1 Learning, capabilities and innovation

Innovation has become more and more important as a strategic clue to handle scarce resources and competition pressure as well as economic instability (Fagerberg, Mowery and Nielson 2005, Aslesen, Isaksen and Karlsen 2011). Building innovative capabilities require active creation, coordination and absorption of useful knowledge related to the deployment of the human resources in the organization and thus a cohesive operational management approach to learning. Most often learning in organizations and work has been approached without direct considerations on how to integrate it in the management of human resources. The outcome of learning, however, has long been considered relevant for management approaches as knowledge management (Nielsen and Rasmussen 2011). This course investigates the empirical conditions for building a more cohesive understanding of human resource learning in firms. With focus on innovative performance the importance of strategic modes of innovation, clues to organizing learning and types of knowledge are considered as main challenges for the management of human resources in a learning perspective.

Developments in the economic, technological and political context the last two decade have positioned human resources in a critical position when it comes to building innovative capabilities in the firm. Innovative capabilities are dynamic routines shaped to catch up with market opportunities in new and innovative ways (Arundel et al. 2007, Kirner & Som 2007, Nielsen et al. 2012). Among the various resources of the firm the human side is unique, meaning that under the right conditions the human resources grow qualitatively by being used. Useful knowledge developed and absorbed in the process of solving complex problems while working can thus be transformed into cumulative building blocks of relational knowledge resources, which may result in unique competitive advantages for the firm (Rasmussen & Nielsen 2011). However, this ability to grow as a learning resource by being challenged in work requires a conscious management in combination with appropriate organizational conditions facilitating the development of human capabilities as a collective strategic resource convertible to employee driven innovation (Fong et al. 2011).

1.1 Context and pressure for change

Globalization is a central contextual driver of the increasingly strategic importance of human capabilities in firms (Wang & Ellinger 2011). The growing liberalization and deregulation has boosted and intensified competition on prices as well as on quality in a global economic environment of instability and unpredictability. This means that most firms must develop their internal ability to adapt and reallocate resources rapidly in order not only to innovate the goods or services they are producing but also the way they are producing, in order to maintain or develop their position and strength in the market. Historically, an important milestone was the Japanese automotive industry which in the early eighties threatens to oust the American counterpart on products as well as production processes. This attack on a central part of American production structure brought the importance of human initiatives and insights high on both the theoretical and practical agenda. The challenge became how to mobilize intangible competitive strength by means of human resources management (Sisson 1994). The intensive global competition in the automotive industry is still vibrant after thirty years (Ingeniøren 2008) and has indeed spread to several other industries.

Another central driver is technology development (Michie & Archibugi 1995). Technology is a classic determinant of work organization and the use of human potentials. The important new development is, however, that the contemporary technologies are much more adaptable and flexible in configuring the relations between employee and work techniques (Greena& Walkowiak 2005). From a former ‘deterministic’ view of the relation between technology and work organization the new technologies have enabled a much more ‘voluntaristic’ view, placing leadership rather than management in a central position in configuring and developing potentials of the relation. It is first of all new information and communication technologies which have removed the former view on technology determinism and created voluntaristic leadership opportunities for innovative organization, processes, market relations, products and services. The new technologies bring opportunities for decentralization of decisions and development of local solutions but also increasing interdependency and dynamics between business units. Parallel to this leadership challenge the new technology also supports the increasing strength of globalization as an influential market power. Without information and communication technology it would be impossible for firms to distribute in global value chains (Hyws 2006) and to act rapidly on market change and economic opportunities. At the same time this continuously developing technology is one of the main drivers of the unstable and unpredictable globalization.

The liberalization and deregulation regime of globalization has also influenced the public sector and its production (Kamp m.fl. 2012). The concept of new public management has a long history going back to the eighties and it has invaded most service production of the sector. I broad sense the idea is to create market relations between public production units, contracting out activities and manage the production of services by contracts. In this way competition pressure and efficiency thinking has been expanded. In a more narrow sense new public management is a way of importing techniques from the private sector in order to make public production more efficient. Performance and process management techniques have thus been applied over most of the public sector. This development is principally disputed from a qualitative public service perspective because the sector is dominated by professions and human services which have a long tradition of autonomy, proficiency, responsibility and self-governance (Nielsen 2016). The dilemma has resulted in development of less rigid techniques but also in many unsolved problems of pressure on professional autonomy often affecting work environment.

1.2 Coping with change pressure

Global competition pressure combined with unstable conditions and continuous technology innovation in general demand strategic preparedness at the firm level in order to sense and size the changing conditions and emerging opportunities exposed through the context (Teece 2007). The strategic sensing thus has to be anticipated by internal organizational dynamics and appropriate routines at the tactic level. By the concept of dynamic capabilities is understood meta-routines focused on the abilities to reconfigure and mobilize internal resources in order to meet external changes or opportunities (Kirner and Som op. cit. 2009, Nielsen et al. 2012). Continuous sizing of appropriate meta-routines depends on learning abilities, relations and practices among the human resources. Competence level and socialization to handle complex problem solving in the work situation are important dimensions for developing dynamic capabilities together with decision latitude and influence. Related to this is a contingent organizational and management awareness of the human potentials. In line with this understanding of dynamic capability the concept of innovative capability has been defined as the ability to mobilize the organizational and human resources and bring problem solving ideas that are new to the firm into practical use (Kanter 1983).

Modern human resource management emphasizes the importance of the intentional link between firm strategy and human resource management. Focus is set on planning and organizing the work process and building employee commitment related to the aims and values of the firm. Flexibility and quality in the employment system is also important (Guest 1987, Hendry 1995). Although the above focus points to a large degree are common it has not been possible to incorporate them into a single theory or approach to human resource management. Human resource management is a group of theories with various hard and soft approaches, which has developed continuously since the eighties, mainly in relation to the changing conditions and challenges of the firms (Storey 1994). In spite of the evolving theoretical body of literature on human resource management there is only a tentative and sporadic theoretical understanding of how to handle development of dynamic and innovative capabilities, managing knowledge creation, learning and encouraging innovation in the firm.

1.3 A systemic understanding of managing learning for innovation

The aim of this course is to develop a cohesive and systemic understanding of managing human resource learning for innovation in the firm. It is an understanding which is founded on the cognitive potentials of the employees and their work relations as dynamic and innovative resources of the firm. Realization and making use of the cognitive human potentials demand management which acknowledges the importance of facilitating and organizing appropriate frames for new initiatives on various decision levels of the firm. The first step in building the model is to identify and define the aim of innovation capability so we can understand innovative capability as the performance measure of human capabilities. The steps which follow will identify the strategic, tactic and operational frames important for encouraging knowledge production and innovation in organizing the learning relations among the human resources. In this way management of human resources is approached as an open and target oriented system encouraging innovation capabilities in firms. Approaching human resources management as open system management means that the external context has importance as environment for shaping the appropriate orientation, instruments, principles and techniques on the various internal decision levels and not least for the interaction between the levels in order to meet the external context exposure in a dynamic and innovative way. Identification of the instruments, principles and management techniques on the various levels will be based on empirical research, which means generated form theoretical knowledge and empirical panel data covering firms from the private urban sector in Denmark in the period between 2006 and 2010. In this period the global economy has been through an exceptional business cycle, going from growth with high pressure on existing capacity to financial crisis, downturn and serious slump in 2010. In the same period globalization has intensified pressure on markets and firms. Private sector firms find themselves in rapidly changing environment with increasing competition (GOPA 2010) that call for development of internal and external resources and capabilities to manage the challenges. This is the context for developing the empirical founded model.