Achieving Business Sustainability through Diversity Management and Effective HRM

*Keletso Lidith Moropane*

#### **Abstract**

Diversity management and business sustainability are increasingly becoming essential drivers for business growth and development across the globe. It is because businesses in varying forms and sizes are the engine of the supply of goods, employment creation and innovation and contribute to the economic growth of different economies in the global sphere. Most modern businesses and organizations comprise a diverse workforce whereby managing employee expectations and maintaining an actively engaged labour force is challenging for management. Business globalization, workplace relations and varying organizational demographics necessitate diversity management for businesses. Despite the contribution of businesses to the development of labour market economies, diversity is overlooked, and achieving sustainable businesses is still a challenge in the world. Numerous business scholars have addressed the issues underlying the business sector by identifying causes and analyzing business failure rates but failed to provide answers as to what businesses can do to achieve diversity and become sustainable. This chapter highlights the importance of diversity management as a strategy to enhance sustainable businesses in the global economy. The chapter focuses on managing diversity, business sustainability and human resource management to achieve its objectives.

**Keywords:** diversity, human resource, management, business, sustainability

#### **1. Introduction**

The world of work is constantly developing because of changes in the economic, political and technological environment. Today, globalization poses significant differences in all spheres of varying economies at the national and international levels. Guillen [1] states that globalization brings diversity to everyday life. Diversity is massively permeating all areas of the business environment, so business managers are forced to employ diversity management policies to achieve social responsibility, diverse working backgrounds and sustainable businesses. Diversity management and sustainable businesses are increasingly becoming significant aspects of business growth and development worldwide [2]. Businesses are essential for supplying goods and services, combating unemployment rates, enhancing innovation, and fostering

economic growth in the global sphere. Fajcikova et al. [3] describe diversity as a social phenomenon closely related to globalization and considers demographic changes involving human qualities such as race, gender, age and ethnic groups.

On the other hand, human resource is an invertible concept where business is involved and plays a vital and most valuable role in any organization, whether small, medium or large. This chapter defines human resource management as the management of people as a collective by focusing on the functions, objectives and outcomes of HRM. That is, enabling and developing the workforce to achieve fulfilling employment relationships for employees and managers. It is further stated that employee diversity and human resource management contribute to creative and innovative dynamic work environments. While diversity influences labour markets, human resource management is a prerequisite for achieving diverse, sustainable businesses. The foundation for a competitive advantage in the business world is diversity, which is why diversity management is increasingly becoming a practical approach in human resource management [4, 5]—globalization is a result of the industrial revolution, where diversity management and human resource management are interrelated. Issues related to the sustainability of businesses are of paramount concern in this chapter as they highlight domineering dimensions meticulously linked to the working class and the future of business and can only be dealt with holistically. This chapter, therefore, focuses on managing diversity in the global economy and integrates human resource management tools toward achieving sustainable businesses. Conclusively, diversity management and business sustainability as areas of research interest for this chapter have recently gained attention from research scholars. However, specific research questions remain unexplored, which this chapter aims to address through the following objectives:


#### **2. Literature review**

This section presents the concept of diversity management in the corporate world and conceptualizes the business case of diversity and human resource management. In addition, strategies to achieve business sustainability are highlighted, as indicated by numerous authors in different contexts.

#### **3. Research methodology**

A literature review on diversity management and business sustainability was conducted using relevant keywords. Bryman [6] defines a literature review as a piece of academic writing demonstrating a researcher's knowledge and understanding of existing academic literature about a topic of research interest. Specific words such as diversity, human resource, management, business, and sustainability were searched based on an inclusive criterion. The criteria used to search for articles are based on

#### *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

the language and relevance of articles. Therefore, the search criteria for this chapter include English articles retrieved in peer-reviewed journals from the past decade. Business sustainability and diversity management have been prominent in research over the past decade. Using recent articles ensures the quality and relevance of studies that indicate the extent of available information on the current subject. The theoretical framework of diversity management and business sustainability in this chapter is conceived from numerous textbooks and content on electronic databases, including EBSCOhost, Research Gate, Sabinet, JStor, Google Scholar, ProQuest and conference papers. In addition, the author used news articles and internet resources, including social media, to trace government publications, public debates and reactions to diversity management and business sustainability.

The chapter mainly incorporates literature evidence which presents a synopsis of different factors. A study by Yadav and Lenka [5] explored dimensions, contextual variables, consequences, and emerging research trends in diversity management. The study highlights that diversity is more prominent in laboratory studies, and not much research has been done among group members in workplaces. This chapter adds to the literature by highlighting significant studies by Udin et al. [7] which investigated ways to manage workplace diversity to sustain organizational competitive advantage. The study shows that managing diversity can enhance creativity and organizational growth. Fajcikova et al. [3] examined whether diversity management can be used as a tool toward the sustainability of competitive advantage. The findings revealed that effective diversity practices could elevate the representation of women and minorities within organizations in senior management. Another study by Seliverstova [8] on workforce diversity management also reveals that diversity management contributes to organizational performance.

#### **4. Diversity management in the world of work**

Diversity is an inevitable social reality in a modern society whereby teamwork, demographics and business globalization necessitate diversity management in any organization. Guillen [1] asserts that diversity encompasses four dimensions, namely, external, internal, organizational and personality. Employee openness, conscientiousness, agreeableness, and level of introversion and extroversion form a person's personality. Internal dimensions focus on race, gender, sexual orientation, physical ability and ethnicity. In contrast, external dimensions refer to geographic location, personal habits, educational background, work experience, marital and parental status, religion, income and appearance. Organizational dimensions include management status, union affiliation, seniority, functional level or unit, work content and location.

Gupta [4] affirms that diversity results in a pool of wisdom, knowledge, talent and exposure to various cultures. Diversity management in the workplace creates an inclusive working environment where management embraces individual differences such as traditions, style, heritage and background [9]. Most modern businesses and organizations comprise a diverse workforce whereby managing employee expectations and maintaining an actively engaged labour force is challenging for management. Managing diversity in organizations is gradually becoming a complex and unique issue in human resource management [10]. Therefore, diversity management is prominently acknowledged for its ability to sustain organizations. Although diversity management is a challenging area for the human resource department, its implementation within organizations dependents on a few factors, both within and outside organizations. Research evidence on diversity and inclusion issues is very limited in emerging economies. There is a pool of studies investigating diversity management in western countries. Still, very few focus on how diversity management forms an integral part of human resource management, especially in developing countries.

