The Effects of High Performance Work Systems on Organizational Trust and Innovation: Moderating Roles of Frontline Manager’s Involvement

As facing uncertain and dynamic business environment, organizations should manage their exploratory innovation and exploitative innovation properly to adapt environmental changes in time. Firms should effectively pursue two different ways of innovation, which are indispensable to create sustainable competitive advantages, by exploration of new business opportunities and exploitation of existing business. Organizations need to take this ambidextrous innovation strategy and adopt SHRM(strategic human resource management) which is aligned to the aforementioned exploratory and exploitative innovation. Previous studies have focused on examining the impact of innovation on organizational performance, rather than on finding the sources of innovation or understanding the process to acquire it. The aim of this study is to offer better understandings of organizational innovation by integrating the literature of high performance work systems (HPWS) with the literature of organizational trust. We suggested that HPWS is a proper system for innovation strategy and tested 1) the mediating role of organizational trust between HPWS and innovation and 2) the moderating role of frontline manager’s involvement on the relationship between HPWS and organizational trust Our tests with Human Capital Corporate Panel (HCCP) data(2013-2017) showed that HPWS enhanced exploratory innovation and exploitative innovation through organizational trust. Moreover, frontline manager’s involvement strengthened the relationship between HPWS and organizational trust Theoretical and managerial implications are discussed.