The role of employment relationships in the emergence of dynamic capabilities: Implications for HR systems


Research on microfoundations of dynamic capabilities (DCs) seeks to explain how micro-constructs interact to promote the development of DCs that allow an organization to adapt constantly to changing demands. Aggregated predictors based on human interaction have been proposed to capture the complex, interactional processes that combine individual contributions into systematic and reliable organizational capabilities. This paper explores if employment relationships that are shaped through individual employees and HR systems and policies can serve as an aggregated meso-level predictor of dynamic capabilities. The question is addressed using survey data from 179 employees of a medium-sized international company of the IT services sector in a mixed-methods approach combining multiple regression analysis with open statement content analysis. We show that a mutual investment employment relationship based on access to information and resources and employee engagement can predict DCs. HR systems can support such an employment relationship by establishing a recognition system, providing performance related development opportunities and developing empowering leadership capabilities of managers.