Existing studies identified six areas in HRM that are easily affected by diversity management: training and developing diverse staff, linking HRM strategy to diversity, recruitment for diversity, selection for diversity, monitoring diversity and equality management, and providing work-life flexibility. Meena and Vanka [11] identified several diversity-orientated HRM practices. These include proper oriented selection and performance evaluation practices, team and control-oriented practices, fair oriented compensation and training practices and identity-free practices. Approaches to diversity management include affirmative action plans, legal compliance, the ad hoc approach, social justice approach and strategic diversity management. In South Africa, for example, affirmative action plans focus on gender equality and establishing ethnicity ratios, while social justice approaches are dedicated to corporate social responsibility. Literature reveals several positive outcomes that often result from diversity management. Amongst many other benefits of diversity management, researchers identified the following effects [1, 3, 12]:


*Source: author's conceptualization based on Mazur and Walczyna [13].*

#### *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

**Figure 1** presents factors that influence the implementation of diversity and elements that do not influence diversity management in the workplace.

The implementation of diversity management in organizations is renowned for its numerous benefits and include the following:


Many organizations practice diversity management in pursuit of internal and external possibilities. Internal possibilities may include the quest for higher productivity, innovativeness within the organization, consistent personnel, or an inspiring work atmosphere [14]. External possibilities, for example, could be an organization's search for new customer segments, maintaining a good reputation and a prestigious level of social responsibility. Possible internal problems that an organization might want to overcome are conflict, maintaining work standards and staff turnovers, while external problems, on the other hand, relate to customer loss, recruitment issues and tight competition. To bring about a competitive advantage in a company through diversity management is not an easy task. Marketing, resource acquisition, creativity, costs, organizational flexibility and problem-solving are some factors that companies need to consider to sustain their business operations [14, 15].

Managing and valuing diversity management is vital for influential people management, improves workplace productivity, and significantly contributes to strategic human resource management objectives. Diversity is used strategically to boost an organization's competitive advantage through cultural diversity, differentiating factors such as efficient work practices and procedures, client consumer-related services, and technological and product services-related innovation [2]. Diversity management emerges due to the quest for businesses to recognize and develop optimal human resource value from existing inherent varying employees manifesting in different dimensions. Diversity management as an intrinsic approach to human resource management is a fundamental aspect that acknowledges and respects individual contributions within organizations and integrates their contribution to the overall mission and vision of companies. In addition, individual employees' personal and social development is of great importance. Diversity is, therefore, generally driven by sustained business growth, which depends on an organization's level of productivity, innovation, creativity, agility, and safety. Achieving sustained business growth

requires organizations to commit to ensuring a sufficiently diverse workforce, actively building workplace culture, teamwork, market knowledge, workforce skills and creating inclusive workplaces through dignity and respect [16].

#### **4.1 HRM as an element of business sustainability**

Human resource is also an invertible concept where business is involved and plays a vital and most valuable role in any organization or business, whether small, medium or large. Human resource management is defined from a macro perspective as the management of people as a collective by focusing on the objectives and outcomes of the HRM functions. That is, enabling and developing the workforce to achieve fulfilling employment relationships for employees and managers [17]. The transformation of human resource practices over the past years has been influenced by various factors, including globalization and diversity initiatives. Global competition, for example, is in pursuit of talented workers to achieve sustained competitive advantage. An organization's environmental, social and financial objectives are achievable through sustainable HRM practices and contribute to developing influential organizations that prioritize sustainable competitive advantage, flexible working environments, organizational culture, job security, work-life balance and participative leadership. While HR influences the success of businesses, HRM is a procedural concept which supports organizational activities to achieve the organization's predetermined goals. The contributions of HRM towards business sustainability include organizational change, professional development, organizational training, work-life balance and employee participation. Therefore, the process of HRM sustainability evolves through the development of employee skills maintenance of active and healthy working environments. Therefore, successful implementation of HRM sustainability considers factors that affect organizational and environmental sustainability, as presented in **Figure 2** below [14].

Sustainability at the business level refers to creating sustainable business models from a social, financial and ecological point of view and focuses on identifying strategies and practices that contribute to a more sustainable world and simultaneously maintain shareholder value. Therefore, sustainable human resource management uses HR tools to aid organizations in embedding sustainable strategies and creating HRM systems that add value to a firm's sustainable performance [18]. Through sustainable human resource management, organizations can achieve a triple bottom line and simultaneously provide long-term health and sustainability for the organization's

**Figure 2.**

*Source: author's elaboration on the base of Mazur and Walczyna [13].*

#### *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

internal and external stakeholders. The triple bottom line is the performance measurement of an organization's pursuit of a sustainable strategy [19]. Consequently, the results of sustainable HRM can ensure policies that prioritize equity in the workplace, the development and well-being of the workforce, and concentrate on supporting friendly environmental practices. King and Cohen [15] confers that sustainable businesses depend highly on a company's leadership which embodies the organization's values, culture and communication channels. Sustainability of human resources, therefore, requires the integration of values, skills and trust to prevent harmful environmental effects that businesses can avert by adopting justice, welfare and development. Therefore, human resource management is an indispensable feature of management practices that focuses on matching relevant talents with specific jobs to increase firm performance.

Sustainability is rapidly becoming a primary focus for numerous organizations globally as societal demands, climate change, regulatory pressures and the need for greater environmental and social responsibility escalates. While organizations are held accountable for their impact on society and the environment, the HR function is critical to achieving the success of sustainable-driven organizations. HR professionals' primary focus and skills are mainly on changing management and organizational process, which requires HR managers to take on the leading role in developing and implementing sustainable business strategies.

#### **4.2 HRM as a business case for business sustainability**

Literature portrays HRM as an introspective function focusing on using the workforce to achieve short-term financial results effectively and efficiently. An appropriate approach to achieving sustainable HRM can contribute toward developing competent managers with the necessary attributes and abilities to deal with and handle present and future challenges that may hinder the sustainability of organizations. HRM is a critical contributor to corporate sustainability leadership. Business leaders, therefore, need to focus on including HR managers in business practices directed towards sustainable HRM through collaboration, consultation and accountability. Simultaneously, HR professionals are encouraged to modify HRM approaches from transactional and transformational to sustainable HRM. Therefore, performing HRM sustainably and supporting business sustainability are the prominent HRM roles necessary for implementing sustainability strategy in any organization.

Performing HRM sustainability focuses on professional HRM processes and tools that are integral to HRM contributions and execution of essential functions based on sustainability principles. These principles include the following:



#### **Table 1.**

*Principles of business sustainability.*


HR managers are therefore expected to fulfil the following responsibilities when performing HRM sustainability in order of importance (**Table 1**).

Embedding sustainability through HRM requires employee attraction, employee skills and knowledge, attainment of employee sustainability goals, sustainable work climate, and sustainable employee behaviours and attitudes. Firstly, organizations are encouraged to utilize their commitment to sustainability when recruiting because it can attract applicants who align with an organization's sustainability goals [12]. Secondly, commitment to sustainability within organizations is believed to affect employee commitment and job satisfaction positively. Sustainability behaviours in employees can increase if companies commit supervisory and organizational support to the workforce. Fourth, an organization's sustainability strategy should align with a company's organizational climate for sustainability strategies to be successful. Training and developing essential knowledge and critical skills are also necessary to achieve sustainability. Lastly, the evaluation and compensation system can include sustainability targets to increase attention and achieve sustainability goals.

