How Flexibility-Oriented HRM Systems Foster Innovation : The Key Role of Absorptive Capacity

Abstract

Flexibility has long been recognized as a key characteristic of effective HRM systems, yet empirical evidence regarding its outcomes—particularly in relation to innovation—remains limited. Drawing on dynamic capabilities theory, this study develops and tests a model examining the impact of flexibility-oriented HRM (FHRM) systems on firms’ innovation performance through absorptive capacity. The empirical analysis is based on data collected from 210 managers of SMEs operating in the electrical and mechanical industries in Tunisia. The findings highlight distinct effects of FHRM on the two dimensions of absorptive capacity—potential and realized AC. Moreover, the results show that absorptive capacity partially mediates the relationship between flexibility-oriented HRM systems and innovation performance. These findings extend theoretical understanding of HRM as an organizational antecedent of absorptive capacity and underline its strategic role in shaping innovation outcomes. The paper concludes with a discussion of theoretical and managerial implications, as well as limitations and directions for future research.