Effect of dynamic workforce capabilities on firm level innovation in the South African metals industry

Abstract

Increasing employee diversity in gender, age, ethnicity generally has a positive impact on the firm level innovation due to diversification of views and experiences. Employee education is an important factor for innovation since education stimulates the capacity of employees to comprehend, create and process information due to better understating of the theoretical concepts of their trade. On the other hand, employee tenure is associated with experience and employees with a long organisational tenure are more familiar with the processes of the organisation and its strategy. Accumulated work experience, inside and outside the organisation, is also important as experienced employees have developed skills that are relevant and specific to their domain, thereby, tackling problems in a more focused and relevant way. The research outlined in this document proposes to combine attributes such as gender, age and ethnicity into a demographic background factor. The current research investigates the effect of this demographic background factor, together with education qualification and tenure, on firm-level innovation in the South African metals industry. The hypothesis is that these three factors (education qualification, tenure, and demographic background) are dynamic workforce capabilities that influence firm- level innovation in the South African metals industry and warrant consideration in the dynamic capabilities’ literature. The South African metals and engineering sector consists of approximately 10,000 companies that employ over 220,000 blue-collar workers and contributes around 3% of the country’s GDP or R900 billion. It has been facing challenges including production fluctuations and external economic pressures since 2008 but remains a key player in South Africa's industrial landscape. The dynamic capabilities framework is typically applied in environment of rapid change and the organisations in the metal South African metals industry are characterised by legacy machinery and equipment that make up a substantial part of their infrastructure. While the technological changes in other industries are fast-paced, the metals industry is moving at a slower pace. Due to the high numbers of blue- collar workers in this sector, understating the impact of factors such as the three under investigation in this paper could be significant for the industry. iii A positive correlation was found across all three tested factors (education qualification, tenure and demographic attributes) and firm-level innovation. The positive value of the correlation coefficient also showed that a positive change in these three factors results in a positive change in the firm level innovation in the South African metals industry. The conclusions were that dynamic workforce capabilities, which is a combination of education qualification, tenure, and demographic background factors, warrant further consideration to the literature on dynamic capabilities in the context of firm level innovation.