The Innovation Strategy of Small and Medium-sized Enterprises in

The Innovation Strategy of Small and Medium-sized Enterprises in
the Perspective of the Strategic Human Resources Management
LIN Wanchun
School of Management, Jinan University, P.R.China, 250022
[email protected]
Abstract: During the past ten years, the strategic human resources management is not only the focus of
discussion in academic circle but also is an ideal state of management pursuited by multitudes of HR
practitioners. The promotion of the core competitiveness of small and medium-sized enterprises needs
innovation strategy and the new strategic model illustrates the whole process of generating, selecting,
executing and evaluating the innovation strategy. The thesis provides us the innovation strategy of small
and medium-sized enterprises in terms of strategic human resources management, thus putting forward
the corresponding implementation methods
Keywords: Strategic human resources management (SHRM), Innovation strategy, Competition
advantage of small and medium-sized enterprises, Co-intelligence
1 Introduction
Strategic human resources management (Strategic Human Resource Management, SHRM) dynamically
integrates strategic demand with human resources management function, thus promoting the formation
and realization of strategy. Although strategic human recourses management benefits organizations
obviously, the strategic status of HR management has not been set up in most organizations. Despite the
fact that a lot of companies bring managerial experts of human resources into the group of supervisors,
the essential change has not taken place to the role of the administrative experts of human resources.
Setichik (1997) managerial function of HR is in an obscuring situation in terms of the strategic role
which is played in organizations. In most cases senior managers often order human resource staff to
implement a number of strategic-related projects and proposals while these staff do not have enough
jurisdiction, consequently human resource management department often is in a dilemma or
embarrassing situation. Caudron (2003) Nowadays 1 / 4 of human resources directors do not have any
professional background. Thereafter, the success of strategic human resource management requires not
only a certain degree of business knowledge but also solid knowledge and skills of human resources
management.
A successful innovation strategy is the starting point of the reform period in those small and medium
enterprises, which is also of great strategic significance to the development of them. As the core
resources of SMEs, Human resources management also plays a significant role in obtaining a
competitive advantage. Therefore it is absolutely unilateral to research on the innovation strategy
regardless of the HR recourses. At present, China's research on innovation strategy is still very limited,.
Most researches have been focused on the diversification strategy, organization patterns, mechanisms
controlling, etc. However strategic human resource management from the perspective of the exploration
of this issue is still blank. According to the theory of strategic human resource management, it will
provide a new theoretical support for the sustainable development of small and medium enterprises if
we employ innovative and strategic thinking, build innovative strategies model meanwhile explore the
implementation of mechanisms, it will ensure the competitive advantages to the SMEs combined with
the Synergy
，
2 Integrate the Strategic Human Resource Management Practices in SME
Innovation Strategic Design
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Strategic Human Resource Management not only vertically integrates the Human Resource
Management with the organization's strategic management process, but realizes the goal of horizontal
integration of various human resource management concepts, policies and measures to successfully
achieve the organization's strategic and tactical objectives. this innovation strategy based on the theory
refers to the ongoing changes in the implementation of a wide range of innovative strategies to enhance
the survival rate of SMEs. Obtaining innovation strategies of SMEs needs innovative ideas from all
walks of staff, it's like in search of the cave exit
in different sections of the road adopt different
approaches to prevent any accidents or miss exit. Based on strategic human resource management
theories, innovative strategies are mainly embodied in the design of innovative strategies model, which
includes strategy formulation, strategic choice, strategic implementation and strategic evaluation, which
run through the innovation and strategic thinking
2.1 Strategy formulation stage
In the early stages of developing strategies, senior managers first need to examine in depth of SMEs
strengths, weaknesses, external opportunities and threats by using the analysis of SWOT, in order to
determine the reform of SMEs in the follow-up cycle and what strategies will be implemented .In this
process the grass-roots employees are most likely to make innovative and strategic thinking because
the front-line staff working in the course of operation of SMEs are particularly aware of problems and
deficiencies and their views and suggestions may be the most representative of customer expectations.
We can see, in the this stage, senior management should take full account of the views of employees at
all levels and stimulate staff boldly to put forth as much as possible innovative and strategic vision to
ensure the right strategic direction for the specified.
2.2 Strategic choice stage
The main task of this phase are: missions and objectives of SMEs as a starting point for strategy
formulation based on the principle, consider the human resource skills, behaviors and cultural needs, the
rational choice of model of innovation strategies of SMEs, perfect the strategic human resource
management practices at this time senior management staff need to summarize innovative ideas put
forward by all the levels of staff and sum up effective strategies for the program to determine the reform
strategy.