HRM sustainability can be approached from different angles, resulting in varying outcomes and objectives. But, sustainability development integrates similar elements across sectors and types of organizations which are appropriate for forming sustainable strategies and programs. As a result, sustainable HRM features are most common across all HRM functions, irrespective of the organization's size, leadership style or geographic area. Sustainable HRM depends highly on an organization's leadership and strategy. Most corporate sustainable leadership strategies are carried out by an executive management team that deals mainly with implementing sustainability. The management team is therefore responsible for sustainability implementation through the following steps (**Figure 3**).

Working towards sustainable HRM is a journey that depends on three major components: compliance, corporate governance and business ethics. Compliance with, for example, national, federal, regional and local laws and labour regulations is the first step towards sustainable HRM. Business ethics includes behavioural guidelines

*Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

#### **Figure 3.** *Source: Author's elaboration adopted from Cohen et al. [14], King and Cohen [15] and Parry et al. [18].*

through which employees, managers, and directors are expected to behave and present acceptable moral and ethical business standards. On the other hand, corporate governance refers to systems by which companies are directed and controlled. While the board of directors in an organization are responsible for ensuring corporate integrity and providing direction for organizational strategies for sustainability, HRM practices can be enhanced by the board's directive through legitimate and empowering frameworks. These frameworks include (**Table 2**):


**Table 2.** *Frameworks towards business sustainability.*

Several factors have been identified that might affect the future of HR practices negatively or positively. In the ever-changing global economy, organizations are encouraged to consider reviewing labour policies, education, benefits packages and compensation, which are essential to human resource management. These factors contribute to the development of better organizational infrastructure. Therefore, the future of human resource management will force HR managers to only recruit competent staff and leaders who will develop strategic decisions that will enable organizations to compete with foreign companies. The HR focus in future includes workforce diversity to enhance leadership behaviours and incentives to motivate the workforce [12].

But most importantly, HR managers ought to pay attention to the impact of globalization for organizations to retain a competitive advantage in the global market and experience a long-lived experience. Aust et al. [20] postulate that globalization, diversity, compensation and benefits packages form an integral part of future-orientated organizations, which must ensure that business strategies align with organizational goals and objectives and that organizations compete effectively in the global market. Therefore, maintaining effective performance-based systems, adapting to new technological innovations, investing in workplace diversity and maintaining competitive pay systems and technical competencies are prerequisites for HR sustainability and business success.

In pursuing sustainable HRM, human resource managers need to understand and carefully implement critical tenets of sustainability practices and HRM capabilities. These include, amongst many others:


Sustainable HRM, in essence, plays a significant and positive role in achieving business outcomes and exerts a positive impact on employees and external stakeholders [20]. Ehnert et al. [9] assert that HRM sustainability practices increase the maximization of profits within organizations and simultaneously reduce negative detrimental influences on employees and societies. Positive consequences of sustainable HRM include the overall growth value of an organization's worthwhile boosting national and international competitiveness. Improved employee engagement, increased employee satisfaction, HR quality boost, employee development, enhanced work efficiency, increased motivation and higher organizational loyalty are some of the benefits that sustainable HRM has for organizations. It can be concluded that socially responsible human management presents itself in the treatment of employees as primary stakeholders in an organization [21]. Therefore, diversity management is consequently considered a social aspect of sustainable HRM in this chapter.

#### *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

While human resource management incorporates planning, integration and action plan to manage employees effectively, diversity can also be included within the practice of human management, thus, creating an alignment between human resource strategies and diversity management goals. Based on the ecological perspectives, the concept of "greener organizations" is explained by Bangal and Tiwari [22] as HRM practices developed and implemented to promote employee behaviour to enhance the ecological efficiency of a company. It means that green HRM can be stimulated by employees, employers, regulatory stakeholders and customers [23]. Strategies to promote "green conduct include mobilizing employees to implement sustainable basic operations at all stages and different business levels. It also works towards holding employees accountable for applying sustainable practices in their daily work life and encouraging the workforce to further the practices in pay incentives. Lastly, using tools to equip employees and train them to develop or improve further. As a result, HR strategy and planning, talent management, building a strategy, organizational effectiveness, and leadership development are the critical knowledge areas for all HR practitioners.

The sustainability of HRM is distinguishable through three approaches: sustainable resource management, sustainable HRM and sustainable work systems. Work systems identify the core social aspects of sustainability and are intended to expand the perception of mechanisms involved in implementing and improving human resources [24, 25]. On the other hand, sustainable resource management prioritizes the clarification of organization and environmental association and further proposes approaches to combat resource scarcity. Sustainable HRM results in a shared advantage for stakeholders, eventually leading to enduring economic sustainability [13].

**Figure 4.**

*Source: author's elaboration based on Mohanty and Nayak [26].*

In a globalized, liberalized and industrialized world of work, all organizations work towards sustaining competitive business environments. Mohanty and Nayak [26] and Bangal and Tiwari [22] postulate that every organization is responsible for implementing eco-friendly businesses that create healthy working environments and long-term sustainability. As a result, Green HRM is an emerging concept that significantly influences the future of HRM and diversity management. Green HRM focuses on rules, regulations, recruitment, selection, performance, training, welfare and employee counselling. Green HRM, therefore, encompasses integrating HR practices and managing the environment in which businesses operate. **Figure 4** below presents the components of Green HRM as identified by Mohanty and Nayak [26].

Although the implementation of Green HRM has been criticized for its complexity, green HRM practices have been admired for their numerous benefits. They include, amongst many others, the ability to reduce overall costs, increase employee morality, motivate innovation and growth, develop knowledge for green HRM, increase a company's image, and improve stakeholder, customer, supplier and employee relationships. It is postulated by Margaretha and Saragih that Green HRM in the future focuses on enhancing HR practices to sustain businesses [27]. The main goal of Green HRM is to reduce the wastage of resources and ultimately preserve the environment. The components of Green HRM, as highlighted in **Figure 4** above, are powerful and practical tools to increase employee engagement and better productivity, make employees eco-friendlier, and achieve business sustainability [23].

The pursuit of business sustainability, in essence, depends on an organization's capacity to adapt to an organizational culture where diversity is concerned. The following recommendations are provided for HR managers to practice for successful diversity management and business sustainability.


Concisely, cultural and personal diversity forms an integral part of diversity management as a strategy to improve individual and team performance and the organization.

