by managers. It is particularly valuable in safeguarding the existing background knowledge of the firm, and thus the prerequisites for future innovation. The aim in this study is to shed light on what is a somewhat neglected protection and appropriability mechanism, and thus to enhance understanding of the role of HRM in protecting core company knowledge—especially in SMEs. These issues are explored in a review of the latest literature and a case study of 15 SMEs representing three industries. The theoretical contribution of the study is to introduce and empirically test a typology of five HRM-related knowledge-protection mechanisms: recruitment, education and training on matters of confidentiality, retaining employees, capturing and diffusing knowledge in-house, and monitoring.