Essay on "Human Resources"

Essay 8 pages (2144 words) Sources: 12 Style: Harvard

[EXCERPT] . . . .

Human Resources

The objective of this work is to discuss whether the 'resource base view' (RBV) determines the design of the 'strategic human resource' (SHR) system of an organizational? Should this determine the design of the 'strategic human resource' (SHR) system of an organization?

The work of Eric D. Brown (2007) entitled; "Aligning Technology, Strategy, People & Projects" states "Most organizations don't place a high enough focus on human capital management as a component of competitive advantage. In order for an organization to be successful in any market, they must create value for their clients. This value can be created using a new strategy, new technology or some other 'gimmick' but in order to sustain this value (and the competitive advantage it brings) organizations must develop and maintain an engaged knowledgeable and creative workforce." (2007)

Brown states that the Resource-Based View (RBV) suggests that the method in which resources are applied within a firm can create a competitive advantage." (2007) There are, according to Brown (2007) two primary assumptions: (1) resource diversity; and (2) resource immobility. Brown states that the work of Mata et al. (1995) defines these assumptions as follows:

Resource diversity: this is also called resource heterogeneity and pertains to whether a firm owns a resource or capability that is also owned by numerous other competing firms, then that resource cannot provide a competitive advantage; and Resource immobility: this refers to a resource that is difficult to obtain by competitors because the cost of developing, acquiring or using that resource is too high. (Brown, 2007)

An example of resource diversity can be viewed in a firm contemplating whether to implement a new information technology product, which is believed to offer a competitive advantage to the firm "if no other competitors have the same functionality. In the event that competing firms have a functionality that is similar in nature, "then this new it product doesn't pass the 'resource diversity' test and therefore doesn't provide a competitive advantage." (Brown, 2007) Brown (2007) states that these two assumptions "can be used to determine whether an organization is able to create a sustainable competitive advantage by providing a framework for determining whether a process or technology provides a real advantage over the marketplace." The resource-based view of the firm "suggests that an organization's human capital management practices can contribute significantly to sustaining competitive advantage by creating specific knowledge, skills, and culture within the firm that are difficult to imitate." (Brown, 2007) Stated differently, through creation of resource diversity and/or resource immobility, "...sustainable competitive advantage can be created and maintained." (Brown, 2007) if the organization is to "create human capital resource diversity and immobility" then organization must have human capital management practices that are adequate in nature as well as organizational processes, knowledge management practices and systems, educational opportunity of both formal and informal nature and social interaction practices that are all sufficient in nature. The Resource-Based View (RBV) of the firm has as its main independent constructs or factors, the assets, capabilities and resources of the firm. Barney and Penrose (2008) state that the resource-based view (RBV) argues that firms possess resources, a subset of which enable then to achieve competitive advantage and a subset of those that lead to superior long-term performance. Resources that are valuable and rare can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution." (Barney and Penrose, 2008) the following figure, labeled Figure 1, illustrates the 'resource-based view over time.

Resource-Based View Over Time

Source: Barney and Penrose (2008)

The work of Morris, Snell, and Wright (2005) entitled: "A Resource-Based View of International Human Resources: Toward a Framework of Integrative and Creative Capabilities" state that various theoretical approaches have been utilized in the study of International Human Resource Management and that it is not surprisingly that "the resource-based view (RBV) of the firm has emerged as perhaps the predominant perspective. RBV is particularly attractive to IHRM researchers in that it focuses directly on the potential value of a firm's internal asset stocks for conceiving and executing various strategies." These authors express that this strategy is a departure from the "traditional I/O economic models of competitive advantage that focus on the structure of markets as the primary determinant of firm performance." (Morris, Snell, and Wright, 2005) RBV is, in contrast to other economic models, based upon two assumptions:

Resources are distributed heterogeneously across firms; and Resources remain imperfectly mobile over time. (Morris, Snell, and Wright, 2006)

There is stated to be a potential for comparative advantage "because these asset stocks are unequal." (Morris, Snell, and Wright, 2005) in the event that resources are immobile, the advantage may be "difficult to appropriate or imitate" and a sustainable advantage is created.

