This study examines whether staff groups which are organized in teams are better at organizational innovation than staff groups who aren’t. Moreover, it examines whether human resource management (HRM) systems, which can be of facilitating or constraining nature, enhance the teamwork and therefore innovation outcomes.18 to 45 organizations from the UK manufacturing sector have been researched. Results suggest that the more widespread the use of teamwork in organizations, the higher the level of organizational innovation. Furthermore, this effect depends on the overall quality of the HRM systems that exist in their organizations. Teamwork is further moderated by an HRM practice that provides teams with time for thoughtful reflection. Thus, HRM systems can be of more or less facilitating or constraining nature for teams in organizations.