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Learning capability improves knowledge resources fosters innovative capabilities and firm competitiveness. The study aims to examine the human resource management (HRM) practice and employee creativity relationship using organizational learning capability (OLC) as a mediating variable.

Data were collected from 67 small-sized and 96 medium-sized firms. Confirmatory factor analysis was applied to establish construct validity and reliability. Structural equation modeling was used to evaluate the proposed model and hypotheses.

The results show that performance appraisal and employee creativity were positively related. Employee participation and employee creativity were positively related. Compensation and employee creativity were nonsignificantly related. OLC mediates the performance appraisal and employee creativity relationship. Similarly, OLC mediates the employee participation and employee creativity relationship. However, OLC did not mediate the compensation and employee creativity relationship.

Due to the research’s SME focus and cross-sectional data, the finding’s generalizability will be constrained.

The findings of the study would be useful to policymakers, stakeholders and management of SMEs in developing a supportive learning climate that promotes experiential and continuous learning cultures to ensure strategic capabilities, sustainable competitive advantage and innovativeness.

The study contributes to the extant literature on OLC, HRM practices and employee creativity by empirically evidencing that OLC mediates the performance appraisal, employee participation and employee creativity relationship.