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Resource Based View of the Firm

What the paper is about is how Resource based view (RBV) has influenced Strategic human resource management (SHRM), and how it has developed in to the field of SHRM whilst being integral in its growth. It also goes in to areas where the fields of strategy and SHRM begin to overlap over a number of issues. This article focused mostly on the RBV. Barney recognises that the RBV is linked to firm’s internal resources. Barney suggests that if a firm’s resources are rare, inimitable and valuable they can produce a competitive advantage for that firm (Barney, 1991).

Since Barneys article with the basis of the RBV model, it has become the theory most often used within SHRM. One area the paper focus on is the effect of RBV on the field of SHRM on whether it provided a rationale for how a firm’s resource could provide a source of competitive advantage has been intensely debated. The article mentions that Wright et al, did not believe it could the basis of a competitive advantage, since individual HR practices could be copied (although he did mention he thought the human capital pool could be a source of competitive advantage).

However the likes of Lado

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and Wilson point out HR systems can be “unique casually ambiguous and synergistic… and thus could be inimitable. ” (Wright et al, 2001) Also whether resources can be considered a sustained competitive advantage and increase a firm’s performance, human resources must be inimitable. Wright et al argued for the inimitability of individual practices, whereas Lado and Wilson noted that, with all its “complementarities and interdependencies among the set of practices would be impossible to imitate. ” (Wright et al, 2001)

The paper also refers to Boxall who built on the RBV concept, proposing human resource advantage consists of two parts. He first argues the management of mutuality (alignment of interests) to create a talented and committed workforce, this can result in a human capital advantage. Second develop employees so they are capable of learning within and across industry cycles. This can result in organisational process advantage (Wright et al, 2001). Many theorists focus on the need to develop human capital or achieving a better alignment between the skills needed by the firm.

It also discusses that there are other factors that can affect competitive advantage, and that is employees. It depends on whether the ‘human capital pool’ chooses to behave in a certain way. The people management system is then used to explain the practices within firms that impacts employees and shape their competencies. The focus is not just on the behaviour of the human resources, but on the skills, knowledge, attitudes and competencies which underpin this. (Songonuga, 2007) Also discussed is the attention strategy literature within the RBV theory that has focused on knowledge.

This theory argues that knowledge is a company’s most valuable resource. Again this is an extremely debated topic. Spender suggests that knowledge is the only real source of competitive advantage (Donnellan et al 2006). Efforts to understand how firms protect their ideas have moved to the fore front of the field. Here Grant argues for a knowledge based theory of the firm, firms exists because they better incorporate and applied specialised knowledge. Whilst Liebesking suggests firms exist because they better protect knowledge from imitation. Knowledge has always been part of HR literature.

As discussed the major distinctions between strategy and HR literatures in relation to knowledge is that, HR focuses on job related issues whilst strategy focuses on market related knowledge. The paper further goes on to say “Strategy theory and research has provided the basis for understanding the value of knowledge to the firm and highlights the need to manage it the HR field has lacked such a perspective but has provided more theory and research in how knowledge is generated… ” Showing how knowledge has affected both fields. (Wright et al, 2001)

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