Bridging HR Practices and Frugal Innovation: Employee Innovative Work Behavior as a Key Mechanism within the AMO Framework

Purpose - This paper has explored how High-Performance Work Systems (HPWS) affect the ability of firm frugal innovation capability (FIC) in small and medium enterprises (SMEs) and explored the mediating role of employee innovative work behavior (EIWB). Based on the Ability-Motivation-Opportunity (AMO) model, the research was meant to explain how organized human resource practices can translate into outcomes of innovation in resource-limited settings. Design/methodology/approach- The empirical study’s data were collected by surveying 365 respondents in 120 Pakistani Small and Medium Enterprises (SMEs). All hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SMART PLS. Findings- The findings suggested the positive impact of HPWS on the capability of firms to be frugal in their innovations is significant. HPWS has also positive effects on employee innovative work behavior that again has a significant positive impact on frugal innovation capability. Moreover, innovative work behavior by employees was identified to partially mediate the relationship between HPWS and frugal innovation capability and support the proposed theoretical model. Originality/value- The study helps to fill the gap in the literature by combining the AMO framework with the research on frugal innovation and empirically proving the mediating role of employee innovative work behavior. It goes further to determine how HPWS leads to innovation in SMEs who have to operate within the limits of resources.