#### **4.3 Integration of diversity management and HRM towards business sustainability**

Despite the contribution of businesses to the development of labour market economies, diversity is overlooked, and achieving sustainable firms is still a challenge in the world. Numerous business scholars have addressed the issue underlying the business sector by identifying causes and analyzing business failure rates but failed to

#### *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

provide answers as to what businesses can do to achieve diversity and become sustainable. Business sustainability is rooted in numerous elements, but diversity, good governance, compliance and ethical conduct are fundamental features. Diversity initiatives are increasingly gaining attention and increasing in the job market due to globalization. It is stated that the impact of globalization on human resource practices in future will be dire as a result of the rapid growth of global markets due to the foreign competition, which will force small and medium businesses to improve their workforce for competitive advantage. Many organizations in the modern day are heavily invested in managing diversity to enhance firm performance through diversity initiatives such as workplace benefits and programs. These programs incorporate organizational features such as flexible work environments, which scholars within the field believe will transform the role of human resource managers and concert it into diverse areas focused on transferring knowledge, workers' expertise and skills. Researchers solicit that the initiatives mentioned above will significantly contribute toward developing harmonious skills, talents, leadership styles and behaviours, enabling businesses to achieve organizational goals and objectives [3, 19, 20, 28]. Although organizations will have a diversified workforce, achieving business sustainability and success in global markets will be very challenging for human resources.

In a study conducted by Mutku [28], it is highlighted that human resource managers may struggle to understand differences in global corporate cultures related to organizational policies, staffing, training, legal frameworks and recruitment and selection. In addition, it is proposed that human resource managers face challenges in recruiting and training employees for diverse workplaces where they will no longer be responsible for recruitment and selection but for employee training. As the diversity widens and employers pursue various workspaces, inequality and discrimination might escalate. Labour departments might also struggle to balance employment security for their workforce and adapt to changes within labour markets. For example, the determination of minimum wages for workers will become extremely challenging as technology is already making it difficult for job seekers to secure low-skilled jobs [26].

Diversity management as a component of HR practices significantly impacts HRM sustainability. HRM sustainability, for example, is achieved by developing employee skills and maintaining an active, healthy workforce. While HRM measures are believed to trigger employees' performance, training an organization's human resources is vital for sustainable development [20]. Aspects such as networking, succession planning, hands-on learning, self-development and coaching can enhance talent and ultimately lead to HRM sustainability at the organizational level. The social components of HRM sustainability for organizations should consider stakeholders' insights and behavioural patterns, setting objectives and strategies, taking accountability by observing the set goals and developing organizational involvement [17]. Social justice is, therefore, a significant factor and should also be kept in organizations because it influences employees to accept organizational structures, respect the code of conduct, make sacrifices for the best interest of business, and protect organizational resources [29]. Psychological components of HRM sustainability focus on freedom from work-related pressures as an essential part of sustainability because it aims to extend the sustainability paradigm by shifting it from the environmental sphere to the psychological and social contexts. It influences and increases employees' ability to work as a team and communicate effectively and constructively. Therefore, employees' psychological needs such as human qualities, self-esteem, self-awareness, organizational beliefs and self-reconstructions and a sense of belonging need to be met to provide employees with a basis for survival in the workplace, including

well-being and workplace advancement in a work environment that matches individual abilities and capabilities [30].

Where business is involved, diversity should not be seen as just a "moral issue" but also as a business concept. As organizations increasingly become global, diversity automatically transforms into a competitive advantage for many companies that embrace it [2]. Therefore, HR's role is to create and empower diverse cultures that are inclusive and offer employees opportunities to grow, learn and contribute to their organizations. Diversity management is also renowned for its ability to aid managers in identifying new trends, which hones factors that motivate staff, increase productivity, boost the workforce at all levels and create an inclusive work climate. Diversity management, therefore, contributes to the changing nature of HRM and has rapidly transformed the role of HR in the past two years [28]. The future of HRM due to diversity management will consist of more agile working environments that are consistently innovative and require the workforce to share resources. That is, the growing gig economy will eventually transform into a sharing economy and become one that revolves around sharing physical, technological and human resources [31]. Sharing resources will contribute to a competitive advantage by attracting future talent, changing work styles, enabling HR managers to forecast future work economic trends, and matching the demand and supply from person to person. Furthermore, it is believed that working environments will be mostly micro-innovative in the next decade. The workforce will consist of product-centric teams, which will create policies around digitalization at work [28].

#### **5. Contribution of the role of diversity management and HRM in business sustainability to People Management-Highlighting Futures**

This chapter contributes to literature or knowledge by growing understanding of diversity management and its significant role in business sustainability. Diversity as a principle for competitive advantage is poorly understood and limited by the availability of academic research data. Diversity management is an under-researched concept, and achieving business sustainability remains a complex area in the global market. Therefore, diversity management and business sustainability as areas of research interest require a new balance between organizational strategies and business models, diverse working environments and sustainable business operations. This chapter, therefore, contributes to a unique, multidisciplinary framework, diversity management, which integrates a holistic approach to investigating its role in achieving business sustainability.

The approach to understanding people management in diverse working environments focuses on individual and collective performance in workplaces and the role of management at all organizational levels to gain competitive advantage. It recognizes that the business environment is often conceived as a workplace where employers, managers and employees encounter differences and imbalances. As a result, such experiences can result in transformational shifts which impact overall business performance. Therefore, the chapter contributes to a growing understanding of how diversity management improves business performance and sustainable business practices.

#### **6. Conclusions**

This chapter outlined an overview of diversity management and human resource management. Research studies prove that diversity is inevitable in modern society and *Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

that HR managers must prioritize diversity management in workplaces as it is influenced by numerous factors such as demographics. It is evident that diversity management is a crucial area for strategic management and allows organizations to identify employee differences to obtain and maintain a diverse, skilled workforce. Diversity management has many benefits for organizations, including HRM productivity and inclusive organizational culture. The implementation of diversity management, although a rigorous process, is recommended for its ability to motivate employees, attract a talented workforce and retain employees. Human resource management is also discussed as an invertible concept in the business world, which plays a vital and most valuable role in any organization. Therefore, the chapter discussed several factors affecting human resource sustainability. Economic and political factors affect the environmental sustainability of businesses, while HR, organizational branding, and psychological and social factors contribute to organizational sustainability. The business case of HRM and sustainable businesses highlights aspects such as the recognition of the right to collective bargaining, promotion of freedom of association and greater environmental responsibility as principles of sustainability. A guideline for implementing sustainability goals was also highlighted, as well as sustainability frameworks. Lastly, diversity and human resource management are inseparable aspects. Thus, this work addressed diversity management's contribution to human resource management and sustainable businesses. Diversity management's contribution is linked to the future of HRM, which highlights the importance and impact of Green HRM as a powerful tool for managing diversity and achieving business sustainability.

#### **Acknowledgements**

My sincere appreciation goes to IntechOpen for acknowledging my interests in the field and inviting me to contribute to the book.

#### **Conflict of interest**

The authors declare no conflict of interest.

#### **Thanks**

Thanks to IntechOpen for the invitation to contribute to the book entitled "People Management-Highlighting Futures." It is an honour to be given such an opportunity to showcase our skills and talents on such prestigious platforms.

