7 Building innovative competences

Basically there are two approaches the firm can deploy in order to provide and to ensure that the necessary competences always are presence when needed: The firms can recruit the competences at the external labor market or they can develop the competences internal and use them flexible in the organization. Even though the internal competence development and flexible deployment is essential to developing dynamic capabilities based on employee learning it is also important for the firm to recruit competences at the labor market. The relations and channels to the external labor market are essential both directly and indirectly for providing and maintaining a strategic evolving competence profile. The recruitment channels indirect influence on strategic competence evolvement first of all takes place through the role which social capital building can take as driver of relational learning and intersubjective competence enhancements. In a relational perspective the formal qualification development and the more informal learning processes should be tied together and embedded in social capital, understood as cooperation, trust and justice in the horizontal and vertical work relations and management processes (Olesen et al. 2008). Development and maintenances of social capital in this way becomes a nourishing element in the learning environment and important for innovation capabilities.

Although it is the prerogative of management to recruit and dismiss employees and a fundamental part of managements obligations, the need to develop and maintain human capital in the firm means, that it becomes appropriate to involve the employees in part of the recruitment process. The selection of recruitment cannels this way becomes important. To involve employees in part of the recruitment process demands a certain amount of social capital, however the involvement also produces social capital to the firm. A firm can use formal as well as informal channels in the recruitment process. Among the formal channels are announcements in newspapers, internet job-bases and public job centers. Among the informal channels are direct encounters, contacts through employees and contacts in the business area (Nielsen 1987). Often information from employees concerning job candidates will depend on so called loose network, which may support the social capital and in this way support some of the fundament of competence and capability development in the firm (Larsen & Pedersen 2009). We have asked the management in 2005 which channels they consider very important when recruiting employees to the firm.

LO high 2005

LO low 2005 (diff. LO high)

Internet job-bases


22,0 (27,7)



15,3 (4,8)

Employee contacts


20,1 (10,5)

Business contacts


7,9 (16,4)

Table 15 Use of recruitment channels by firms with high level and low level of organizational learning in 2005 (percent shares)
Source: Disko 4 survey

Internet job-bases are of high priority in firms with high developed learning organization (LO). The distance between high developed LO and low developed LO is also the largest here among the various channels. Besides job-bases the informal channels score high among the high developed learning organizations. This is the case for contacts in the business area and especially contacts through employees. The use of employee’s loose networks thus has high priority in the learning organizations. Indeed there is a danger of using a ‘narrow’ recruitment pool, so that the personnel profile becomes conform and similar. Diversity in the personnel profile can empirically enhance innovation capacity and it is important to have a selection phase which is extensive and have potentials. However in the early phase of the recruitment process, the overview of potential candidates based on employee’s loose networks play an important part for perception of skills and competences available.

In the internal development of competence we have discussed the importance of relational learning and intersubjective competence development. In such a perspective learning becomes a process closely related to problem solving and creativity in the work relations and competences becomes the result of this process (Holt Larsen 2006). Although the cognitive base of the learning processes are the individual employee, the learning must appear on group and organizational level as changes in relational routines and practices. In this way the pool of individual competences in specific and changing relations will constitute the dynamic capabilities of the firm. It is these capabilities which constitute the firm’s integrative ability to adjust and react in relation to a volatile and unstable context (Augier & Teece 2008). Understanding the close relation between relational learning, competence development and dynamic capabilities is of central importance in managing human resource learning for innovation. Management use of organizational frames and work relations, however, are not always sufficient in order to fertilize work relations for product or service innovation. The organization related learning helps to provide an evolving body of what could be called situational knowledge. Such situational or firm specific knowledge has to be supplemented by formal training and qualification measures. In this way the organization related and situated learning is complemented by new qualifications, which helps absorption of new knowledge and methods furthering product or service innovation. In the table below the share of firms where more than 50% of the employees have participated in formal training and qualification are shown for firms with high (and gab to low) develop learning organization (LO) in 2005 and 2009.

LO high 2005 (diff. LO low)

LO high 2009 (diff. LO low)

High educated

48,3 (30,1)

43,2 (26,4)

Skilled employees

44,8 (23,1)

38,3 (17,5)

Unskilled employees

39,1 (25,6)

36,4 (20,6)

Table 16 More than 50% of employees in vocational groups participated in formal training and qualification in 2003–2005 and 20072009 with high level of organizational learning 2005 and 2009.
Source: Disko 4 and GOPA survey

It is the extensity of formal training and qualification in high developed vs. low developed LO which is measured in the table for three educational groups. In the firms with high developed LO more than 50% of the further and higher educated frequently participate in formal training and qualification. In 20032005 this characterized 48% of the firms with high developed LO and in 20072009 the level for these firms was decreased to 43%. An interesting observation is that the gaps (percent difference) between firms with high developed and with low developed LO are quite large: 30 percent point in the first period in the first period and 26 percent point in the second. For skilled employees the proportion of firms with high developed LO providing formal training and qualification for more than 50% of these employees is somewhat lower than for further and higher educated and the gap is not so wide to low developed LO. The lowest proportion is found among unskilled employees. Here 39% of the highly developed firms provide formal training and qualification for more than 50% of the group in 20032005 and 36% does so in 20072009. Perhaps the most interesting observation is that the gap between the educational groups is not as wide as the gap between high developed and low developed LO. This indicates a tendency that the high developed LO provide formal training and qualification to all employees in the firm. The tendency complements the organizational related learning in the construct of learning organizations.