2.3 Strategy of the implementation phase
At this stage, innovative strategies protect the grass-roots workers to be an important factor in successful
implementation of the SME .So senior managers must pay more attention to their interests and
aspirations and understand their importance for the success of SME development strategies. During the
implementation of the strategy the conflict and dispute arouse in this course will cause losses to small
and medium enterprises and grassroots groups are also the first victims of staff. For such cases, if the
SME senior managers turn a deaf ear and a blind eye, it will lead to dissatisfaction and frustration from
the grassroots employees and thus produce significant resistance, resulting in the failure of innovation
strategy. Enhancing grass-roots employee job satisfaction and human resources of SMEs are closely
linked, so senior managers should take this as a guide and greatly strengthen its human resources
management of basic work. For example, Human Resource Department and administrative department
on the senior level should highly cooperate; Recruit, training, performance management, salary structure,
bonus welfare, etc. should be combined with human resources ability and human resources behavior;
Human Resource Department should reflect the good result that the management practice activity of
human resources produce to the staff of different levels who proposes the innovation strategy.
Meanwhile, Human Resource Department must transfer some time from administrative management to
human resources management. This requires proper fraction of Human Resource Department, concretely,
three kinds of fraction ways can help to solve this problem. First, lots of daily work about human
resources management (for instance, recruit, salary, training, etc.) can transfer to line manager or straight
line manager to finish. Therefore human resources administrative department can orient at inside role of
consultant expert especially. To finish the transformation of this kind of task smoothly, office managers
need to study and grasp essential human resources management skills and knowledge, Human Resource
Department can offer essential help. Second, the computer network can help Human Resource
Department to improve working efficiency and improve staff's participation degree in the course of
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management. Third, the organization can outsource some human resources management and give them
to specialized advisory company in order to allocate more time to be absorbed in the strategic
management affairs. Comparatively speaking, OutSourced human resources managements are generally
all that customary and their additional value is lower. According to Khatri and Budhwar ( 2002)The
survey of 35 managers, three possible kinds of the OutSourced human resources management: The
recruitment of the contracted worker, hunter and training interchangeably of the manager on the senior
level. In Ericsson, human resources directors and managers of each department are called human
resources administrators. In fact the definition on this kind of name gives a kind of hope , wants them to
really become general manager's partners, and put forward the opinions and suggestions from other
angles. This requires office managers and human resources directors to coordinate each other,
understand and hold enterprises in an all-round way, and possess good assurance to the demand for
talent and strategy of enterprises.
2.4 Strategic evaluation phase
the main task at this stage is to examine the performance of small and medium enterprises to evaluate
the effectiveness of innovative strategies ;Combined with initial results already achieved, SMEs must
quickly adjust the innovative strategies to meet the new demands for reform .Meanwhile, HR
assessment results should be fed back to the small and medium enterprises of all staff, once again make
clear missions and objectives of SMEs for SMEs to enter the next round of innovation strategy and lay a
solid foundation for reform.
3 Ways to Implement Innovative Strategies
From a strategic human resource management perspective, the key to the implementation of innovation
strategies lies in the degrees of SMEs' external and internal co-intelligence. Co-intelligence means an
enterprise behavior. that the enterprises have to do to complete a concept, task, project or projects within
the monetary capital to purchase the use of small and medium enterprises outside the enterprise
intellectual capital. In fact, the creativity of in-house staff of small and medium enterprises and the
absorb of the external intelligent capitals are two separable aspects of co-intelligence, so a wider range
of Synergy can be defined as: small and medium enterprises by stimulating the creation of internal staff
force to absorb external intellectual capital, adopt a "harmony of the internal and external extension of
unified management" approach to achieve "wisdom and capital" efficient integration, thus reaching the
completion of strategic planning, strategic tasks, projects or works of a corporate behavior SMEs can
use co-intelligence means to obtain intellectual Innovation Strategy.
3.1 Internal harmonization of the financial means of intellectual
3.1.1 Develop strategic high-level human resource managers
If CEO can not realize the strategic importance of the human capital, they would not bring management
function of human resources within and organize the course of the strategic policy. By the survey of 148
manufacturing companies in Louisiana, Bennett,etc.( 1998) discover, when the top administrator regards
the staff as a kind of strategic resource, the strategy degree of the management function of human
resources is higher. Because supreme administration and supervision authorities have strategy necessary
resources of human resources management and final policy-making power of the system, so if there is
not the highest and managerialest support, no matter what importance to understand strategic human
resources management the staff following are, human resources management may be unable to finish the
conversion to the strategic role.
Secondly, Ulrich (1998) points out the managers on the senior level are playing an important role too in
the course of forming of the strategic role of human resources management. They can offer financial
support for new human resources administrative skill and measure, can also propagate the understanding
that they contributed to human resources strategy to other departments and administrators, these will
promote the forming of the strategic role of human resources management and consolidate virtually.
these managers must possess and be able to use two kinds of abilities: first, upwards, the ability to
establish partnerships with managers; downwards, the ability to communicate with employees in order
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to ensure their understanding of innovation strategies of SMEs; Second, they can identify current human
resource management policies, programs and management practices in which can be a real development
of human resources and enhance the competitive advantage of SMEs parts. Let us take Haier Group for
an example, Macaulay, president of Haier America Haier, is very much identified with the culture and
has a high degree of consistency of business philosophy and methods of marketing with Zhang
ruimin,.McCoy, through his words and deeds , he has a great of influence on many American Haier, thus
making Haier culture swiftly accepted by the United States Haier people and the product in the United
States also expanding its market share constantly.