#### **Other declarations**

I, Lidith Moropane, declare that this chapter, "Managing Diversity and Achieving Business Sustainability," is my work. Furthermore, I declare that the text and biography reflect my consulted sources. Therefore, all sources used in this chapter are indicated and acknowledged using direct and indirect references. Sections with no source referrals are my ideas, arguments and conclusions. Lastly, this work has not been submitted to any institution or published on any platform.

*People Management - Highlighting Futures*

### **Author details**

Keletso Lidith Moropane North-West University, Johannesburg, South Africa

\*Address all correspondence to: lidithmoropane@gmail.com

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

#### **References**

[1] Guillen M. Diversity in globalization Organizational Change in Argentina, South Korea and Spain Discussants: Evelyne Huber and Michael JANUARY 2000, PAPER NUMBER 6. 2000

[2] Kollen T. Diversity management: A critical review and agenda for the future. Journal of Management Inquiry. 2019;**30**(3):259-272. DOI: 10.1177/1056492619868025

[3] Fajcikova A, Hudakova M, Urbancova H. Diversity Management as a Tool of Sustainability of Competitive Advantage. PRME Working Group on Developing a Sustainability Mindset. 2016 'Description'. Available from: www.unprme.org/working-groups/ display-working-group.PHP?wgid= 3344 [Accessed: 13 September 2022]

[4] Gupta M. Management Practices Engaging a Diverse Workforce. New York: Apple Academic Press; 2020

[5] Yadav S, Lenka U. Diversity management: A systematic review. An International Journal. 2020;**39**(8):2-30. DOI: 10.1108/edi-07-2019-0197

[6] Bryman A. Research Methodology in the Business Management Contexts. Cape Town: Oxford University Press Southern Africa; 2014

[7] Udin HS, Wahyudi S, Yuniawan A, Suharnomo S. A systematic literature review of managing workplace diversity for sustaining organizational competitive advantage. 2017;**8**(12):398-406. Article ID: IJMET\_08\_12\_039. Available from: http://iaeme.com/Home/issue/ IJMET?Volume=8&Issue=12

[8] Seliverstova Y. Workforce diversity management: A systematic literature

review. Strategic Management. 2021;**26**(2):3-11. DOI: 10.593/ StraMan2102003S

[9] Ehnert I, Parsa S, Roper I, Wagner M, Muller-Camen M. Reporting on sustainability and HRM: a comparative study of sustainability reporting practices by the world's largest companies. The International Journal of Human Resource Management. 2016;**27**(1):88-108. DOI: 10.1080/09585192.2015. 1024157

[10] Zaim H, Abid O, Youssef D. Diversity management and its impact on HRM practices: Evidence from Kuwaiti companies. Eurasian Journal of Business and Economics. 2017;**10**(20):71-78. DOI: 10.17015/ ejbe.2017.020.05

[11] Meena L, Vanka S. Developing an empirical typology of diversityoriented human resource management practices. Journal of Management and Development. 2016;**36**(2):2-16. DOI: 10.1108/JMD-0

[12] King D, Lawley S. Organizational Behaviour. Oxford: Oxford University Press; 2016

[13] Mazur B, Walczyna A. Bridging Sustainable Human Resource Management and Corporate Sustainability. Lublin, Poland: Multidisciplinary Digital Publishing Institute; 2020. DOI: 10.3390/ su12218987

[14] Cohen E, Taylor S, Muller-Camen M. HRM's Role in Corporate Social and Environmental Sustainability. Alexandria, VA: Society for Human Resource Management; 2012

[15] King DR, Cohen C. Human resource management: Developing sustainability mindsets. In: Molthan-Hill P, editor. Business Students Guide. 2nd ed. ResearchGate; 2017. pp. 261-287. DOI: 10.9774/GLEAF.9781783533213\_10

[16] Sunday E, Asaleye A, Inegbedion H. Managing diversity for organizational efficiency. Journal of Management Inquiry. 2020;**10**(1):1- 10. DOI: 10.1177/2158244019900173 2-2016-0031

[17] Nawaz ZM, Shafique NM, Haque JW, Li W. Impact of workforce diversity management on employees' outcomes: Testing the mediating role of a person's job match. SAGE Open. 2020;**10**(1):1-16. DOI: 10.1177/2158244020903402

[18] Parry E, Dickmann M, Cooke F. Building sustainable societies through human-centred human resource management: emerging issues and research opportunities. International Journal of Human Resource Management. 2022;**33**(1):1-15. DOI: 10.1080/09585192.2021.2021732

[19] Savitz A. Talent, Transformation and the Triple Bottom Line: San Francisco. CA: Jossey-Bass; 2013

[20] Muller-Camen M, Matthews B, Aust I. Common good HRM: A paradigm shift in sustainable HRM. 2020;**30**(3):1- 11. DOI: 10.1016/j.hrmr.2019.100705

[21] Sabokro M, Faradonbeh BS, Hossein E, Mohiuddin M. Achieving human resource management sustainability in universities. International Journal of Environmental Research and Public Health. 2022;**19**(2):928. DOI: 10.3390/ijerph19020928

[22] Bangal D, Tiwari P. Green HRM: A way to greening the environment.

Green Human Resource Management. 2015;**17**(12):44-53. DOI: 10.9790/487x-171214553

[23] Newman A, Miao Q, Hofman PS, Zhu CJ. The impact of socially responsible human resource management on employees' organizational citizenship behaviour: the mediating role of organizational identification. The International Journal of Human Resource Management. 2016;**27**(4):440-455. DOI: 10.1080/09585192.2015.1042895

[24] SHRM (Society for Human Resource Management). Advancing Sustainability: HR's Role. Alexandria, VA: Society for Human Resource Management; 2011

[25] Ulrich D, Ulrich W. The Why of Work. New York: McGraw Hill; 2010

[26] Mohanty V, Nayak S. Green HRM for business sustainability. Indian Journal of Scientific Research (Chicago: Global Academic Society). 2017;**15**(2):102-105. Gale Academic OneFile, link.gale.com/ apps/doc/A521163113/AONE?u=anon~1c d639e8&sid=googleScholar& xid=b9c0a60b. [Accessed: September 12, 2022]

[27] Bhanu M. A way for corporate sustainability. International Journal of Human Resource Management and Research. 2016;**6**(2):13-20

[28] Mutku C. The Future of Human Resource Management. Munich, Germany: GRIN Verlag; 2018

[29] Caligiuri P, De Cieri H, Minbaeva D, Verbeke A, Zimmermann A. International HRM insights for navigating the COVID-19 pandemic: Implications for future research and practice. Journal of International Business Studies. 2020;**51**(5):697-713. DOI: 10.1057/s41267-020-00335-9

*Achieving Business Sustainability through Diversity Management and Effective HRM DOI: http://dx.doi.org/10.5772/intechopen.106931*

[30] Ulrich MD, Brockbank W, Younger J. The State of the HR profession. Human Resource Management. 2013;**52**(3): 458-468

