Human resources – strength and weakness in protection of intellectual capital
| Date | 12 October 2015 |
| Pages | 742-762 |
| DOI | https://doi.org/10.1108/JIC-03-2015-0027 |
| Published date | 12 October 2015 |
| Author | Heidi Olander,Pia Hurmelinna-Laukkanen,Pia Heilmann |
| Subject Matter | Information & knowledge management,Knowledge management |
Human resources –strength and
weakness in protection of
intellectual capital
Heidi Olander
LUT School of Business and Management,
Lappeenranta University of Technology, Lappeenranta, Finland
Pia Hurmelinna-Laukkanen
Oulu Business School, University of Oulu, Oulu, Finland, and
Pia Heilmann
LUT School of Business and Management,
Lappeenranta University of Technology, Lappeenranta, Finland
Abstract
Purpose –Human resources in knowledge intensive industries create the basis for continuing innovation
and subsequent firm performance. At the same time, they pose risks for the competitiveness of the firm:
unwanted leaking of knowledge and intellectual capital to outsiders exposes firm-critical knowledge, and
knowledge leaving with a departing key employee may jeopardise the firm’s projects. The purpose of this
paper is to examine how human resource management can serve as a protection mechanism to diminish
knowledge leaking and leaving via employees.
Design/methodology/approach –The authors approach these issues through a case study utilising
interview data from 22 interviews within two large research and development intensive firms.
Findings –Human resources could be seen both as a strength and weakness of a firm with respect to
knowledge protection. The findings indicate that there are numerous practices related to commitment,
trust, motivation, and sense of responsibility available to deploy to strengthen loyalty and to improve
preservation of intellectual capital.
Originality/value –While human resources management aspects have been widely discussed with
regard job profitability and efficiency in generating intellectual capital, their connection to knowledge
protection has often been overlooked. This study aims to contribute to this area.
Keywords Knowledge, Innovation, HRM, Intellectual capital, Management, Qualitative research
Paper type Case study
Introduction
Human resources are invaluable sources of innovation and competitive advantage for
firms (Sels et al., 2006; Massingham and Tam, 2015). Insightful, experienced and
enthusiastic research and development (R&D) personnel can produce new ideas
themselves and/or in collaboration with partners outside the company (Riahi-Belkaoui,
2003). However, human resources are one of the most volatile resources (e.g. Harcourt
and Wood, 2007), and relatively little is known about how they can be managed to
sustain competitiveness. While employees of the firm engage in knowledge sharing,
they also deal with the highly confidential, innovation-related knowledge that should
Journal of Intellectual Capital
Vol. 16 No. 4, 2015
pp. 742-762
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-03-2015-0027
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
The authors would like to take this opportunity to thank the fellow researcher Dr Miia Kosonen for
her important contributions to the early phases of this research, and the reviewers and editors for
comments that allowed final polishing of the paper. Funding from Tekes –the Finnish Funding
Agency for Innovation was an important enabling factor in conducting the research, and therefore
highly appreciated.
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JIC
16,4
not leak beyond the firm boundaries; it has been noted that any resource can only be
valuable as long as it is unique and distinct to the company (Barney, 1991). Besides
knowledge leakages induced by employees, key employees leaving may pose risks for
the firm’s innovation activities. One of the central options available to management to
forestall knowledge leaking and leaving is relying on human resources management
(HRM)-related mechanisms, which can help retain employees in the firm as a productive
resource, and foster their willingness to create, share, and still simultaneously (the
focal issue in this study) protect intellectual capital consistently (see Ahuja et al.,
2013; Hurmelinna-Laukkanen and Puumalainen, 2007). Accordingly, it is important
for innovation managers to understand and manage human resources from this
pointofview.
Earlier research on protecting a firm’s intellectual assets has concentrated to a large
extent on the use of formal mechanisms of protection and appropriation such as
contracts and patents (Cohen et al., 2000; Davis, 2004; Hertzfeld et al., 2006; Lang, 2001).
At the same time informal mechanisms have not attracted as much research
interest –despite the recognition that formal means cannot cover everything. The available
HR-related mechanisms for knowledge protection in innovation management, in particular,
have so far garnered rather limited attention. Some research exists on employment
contracts and non-disclosure agreements (NDAs), but these are closely related to the formal
forms of protection. While some researchers (e.g. Hurmelinna-Laukkanen and Gomes, 2012;
Hurmelinna-Laukkanen and Puumalainen, 2007; Baughn et al., 1997; Liebeskind, 1996,
1997) have brought up the issue of using HR-related practices for knowledge protection in
innovation management, the findings have been somewhat inconclusive. Some of the
research findings highlight the importance of these mechanisms, while some suggest that
they might not provide very strong protection.
Kinnie and Swart (2012) note how HR practices play a strategic role in managing the
way in which employees relate to both to the profession and the firm. In line with this,
HR practices influence employees’attitudes towards knowledge protection; if they see
that as something that makes their work more difficult (see Hannah, 2005; Hannah and
Robertson, 2015) or as a natural part of innovation management. These attitudes may
affect the company’s opportunities for the appropriation of knowledge and intellectual
capital, both in terms of profiting from innovations, and the possibilities of generating
further innovation from intellectual capital (Ahuja et al., 2013).
While it is widely recognised that much of the knowledge and intellectual capital
that creates a competitive advantage is embodied within the firm’s employees, there the
ways in which knowledge management and HRM could help preserve competitive
advantage warrant more research (Currie and Kerrin, 2003; Haesli and Boxall, 2005;
Storey and Quintas, 2001; Camelo-Ordaz et al., 2011). For example, protection aspect of
managing intellectual capital has been touched in earlier research (e.g. Kianto et al.,
2010), but there has thus far been very little in-depth, non-survey-based empirical work
on linking intellectual capital and knowledge management with HRM (exceptions
include Currie and Kerrin, 2003; Haesli and Boxall, 2005). In particular, informal
mechanisms have been studied mostly in the context of SMEs (e.g. Leiponen and Byma,
2009; Olander et al., 2009, 2011), and in many cases, their focus has been more on
securing knowledge sharing than knowledge protection (Currie and Kerrin, 2003;
Haesli and Boxall, 2005).
Likewise, there are some studies addressing the practice of hiring competitors’
employees to enhance a firm’s knowledge base, but practices to diminish the outbound
knowledge flows (e.g. competitors hiring away the focal firm’s employees) are much
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Protection of
intellectual
capital
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