I. RESOURCE-BASED VIEW "SHOULD'S"

1) Organizations should require experienced individuals to assist less experienced individuals in learning the necessary organizational knowledge

The work of Geisler (2007) entitled: 'The Metrics of Knowledge: Mechanisms for Preserving the Value of Managerial Knowledge" states that a gap exists in the RBV research in relation to socialization, tutoring, mentoring and continuous reporting, all of which are necessary to reduce the loss of critical knowledge. It is stated that since knowledge is "fundamentally a cognitive phenomenon, these mechanisms emphasize the sharing of knowledge by experienced, with less experienced managers." (Geisler, 2007)

2) Organizations should create IP culture at the level of higher education, create teaching materials and educate the broader business community and improve training in IPRs. (Hanel, 2004)

The work of Petr Hanel entitled: "Intellectual Property Rights Business Management Practices: A Survey of Literature" reports a study in which New Focus Research Pty Ltd. (2000) examined "the awareness of firms of the importance of IP and of the services of the patent office and their use. The report contains the questionnaire and the tabulation of responses with brief observations for: (a) a sample of SME who go through patent attorneys; (b) those who go directly through IP Australia; - tertiary; (d) SME who do not use patents, trademarks or designs and (e) large-scale enterprises LSE. (Hanel, 2004) Stated to have arisen from this study is the awareness of the need of creation of IP culture in the firm that is at the same level of higher education and which includes the creation of materials and education of the:broader business community" and improvement of training in IPR. (Hanel, 2004)

3) the organization should examine which of its strengths possess inherent barriers to duplication. (Fahy and Smithee, 1999)

Barriers to duplication of the organization's resources increase the competitive advantage of that resource because the resource is more difficult to duplicate or imitate. The work of Fahy and Smithee entitled: "Strategic Marketing and the Resource-Based View of the Firm" states that instead of the "indiscriminate lists provided by SWOT analyses, resources should be categorized according to ease of duplication by competitors. The tangible assets/intangible assets/capabilities typology presented earlier gives an implicit hierarchy of resources based on barriers to duplication. Broadly speaking intangible resources and capabilities are more difficult to duplicate and provide a more meaningful basis for marketing strategy development." (Fahy and Smithee, 1999)

4) When the Resource-Based View organization considers outsourcing it should examine specific 'key' considerations, which include: (1) economic; (2) technological; and (3) strategic considerations. (Agarwal, 2005)

The work of the work of Agarwal (2005) entitled: "Strategic Partnerships in Transformational Outsourcing as a Distinctive Source of it Value: A Social Capital Perspective" states that specific motivations drive economic, technological and strategic considerations of outsourcing in the organization. Economic motivations are stated to be inclusive of: (a) cost-reduction; (b) economies of scale; - share risk; and (d) improved performance. (Agarwal, 2005) Technological motivations include: (a) technological integration; (b) specialized skills; - reduced technological risk; and (d) technological flexibility. Strategic motivations include: (a) a focus on core business; (b) flexibility; - strategic alliances; (d) innovative use of it functionality; and (e) increased knowledge and expertise. (Agarwal, 2005)

5) the organization should be selective when choosing what business functions will be outsourced. (Agarwal, 2005)

The work of Agarwal (2005) entitled: "Strategic Partnerships in Transformational Outsourcing as a Distinctive Source of it Value: A Social Capital Perspective" states that "prior studies suggest that selective outsourcing with multiple vendors and short-term, tight contract are more likely, to achieve positive outcome. Short-term contracts provide flexibility while selective outsourcing eschews the problem inherent in total outsourcing." The most common business function that is outsourced are it functions and infrastructure. The following chart lists the it functions that are most commonly outsourced within the RSV organization.

IT Functions Outsourced

Source: Agarwal (2005)

II. RESOURCE-BASED VIEW "SHOULD NOTS"

1) the organization should not have their generated information unstructured and not in such a format that renders information unable to be located when needed. (O'Callaghan and Smits, nd)

The work of O'Callaghan and Smits (nd) entitled: "A Strategy Development Process for Enterprise Content Management" states that most organizations today "generate information… READ MORE

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