[31] Deloitte. 2018 HR Technology Disruptions - Productivity, design & intelligence reign. Deloitte Consulting LLP; 2017

#### **Chapter 9**

## The New Business Management of Innovation and Human Capital: European vs. American Model

*Paulino Montes-Solla*

#### **Abstract**

This work aims to shed light on the new principles and techniques of business management of innovation and human capital within a widely connected world. The two most extended innovative paradigms (startups and transfer innovation) are used in all world innovation systems. Their common point is the transformative potential of innovation based on good human capital skills in new management methods to promote an adequate combination of economic progress and social welfare. The human capital skills must be focused on the new agile business models used by these innovative paradigms on the frontier of technological knowledge. The entrepreneurs, startups, and innovative companies need to attract innovative talent that help to implement industrial initiatives (Industry 4.0 in Europe and Advanced Manufacturing in the USA) and dynamize the traditional productive sectors in a market with uncertainty. The technology knowledge is relatively stronger and reliable than business knowledge. Therefore, ICT skills and new innovation management are keys to supporting traditional sectors. The startup boom will produce changes in business models, organizations, and human capital skills.

**Keywords:** innovation, entrepreneurship, startups, new business management, human capital, EU, USA

#### **1. Introduction**

The objective of this chapter is to present orderly the new management principles and human capital skills to reduce the uncertainties and costs of the innovation processes at the market. The main innovation stereotypes (USA vs. European) are compared, and their implications for current innovation policy are discussed.

The content is structured as follows. In the first place, technological and market uncertainties that affect innovation are introduced. The second section highlights the necessary skills of human capital to cope the new challenges into a changing world and new business models focused on digitalization and blank spaces markets with fuzzy goals. The third part delimits the different styles of innovation, the startup model (American paradigm), and the innovation model by transfer to productive processes and sectors in industrial sectors to develop their productivity (European and especially German paradigm). Finally, in the fourth part, by way of conclusion, current views on the possibility of a fourth industrial revolution (Industry 4.0 or EU model vs. advanced production initiative or US model) are discussed. The threats of the disruption innovation they can pose in a connected world on the brink of an information revolution are presented. The problems are exposed, and the support for both styles of innovation is justified as a more sensible line of policy, together with a growing diffusion of new techniques and principles of innovation management in the training of young professionals and managers, as well as their dissemination between professionals and managers of consolidated companies, opinion formers and policy-makers [1].

#### **2. New ideas, inventions, and innovation: the market uncertainties**

Currently, most innovations are linked to the inventions and advances of science and technology, but innovating is more than that. To innovate is to bring to the market new products and services that meet the needs of your potential customers and that they are willing to acquire. Therefore, the business management of innovation is different from invention. It is the art of designing, developing, and marketing new products and procedures with good expectations of success in the market.

Business innovation combines creativity, research, and product development to create offerings for different customer and consumer segments. It unfolds in a context of uncertainty (technological, productive, and market), the greater the degree of novelty (breakthrough) of the ideas and inventions on which it is based.

Usually, inventors do not pay much attention to the market phase (commercialization road map), but the evidence shows that it is essential in terms of benefits or net profits. Inventors do not usually pay much attention to the market phase (commercialization road map), but the evidence shows that it is essential in terms of benefits or net profits.

Once the innovation phase has been launched, there is a head-on collision between forecasts and reality, since entering an unknown territory (blue ocean) with multiple dimensions and unpredictable details. This context of uncertainty is characterized by an action and discovery spiral: new step (action), new information (feedback), and new context (continuous reassessment) of possibilities, needs, and objectives of the innovation development and implementation process.

#### **3. Human capital skills to the innovation challenges**

The main advantage of the innovation process is the creation of new economic business spaces outside the competition of traditional sectors.

Business managers have been transforming the vision of the human capital necessary to face the challenges of the market. In manufacturing societies, they were considered only as labor. Over time, human capital has been gaining importance as their skills and knowledge in business management have increased. So, Maslow [2] introduced his theory of hierarchical needs and provided management with new insights on how to use human capital. With the development of the service sector at the end of the twentieth century, a close relationship is generated between business human capital and business success for the sale of this intangible service.

When global business competition is generated at the beginning of the twentyfirst century, the qualifications and capabilities of human capital become extremely *The New Business Management of Innovation and Human Capital: European vs. American Model DOI: http://dx.doi.org/10.5772/intechopen.106928*

necessary to redesign or modify products and services and adapt them to customer demands. Good human capital facilitates the creation of value in companies. The scientific-technological revolution has fostered the process of change and appreciation of human capital in order to differentiate itself from the competition at a global level.

One of the key inputs for the success into innovation process is human capital training, defined as skills, knowledge, and experience of employees. A formed human capital strengthens the capacity of a firm to retain and develop a new knowledge frontier. Thus, a well-trained human capital is more likely to spur innovation at companies. Even, some companies come to pay a postgraduate innovation training to employees to improve the possibilities of success in the process of new products launch.

Technological change facilitated the spread of knowledge and prompted the birth of new models of innovation. This is what was called "the innovator's dilemma" [3] of which there are such well-known examples as Kodak, IBM, or Xerox, which lost their leadership by "disregarding" an unknown segment of their business. New opportunities and capacities were opened to absorb external knowledge and take advantage of it in the company, which gave a key impetus to business innovation processes (concept of absorptive capacity [4]).

Open innovation [5] describes the radical change in the ways of managing R&D in large companies and small projects. The traditional internal models were opened to external sources to acquire new knowledge, exploit technologies, and improve results. The cooperation and openness of R&D to find new solutions for customers increased efficiency and generated new business models, increasing development possibilities [5, 6], on the evidence in the consumer electronics sector [7].

In the consolidated companies, marketing experts were integrated into the product development teams and new marketing techniques were put into practice for the new products (idea filtering, concept testing, and product testing. All these techniques are an essential part of the new business management of innovation [8].

The new open innovation models are also widely used in the startups and smalland medium-sized business sector based on the qualification, skills, and knowledge of human capital to break down many barriers and obstacles of the innovation [9–11]. A startup is not a company per se, it is a provisional organization whose objective is precisely to design and search for a product and a viable business model that allows it to develop sales and become a company. To do this, it is necessary to have a human team with skills in the new management of innovation.

In summary, human capital with postgraduate education on innovation management, or employer-sponsored training or business experience on innovation management, are significantly associated with the success of the innovation launch process to the market.

#### **4. Innovation models: disruptive startups (US paradigm) vs. transferring process (EU paradigm)**

There are many different types and classes of innovation, which makes it difficult to classify them, but they can be grouped into some reference paradigms.

#### **4.1 US innovation paradigm: Startups model**

On the one hand, there is the trend called "Innovation at the frontier of knowledge." It refers to the American creative style, whose paradigm is the "innovative

milieus" (such as Silicon Valley at San Francisco or Route 128 at Boston). They are highly efficient innovation systems, endowed with expert knowledge and highly developed and sophisticated financing and marketing mechanisms, where inventions at the frontier of knowledge become highly relevant disruptive innovations (Google and Facebook, now called, Alphabet and Meta).

