The Firm and Strategic Human Resource Management - Article Example

THE FIRM AND STRATEGIC HUMAN RESOURCE MANAGEMENT Review of the paper- Resource based view of the firm by Dunford, Snell and Wright (2001) …………………………. College/University………………….. Submission Date …………………… Words count: 1544 Synopsis Achieving sustainable competitive advantage is one of the major challenges of a business. There are ways to achieve competitive advantages, and many businesses go for extensive marketing strategies and rather expensive methods. Gaining greater advantages from the internal available human resources is quite interesting in the field of Strategic human resource management. A firm is a bundle of resources, and most valuable as well as inimitable and intangible resources are Human capitals. The work of Dunford, Snell and Wright (2001) proves how can a firm achieve sustainable competitive advantages with human resources and strategic human resource activities. Introduction The resource-based view of the firm has recently reached an eminent position among the principles and theories of the Human Resource strategies. The development of the research based view of the firm in terms of theory, methods, practice and empirical evidence has significantly influenced the field of strategic human resource management. Human capital is one of the most valuable resources of a firm and therefore viewing the firm as a collection of assets or resources will be a strategic ideology of human resource management. This piece of research work is an attempt to critically review the work of Dunford, Snell and Wright (2001) - Human Resources and the Resource Based view of the Firm- and to analyze the main findings of their work. This paper summarizes the views and findings of Dunford, Snell and Wright (2001) and outlines its relation with the general issues being discussed in the modules. This paper also identifies the practical implications and strengths and weaknesses of the master work. Findings from the article Dunford, Snell and Wright (2001) examined how research based view of the firm has been applied to the strategic human resource management concepts in terms of theory and empirical evidences. They found that the application of RBV has effectively led to an increasing convergence between strategic management and strategic human resource activities. A research based view of the firm focuses directly on the potential value of the internal assets of a firm for executing various strategies (Stahl and Bjorkman, 2006). Whether investing in human resource management functions can yield positive outcomes in the organizational performance or not has always been a matter of concern for the management. Wright, McMahan and McWilliams put forth the idea that highly integrated Human Resource practice can always help a firm achieve sustainable competitive advantages (Dreher and Dougherty, 2001). The same view has been presented in the work of Dunford, Snell and Wright. According to them, human resource management practices can influence the human capital of a firm and the job related behavior structure within the organization. The resource based view of the firm will help a firm achieve sustainable competitive advantage only if human resources are properly managed and developed. Dunford, Snell and Wright (2001) viewed that human resource management practices are valuable, rare, inimitable and non-substitutable. It has recently become one of the most often used and most discussed within the strategic human resource management. Dunford, Snell and Wright (2001) found that the resource based view of the firm has been regarded as the human resource perspective that shows how a firm’s human resources can be well utilized in order to achieve the potential source of sustainable competitive advantages. This view has first been emphasized by McMahan and Wright in 1992. The views of Cappelli and Singh have been considered in the work of Dunford, Snell and Wright. The strategic human resource management perspectives assume that certain business strategies demand a distinctive set of behaviors of the employees and thus certain HRM policies formulate a set of employee responses as well. The relation of strategy formulation or strategy development and employee responses has then been outlined throughout a number of studies and researches. Most studies have found that strategic human resource perspectives have profound impact on the employee response as well. From various literatures, Dunford, Snell and Wright (2001) summarized basic three concepts that can prove the significance of resource based view of the form. Human capital pool is not just a combination of many employees, but, rather it refers to the valuable stock skills in an organization. Skills, knowledge and talents of the employees are part of the intangible assets of an organization. Secondly, researchers agree that employee behavior is an independent component of strategic human resource management. Employees are skillful and moreover they have cognitive as well as emotional feelings that enable them to perform according to their decisions and being driven by strategies. Dunford, Snell and Wright (2001) considered high performance work system to explain the significance of resource based view of the firm. The high performance work system, as described by Boxall and Macky (2009), is a notion that leads to superior organizational performance. If there are effective systems to manage human capital, the components can be well maintained and managed in a way that competitors cannot copy. This is to be developed as a strategy and this will continuously generate competitive advantage. The Human Resources practices can positively influence the level of competitive advantages of a firm. The Human Resource practices and employee performances, their responsiveness, employee turnover and gross rate of return on assets are interrelated. More