Human Resource Management and Radical Innovation. A Fuzzy-Set QCA of US Multinationals in Germany, Switzerland, and the UK

Abstract

This paper explores, based on the varieties-of-capitalism approach, configurations of key human resource management practices that explain radical innovation in subsidiaries. A fuzzy-set qualitative comparative analysis is conducted with data for 69 subsidiaries of US-based MNEs in Germany, Switzerland, and the UK. Contrary to the implications of the varieties-of-capitalism literature, combining numerical flexibility and employing a high share of academics does not necessarily achieve radical innovation. Various paths to radical innovation exist, and most of them involve functional flexibility. Overall, the findings emphasize the strategic discretion MNEs have, and accentuate that functional flexibility is a key HR practice to achieve radical innovation across differing varieties of capitalism countries.

Keywords: functional flexibility, numerical flexibility, radical innovation, radical change, varieties of capitalism, qualitative comparative analysis

JEL Classification: M50, O32, M21