Currently, there is a boom in entrepreneurship and an explosion of technology startups in many parts of the world. According to many experts, the current boom in tech entrepreneurship has much stronger foundations than the internet bubble of the 1990s. The product development and market launch process are long, costly, and fraught with uncertainty about consumer response. For these reasons, the new startup management principles are oriented toward a process of customer discovery and customer validation hypotheses, where the product development goes hand by hand with the customer validation. The aim is to create an MVP (minimum viable

**Figure 1.**

*Development phases of a startup. Source: Own elaboration based on The lean Launchpad online blog.*

*The New Business Management of Innovation and Human Capital: European vs. American Model DOI: http://dx.doi.org/10.5772/intechopen.106928*

product or prototype) with which the sales process can be started and captures the market information, unlike what traditional models of a complete development of the product have proposed.

This new methodology of the US paradigm (startups) is based on a gradual search process through experimentation and validation of the starting hypotheses (see **Figure 1** below). This makes faults discoverable quickly and inexpensive. With this, it allows ratifying or reorienting (pivoting) the attributes and benefits of the minimum viable product and the value proposition until they fit into the "pain points" and the unsatisfied needs of customers.

The key aspect to develop a startup is the search and discovery of a product and a business model that works and adapts to the needs of potential clients. As can be seen in **Figure 1**, it is a two-phase process: the first phase is search, based on a process of interaction with consumers and clients for discovery, reformulation, and validation of initial hypotheses, and the second phase is execution, based on the generation of customers sales and the construction of the company [12].

During the customer discovery process, startups look for a business model that works, so if potential customers do not validate their initial business hypotheses, they revise or pivot to new hypotheses. It is an iterative process of trial and error, where failures will be quick to find the right solution as soon as possible. Once the product has been validated and the model has been tested on the market, startups increase their marketing and sales spending and begin to scale their business. From there, the startups will begin the process of company building.

For this reason, the biggest real challenge for startups is to develop and validate their value proposition, define their products, and seek a profitable business model that allows them to consolidate sales and scale business volume. For this, there are instruments to evaluate the key points of the project, as is the case of The Business Model Canvas [13].

Agile development methods are used to shorten the product development cycle. This methodology (Lean Startup) was disseminated by Eric Ries, one of Steve Blank's most brilliant students, in the homonymous book [14]. It uses in-market validation tests to align the processes of product creation and customer discovery and development, tweaking and pivoting (bottom part at **Figure 1**). It uses incremental indicators to measure the result of actions on interested customers and sales and analyzes and controls the appropriate growth model based on the costs of acquisition, customer retention, and value of customers throughout their life cycle.

Steve Blank indicates several advantages of the agile management of innovation and entrepreneurship through the Lean Startup methodology [15]:


#### **4.2 EU innovation paradigm: transferring process model**

On the other hand, there is the "innovation by transfer" style, which is the European Union paradigm. It focuses on supporting the diffusion of new technologies to improve processes and products to the real economy, both in "spearhead" technology sectors and in industry in general, or even in the more traditional sectors (agricultural and livestock sectors). The key idea of this approach is that innovation should be spread broadly to drive productivity gains throughout the economy, and not be concentrated in just a few high-tech sectors. This European style is usually supported by collaboration networks with public-private partnerships and broad incentives from public policies.

The greatest exponent of the EU innovation paradigm is the German case. It has taken the lead in adapting innovations to industry and spreading them across business sectors. A large part of the innovations consisted of introducing new ideas and capabilities into businesses with traditional products and processes to give them dynamism and future prospects. In large part, "Germany's style of innovation explains its prowess in the field of manufacturing: most of the Chinese products we buy every day are produced with machinery made in Germany, and the companies that make them are prospering" [16]. One of its most emblematic successes is the Fraunhofer Foundation innovation collaboration network.

The main characteristic of the EU transfer innovation paradigm is that generates vast possibilities for new styles of entrepreneurship. The possibilities and future trends are not yet well known, but it is observed that this type of transfer innovators

**Figure 2.**

*Top 10 startup mistakes (relative frequency %). Source: Own elaboration from 100FirstHits data [15].*

*The New Business Management of Innovation and Human Capital: European vs. American Model DOI: http://dx.doi.org/10.5772/intechopen.106928*

requires broader professional skills, training, and knowledge to build bridges between different industries and businesses.

#### **4.3 Startups mistakes of both paradigms**

But even though startups use these agile methodologies at both paradigms, they also make mistakes and fail in their product launches to market (see **Figure 2**).

More than 60% of startups frequent mistakes are concentrated in areas related to the development (or discovery) of clients, reaching up to 66% if we also consider the mistake of devoting more effort to attracting investors than clients (5.4%). The biggest mistake is still building something that no one wants to buy (35.8%). Following in importance is the dispersion of efforts in search of all perceived opportunities without concentrating resources (very limited in a startup) in the appropriate market segment (13.4%). The next biggest mistake is overfocusing on internal product development without starting early sales and marketing studies as soon as possible (11.7%). Waiting to have the product completely ready is a major mistake that forces you to invest time and money without having solid evidence from customers through demos and minimum viable products (MVPs).

Disruptive technology startups have a lower probability of success (>25%) than the creation of SME companies in other traditional sectors, but their capacity for growth, scalability, and success (hockey stick growth trajectory) is in a very short time they reach prominent positions among the most influential and largest companies.

#### **5. Conclusions**

The two innovative paradigms (startups and transfer innovation) are used, to a greater or lesser extent, in all world innovation systems. Innovation processes are made up of very different combinations of both paradigms. Their common point is the transformative potential of innovation based on good human capital skills in new management methods to promote an adequate combination of economic progress and social welfare.

These skills must be focused on the new agile business models used by startups on the frontier of technological knowledge. These new projects challenge established norms and created new business spaces with disruptive capacity (Apple, Spotify, Amazon, Uber, Airbnb…) [17].

But also, human capital skills can be able to help industrial initiatives of the two paradigms (Industry 4.0 in Europe and Advanced Manufacturing in the USA). They can be able to increase the dynamism of the traditional productive sectors as central elements for employment, prosperity, and the countries' own innovative capacity [15].

Currently, process innovation in manufacturing and other sectors, supported by widely used new technology projects (ICTs, Robotics, New Materials, Algorithms, etc.) is causing profound changes in production methods and industrial organization (Industry 4.0) [18]. These changes are the beginning of the "fourth industrial revolution" because of a digital transformation of manufacturing and production. In this new paradigm of industrial change, Germany has a world leadership position. It has focused on the innovation of state-of-the-art industrial equipment and processes.

