THE ROLE OF STRATEGIC HUMAN CAPITAL IN DRIVING INNOVATION: A STUDY ON TALENT RETENTION AND ORGANIZATIONAL PERFORMANCE

Abstract

A strategic human capital has become one of the major sources of organizational innovation and long-term competitive advantage. Against the background of the growing competition in the global market and fast technological development, companies are being forced to integrate their talent strategies with the concepts of innovation. In this study, we explore how strategic human capital can spur innovation and pay specific attention to the topic of talent retention and how it can (or cannot) contribute to organizational performance. By means of mixed-method investigation through a survey data set (310 mid- to large-scale companies representing both technological and manufacturing industries) and in-depth interviews, the study examines the relationship between HR strategies and the engagement of employees, on the one hand, and the major innovation outputs, on the other. In the analysis, the leadership development, learning culture, and internal mobility point out as key constituents of strategic HR structures that spur innovation. Statistical analysis and content analysis also supply that the organizations recording high rates of talent retention have more efficiency in innovation by 27 percent and revenue per employee by 19 percent as compared to industry averages. The study has been important to this field because it is an empirical effort to associate human capital management practices with innovation success with practical implications to human resource heads and innovation heads.