specifically, those employees who are well performing and more productive are more valuable assets than those who are not. What makes them productive or high-performing has always been a matter of debate. Almost all literatures have emphasized that selective hiring and recruiting, employee training and development, motivation and reward system are some of the HR practices that can help a firm make its employees more productive and high-performing. As is discussed in the module, according to Macky and Boxall (2007), employees become high-performing when there are ‘ability, motivation and opportunities’ (AMO theory). The HR practices can have greater impacts on employee performance and well performing employees are the valuable resources. The resource based view of the firm thus can be summarized that HR practices can create valuable resources in the firm. Dunford, Snell and Wright (2001) have quoted from Koch and McGrath (1996) that high productive workforce in an organization will have attributes that make it valuable strategic assets. The findings of the paper are almost same to what we have discussed in the modules. HR practices can have significant impacts on employee performance and high performing employees are assets of a firm. Viewing human capital as valuable, rare, inimitable and non-substitutable resources has been reckoned as integral part of resource based view of the firm according to Dunford, Snell and Wright (2001). Assessment method in the empirical study The authors have gathered various studies and researches already conducted by others in order to present empirical analysis of resource based view of the firm and its implication on the Human resource management. The authors have used exploratory research in the paper by observing various studies like study by Boxall and Steenveld in 1999, Wright and McMahan in 1995 about NCCA basket ball team and Richard’s (2001) study of human capital pool. A number of research and survey studies are being collected in order to present the empirical analysis. For instance, the study of Youndt and Snell has been included to show the effects of HR practices on human capital. According to their study, intensive or extensive staffing, competitive pay, intensive or extensive training and promotions schemes were most significant tools that determined the level of human capital in the organization. The Research and Practical Implication The paper has outlined the basic concept that resource based view of the firm is strategic perspective of Human Resource management. Human capital is valuable, rare, inimitable and non-substitutable assets as well as valuable resources only if these capital assets are maintained and managed well. Various managing tools like selective hiring, motivation, training and employee development activities can helps a firm achieve sustainable competitive advantages. The norm of resource based view of the firm is theoretically sound as well as practically and pragmatically effective. Selective hiring and recruiting, effective training and employee development, creating learning environment for enhancing knowledge management and motivation and reward system can be easily implemented in the firm in order to maintain and manage the available human capital. Organizations that seek competitive advantage must focus on the available assets and to increase the value through the potential HR functions. Even though the HR functions may cause expenses to the firm, it must be viewed positively that it is rather investment as it can help create high-performing employees who are most valuable, rare, inimitable and non-substitutable assets of the firm as discussed by Dunford, Snell and Wright (2001). Strengths and Weaknesses of the paper The paper examined the significance of resource based view in the SHRM. The paper has gathered views and studies of a large number of experts in the field and it has pointed out various norms of HRM like knowledge management, high performance working etc. Even though the paper has elaborated the norm of resource based view of the firm based on various literatures and studies, it hasn’t outlined effective measures and tools the Human resource management can take in to account in order to achieve valuable, rare and inimitable human resources. The research work is exploratory and it would be more accurate if it could be backed with surveys or studies that directly show the relation between HR practices and its influence on human resources. Conclusion A firm is not a collection of activities, but rather a bundle of unique resources. Among the most intangible assets of the firm, skills, talents, experiences and knowledge that employees can play vital role to lead the firm to achieve sustainable competitive advantage, because, human resources are rare, most valuable, inimitable and non-substitutive. This piece of research work presents a review of the work of Dunford, Snell and Wright (2001) and outlines basic findings from the paper. References Boxall P and Macky K (2009), Research and theory on high-performance work systems: progressing the high-involvement stream, Human Resource Management Journal, Dreher and Dougherty (2001), Human Resource Strategy: A Behavioral Perspective for the General Manager, McGraw Hill, Dunford B.B, Snell S.A and Wright P.M (2001), Human Resources and the Resource Based View of the Firm, Center for Advanced Human Resource Studies, Retrieved 25/03/10 from http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1065&context=cahrswp Macky K and Boxall P (2007), The relationship between ‘high performance work practices’ and employee attitudes: an investigation of additive and interaction effects, The International Journal of Human Resource Management, Routledge Stahl G.K and Bjorkman I (2006), Handbook of research in international human resource management, Illustrated Edition, Edward Elgar Publishing Read More