Human Resource Management and the Resource Based View

Introduction

According to Delery and Shaw (2001), there is general agreement that (1) human capital can be a source of competitive advantage, (2) that HR practices have the most direct influence on the human capital of a firm, and (3) that the complex nature of HR systems of practice can enhance the inimitability of the system. This view is supported by recent books on strategic HRM (Boxall and Purcell, 2008; Paauwe, 2004). Human resources belong to a firm's most valuable assets. Since the late 1990s there is a growing body of literature focusing on creating (sustained) competitive advantage for organizations through the development of core competences, tacit knowledge and dynamic capabilities (Paauwe, 2004). Reflecting on the past decade we conclude that the resource-based view (RBV) (Barney, 1991) has become one of the dominant theories in the debate on strategic HRM and on how human resources and related HR practices can have an effect on firm performance. In fact, RBV was found in 30 per cent of the empirical studies on HRM and performance between 1994 and 2003, ranked in third place after strategic contingency approaches and Abilities-Motivation-Opportunity theory (AMO theory), present in 41 and 40 per cent of studies, respectively (Boselie et al., 2005). However, RBV is often merely named1 in HR research and not really tested or applied with the exception of a few articles (Wright and Barney, 1998; Boxall and Steeneveld, 1999). In this chapter we will give an overview of the RBV and its impact on human resource management.

This chapter aims to extend the ‘classic’ RBV approach in HRM with new institutionalism (Di Maggio and Powell, 1983) on context and with strategic balance approaches (Oliver, 1997; Deephouse, 1999; Paauwe, 2004). Our main reason for doing this is that in this way we correct the RBV for an overly narrow focus on the importance of [Page 422]internal resources. New institutionalism and the balanced approaches provide insights in the search for unique (balanced) combinations of strategy, practices, structures and systems, taking into account both the different external environments (market and institutional mechanisms) and the internal resources, capabilities and administrative heritage of an organization.

The chapter starts with an overview of general RBV theory (section 2). Next, we take a closer look at RBV in HR research itself using illustrations of empirical studies that apply RBV or at least claim to apply RBV (section 3). In section 4, we summarize the general critiques of the RBV, for example whether the RBV istautological, difficulties in measuring and testing RBV, the static nature of RBV, and the over emphasis on the internal organizational environment. This motivates us to search for alternative approaches and new institutionalism and the strategic balance theory are considered (section 5). Finally, in section 6, we discuss the value of these alternative approaches on RBV in future HR research, including the implications for methods and techniques.

RBV Theory

Resource-based theory led to a change in strategic management thinking from an ‘outside-in’ approach – with an emphasis on external, industry-based competitive issues (Porter, 1980) – to an ‘inside-out’ approach (Baden-Fuller and Stopford, 1994), in which internal resources constitute the starting point for understanding organizational success (Paauwe and Boselie, 2003). The shift from external oriented Porter-like frameworks towards the internal oriented resource-based view is reflected in the following statement by Wright and McMahan

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