MNEs' Subsidiary HRM Practices and Firm Innovative Performance: A Tacit Knowledge Approach

Although there is a general recognition that human resource management (HRM) practices are a key factor in a firm's innovation performance, from the extant literature we see that empirical investigation does not always offer evidence to support this assertion. This paper proposes that knowledge transfer received positively moderates the link between HRM practices and firm innovative performance in foreign multinational enterprises (MNEs) subsidiaries operating in China. Specifically, the influence of tacit knowledge approach on the effects of knowledge transfer received on HRM practices and firm innovative performance. With hierarchical linear modeling, our results demonstrate that: (1) HRM practices can have a positive effect on firm innovative performance; (2) knowledge transfer received can positively moderate the effects of HRM practices and firm innovative performance; and (3) the positive effects of knowledge transfer received on HRM practices and firm innovative performance will be strengthened with a tacit knowledge approach. This paper shows that through the adaptation and application of a tacit knowledge approach, executives can create an atmosphere for interaction between the workforce and senior colleagues, forming an inter-intra network chain to share intangible knowledge that is mostly derived from the culture and experience.