Currently, the possibilities of integrating the different general-purpose technologies (GPTs), such as IoT, in the different automation processes of production, logistics, and distribution offer fantastic prospects for the development of the industry [19]. And, in the future, the changes in industrial production processes (general interest services included) will generate new personalized business opportunities for clients and consumers.

But, at this moment, only a few developed countries have maintained the value of generating industrial value added. Only Germany and Austria (see **Figure 3**) maintain an industry with a significant relative weight and a more favorable evolution than at the world level [20].

The objective of Industry 4.0 is to increase the competitiveness and sustainability of industrial sectors and maintain the weight of these sectors in the economy. For this, it is necessary that the promotion of automation, robotization, and information on industrial and manufacturing processes generates new jobs that have skills of the new principles of innovation management adapted to customers.

It is vitally important to preserve jobs and activities in the industrial core of developed countries, but it cannot be done at any price. ICTs and their use in advanced manufacturing open a window of opportunity. It is based on technological developments and R&D, whose evolution and trend have less uncertainty than innovation processes linked to the market [21].

As a summary, knowledge related to technology is relatively strong and reliable, while knowledge regarding business developments is weaker and less reliable [22]. Therefore, ICT skills and new innovation management are keys to supporting traditional sectors.

Disruptive changes combined with new agile business models will help increase the productivity of traditional sectors. The startup boom will produce changes in business models, organizations, and human capital skills. These changes will reach

**Figure 3.** *Industrial added value in Europe (2017). Source: Interreg Europe data [17].*

*The New Business Management of Innovation and Human Capital: European vs. American Model DOI: http://dx.doi.org/10.5772/intechopen.106928*

multiple private sectors (leisure, tourism, retail distribution, transport, energy, and finance) and public sectors (health, education, and public administrations).

The main contribution of this chapter is the evidence, both theoretical and practical, that a greater training of its human capital focused on new agile business models and new innovation management generates better marketing results for new products.

#### **Acknowledgements**

The author wishes to acknowledge the funding received from the research group to which he belongs: Jean Monnet Group on Competition and Development (C + D Group, https://www.gcd.udc.es/paulino/) at University of A Coruña at Galicia, Spain (https://www.udc.es/).

#### **Author details**

Paulino Montes-Solla Jean Monnet Group on Competition and Regional Development, Faculty of Economics and Business, University of A Coruña, Spain

\*Address all correspondence to: paulino.montes.solla@udc.es

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

### **References**

[1] Faiña Medín JA, Losada-Lopez C, Montes-Solla P. "Innovación y Emprendedurismo: Ordenando el Rompecabezas de la Nueva Gestión Empresarial de la Innovación [Innovation and Entrepreneurship: Sorting the Puzzle of the New Business Management of Innovation]," MPRA Paper 75479. Germany: University Library of Munich; 2016

[2] Maslow AH. A theory of human motivation. Psychological Review. 1943;**50**(4):370-396. DOI: 10.1037/ h0054346

[3] Christensen CM. The Innovator's Dilemma. Michael LT, Andrew H. Van de Ven, editors. HBS Press, 2003 edition Haper; 1997

[4] Cohen WM, Levinthal DA. Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly. 1990;**35**(1):128-152

[5] Chesbrough H. Open Innovation: The New Imperative for Creating and Profiting from Technology. HBR; 2003

[6] Chesbrough H. Open Business Models How to Thrive in the New Innovation Landscape. HBS Press; 2006

[7] Christensen JF, Olesen MH, Kjær JS. The industrial dynamics of open innovation: Evidence from the transformation of consumer electronics. Research Policy. 2005;**34**:1533-1549

[8] Assimakopoulos D, Carayannis E, Rafiq D. Knowledge Perspectives of New Product Development. New York: Springer; 2012. DOI: 10.1007/978-1-4614-0248-0

[9] Chesbrough H, Crowther AK. Beyond high tech: Early adopters of open innovation in other industries. R&D Management. 2006;**36**(3):229-236

[10] Lichtenthaler U, Ernst H. Opening up the innovation process: The role of technology aggressiveness. R&D Management. 2009;**39**(1):38-54

[11] Van de Vrande V, de Jong J, Vanhaverbeke W, de Rochemont M. Open innovation in SMEs: Trends, motives and management challenges. Technovation. 2009;**29**:423-437

[12] Blank, S. Why the Lean Start-up Changes Everything [Internet], HBR Magazine, 2013. Available from: https:// hbr.org/2013/05/why-the-lean-start-upchanges-everything [Accessed: May 10, 2022]

[13] Osterwalder A, Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Clarck T, editor. Wiley; 2010. DOI: 10.5367/ijei.2014.0149

[14] Ries E. The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. Viking; 2010

[15] Compass. The Global Startup Ecosystem Ranking 2015. The Startup Ecosystem Report Series: 2015. Available from: https://cdn.plataformaurbana.cl/ wp-content/uploads/2015/08/ranking-2015-global\_startup\_ecosystem\_v1.pdf [Accessed: May 10, 2022]

[16] Garpild, D. Top 10 Startup Mistakes Infographics. 100FirstHits Blog. 2013. Available from: http://100firsthits. com/2013/11/15/top-10-startupmistakes-infographics/ or https://www. slideshare.net/100FirstHits/startupsinfographics [Accessed: May 10, 2022]

*The New Business Management of Innovation and Human Capital: European vs. American Model DOI: http://dx.doi.org/10.5772/intechopen.106928*

[17] Breznitz, D. Why Germany Dominates the U.S. in Innovation [Internet]. 2014. Available from: https://hbr.org/2014/05/why-germanydominates-the-u-s-in-innovation [Accessed: May 10, 2022]

[18] Interreg Europe. Industry 4.0: Policy Brief from the Policy Learning Platform on Research and innovation [Internet]. 2017. Available from: https://ec.europa. eu/digital-single-market/en/cordinationeuropean-national-regional-initiatives [Accessed: May 10, 2022]

[19] Kagermann H, Wahlster W, Helbig J. Recommendations for implementing the strategic initiative: Industrie 4.0. Hellinger A, Stumpf V, editors. Final Report of the Industrie 4.0 Working Group [Internet]. Fráncfort. 2013. Available from: https://www.din.de/blob/76902/ e8cac883f42bf28536e7e8165993f1fd/ recommendations-for-implementingindustry-4-0-data.pdf [Accessed: May 10, 2022]

[20] Berger, R. Industry 4.0. The new Industrial revolution. How Europe will succeed [Internet]. 2014. Available from: https://www.rolandberger.com/media/ pdf/Roland\_Berger\_TAB\_Industry\_4\_0\_ [Accessed: May 10, 2022]

[21] Pavitt K. Knowledge about knowledge since Nelson & Winter: A mixed record. In: SPRU, Science and Technology Policy Research, Electronic Working Paper Series, Paper No. 83. University of Sussex; 2002

[22] Nelson R, Winter S. An Evolutionary Theory of Economic Change. HBS Press; 1982

#### **Chapter 10**