3.1.2 Managers should have long-term views
Strategic change involves the organization in various management, which requires in-depth and
sustained efforts to complete; so it often takes some time to observe the results of strategic change. Thus,
in the establishment of strategic human resource management, senior managers should adopt a
long-term point of view, on the other hand, organization of various functional departments should
cooperate together so that an organized, systematic and coordinated implementation of the Strategic
Human Resource Management
3.1.3 Financial staff needed to create a culture of intellectual
SMEs should strive to create a communicational, unity and harmonious culture and inspire employees to
give full play of his intelligence and promote the ethnological innovation and management
innovation.og SMEs. 2001, Sohu's online advertising sales were unsatisfactory, human resources not
only went to study and made plans to launch all the staff, but also took the initiative to discuss with
business executives, and planned a whole line of business organizational structure; selected qualified
personnel to establish an effective compensation system and the proper incentives system to help
managers achieve the business leap. By 2004, Sohu advertising sales improved nearly 50%
3.1.4 Upgrading of the knowledge, skill of the staff of Human Resource Department
Obviously, if you want to become a member who organize the management group of the business and
play the important role, human resources managers must study and grasp relevant professional
knowledge first. Otherwise, they will not quite understand the business topic and content discussed of
line managers, of course there are no constructive suggestions. The future managers of human resources
on the senior level must possess the education backgrounds of MBA level or general commercial
management, because such human resources manager all have certain understanding in organizing
strategy and business operation, can become the outstanding strategic partner of business more quickly.
Not only managers on the senior level should study, so staff members in Human Resource Department
all need to study the essential skill of administrative institute of strategic human resources. Already
professional knowledge that improve human resources staff comes through the training project that is
specially designed to a lot of enterprises, train them to become the qualified inside consultant expert. For
example, GE Motors Corporation has offered a set of global human resources courses in common use to
train the staff of Human Resource Department, improve the management skills and establish the ability
to step membership credentials.
In Ericsson and Chinese Hewlett-Packard, what Human Resource Department did is interpreter work,
namely translate the tactics and strategy of enterprises into executable tactics and method. Obviously,
the quality translated depends on the overall qualities of human resources members, especially to the
assurance organizing strategy and business operation. This proves the human resources members' focal
point of work is changing, originally a certain individual or a certain group ,now it pays more attention
to the improvement of organization efficiency and human resources function’s contribution to this kind
of strategic improved.
3.2 SMEs co-intelligence ways of "external extension"
Generally speaking, many related resources and innovations are impossible to have a company-specific,
they are commonly found in many enterprises, universities, research institutions and among customers.
Co-intelligence ways of "external extension" allow SMEs to get abundant resources, innovation and
intelligence while taking a low cost,
3.2.1 Strengthening SME cooperation between the learning and intellectual exchanges
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Economics of the transaction cost is pointed out, the production that exchanged because the market
management benefit is greater than enterprise's transaction cost and management benefit, and is smaller
than the transaction cost of the market, can bring potential comparative advantage for them because of
innovative intelligence resources that enterprises have, make enterprises often obtain external
intelligence of complementarities through the trade, in order to expand its border that absorbs external
intelligence. However, the trade is not omnipotent. Different enterprises embody extremely strong
heterogeneity on resources, organize the inside in enterprises in especially some innovative intelligence
resource solidification, can not flow trade totally, this require enterprise set up good cooperation, thus
realize the sharing and complementation of innovative intelligence resources of each side
SMEs allow co-operate between all levels of staff learning and intellectual exchanges, which will help
SMEs to learn one another's knowledge and ability in order to achieve the integration of knowledge
among SMEs. To cooperate in the knowledge of complementary may create new cross-cutting
knowledge. The gradual accumulation of knowledge and ability may bring a qualitative leap in
innovation and ideas, stimulate employees and enhance the organization's innovation capability.
3.2.2 Strengthen cooperation with universities, research institutions
Colleges and universities have a large number of high-level human resources, but lack issues and
financial resources; SMEs lack the necessary innovation and high-level research institute of human
resources, but they can provide the results "incubator" funding base and development capitals. Therefore,
the small and medium enterprises to universities or research institutions Synergy can be achieved
"win-win."
3.2.3 Seek the views of customers SMEs
As key stakeholders of the Survival and development of SME, customers’ interests directly determine
the demand for innovation strategies of SMEs, whether SMEs can obtain the real market acceptance and
the size of market share and the level of profits for SMEs.
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