Human Resource Practices and Innovation Capability: Unpacking the Mediating Role of Knowledge Management

This paper aims to investigate the mediating role of knowledge management (KM) in the relationship between human resource (HR) practices and organizational innovation capability. The study uses a stratified multi-stage sampling technique, with a sample size of 120, consisting of both male and female employees in the service sector. Using the collected samples, the data is analyzed using structural equation modeling, which applies three different approaches to mediation analysis. The findings reveal that KM significantly mediates the relation between HR practices and organizational innovation capability. Moreover, the study found that KM mediates this relationship positively for both male and female employees. It is possible to enhance organizational innovation capability if HR practices are developed and executed properly by HR managers. Through the application of HR practices, organizations can manage and share knowledge, which leads to innovation and a competitive advantage. Developing countries are increasingly adopting policies such as empowering employees through decision-making to stimulate innovation. Enhancing knowledge management (KM) and intellectual capabilities has, therefore, become a strategic focus for HR policies in these countries. I aim to alert the public in developing countries, especially Pakistan, regarding the role of KM and intellectual capabilities in striving for better organizational performance.