Restoring Trust: The Role of HR in Corporate Governance

Theories of knowledge-based competition focus on internal resources as the source of value creation. The HR architecture (Lepak & Snell, 1999) brought human resource management directly into this forum by developing a model of human capital allocation and management. We attempt to extend the HR architecture by introducing a framework of relational archetypes—entrepreneurial and cooperative—that are derived from unique combinations of three dimensions (cognitive, structural, and affective) that characterize internal and external relationships of core knowledge employees. Entrepreneurial archetypes facilitate value creation from external partnerships while cooperative archetypes facilitate value creation from internal partnerships. This paper identifies how each of these archetypes is managed by a corresponding HR configuration and how they together contribute to value creation by facilitating organizational learning via exploration and exploitation

Next Generation SHRM Research: From Covariation to Causation

[Excerpt] In response to the longstanding and repeated criticisms that HR does not add value to organizations, the past 10 years has seen a burgeoning of research attempting to demonstrate that progressive HR practices result in higher organizational performance. Huselid’s (1995)groundbreaking study demonstrated that a set of HR practices he referred to as High Performance Work Systems (HPWS) were related to accounting profits and market value of firms. Since then, a number of studies have shown similar positive relationships between HR practices and various measures of firm performance. While the studies comprising what I refer to as “first generation SHRM research” have added to what is becoming a more convincing body of evidence of the positive relationship between HR and performance, this body tends to lack sufficient data to demonstrate that the relationship is actually causal in the sense that HR practices, when instituted, lead to higher performance. This next generation of SHRM research will begin (and, in fact has begun) to focus on designing more rigorous tests of the hypothesis that employing progressive HRM systems actually results in higher organizational performance. This generation of research will focus on two aspects: demonstrating the HRM value chain, and proving causality as opposed to merely covariation

Options for Human Capital Acquisition

An \u27options\u27 view of human capital acquisition explains value creation through timedeferred, sequential, path-dependent investment choices and addresses gaps in the resourcebased theory explanation of the relationship between human resources and competitive advantage. Firms will invest in options for human capital, using alternative employment arrangements like temporary/contractual/part-time workers and internships, or by outsourcing the work, when uncertainty associated with human capital is high and investments in human capital are largely irreversible. We discuss various options for skills and employees, two interrelated components of human capital. These are flexibility options, options to wait or defer, options to abandon, learning options, and switching options. The opportunity cost of not having options is quantifiable, which makes the real options approach valuable for strategic HRM decisions

Which Resources Matter in Initial Public Offering Firms? A Longitudinal Comparison of Five Resources’ Contributions to Firm Performance

In order to better understand the relevant resources in the resource based view of the firm, this study examines which resources executives in initial public offering (IPO) firms think are important to their success two years after the IPO. Results indicate that managers recognized five different resources as important, with the executives considering themselves (management) to be the most important resource. The effect of all five resources (culture, human resource management [HRM] practices, management, technology, and product/marketing) on both short and long-term firm performance was studied. Results show that management and technology are considered important by the investment community, with both affecting short-term IPO firm performance. However, analyses on long-term performance suggest that the key role management plays may be due to management’s ability to develop synergies with people who are key to the organization’s success — both employees and customers

Recognizing Risk in Human Capital Investments: A Real Options Approach to Strategic Human Resource Management

An issue that has not yet been explored in the field of strategic human resource management (SHRM) is that of managing the ‘risks’ involved in human capital management of the firm. We address this issue using the real option theory framework. We argue that certain HR practices manage risk and generate opportunities for the firm by creating \u27options\u27 for its human capital management. These HR options help ensure stability of returns from human capital and thus sustain competitive advantage. Different types of HR options and the role of certain HR practices in creation of these options are discussed

Theoretical and Empirical Challenges in Studying: The HR Practice - Firm Performance Relationship

Over the past 10 years a plethora of research has been conducted seeking to establish a relationship between human resource (HR) practices and firm performance. While this research has demonstrated promising results, a significant number of problems exist. This paper seeks to identify the theoretical and empirical challenges facing researchers who wish to further establish the impact of HR practices on firm performance. We conclude with some recommendations for future research in this area that might more accurately assess this relationship in ways that will be useful for both researchers and practitioners

People in the E-Business: New Challenges, New Solutions

[Excerpt] Human Resource Planning Society’s (HRPS) annual State of the Art/Practice (SOTA/P) study has become an integral contributor to HRPS’s mission of providing leading edge thinking to its members. Past efforts conducted in 1995, 1996, 1997, 1998, and 1999 have focused on identifying the issues on the horizon that will have a significant impact on the field of Human Resources (HR). This year, in a divergence from past practice, the SOTA/P effort aimed at developing a deeper understanding of one critical issue having a profound impact on organizations and HR, the rise of e-business. The rise of e-business has been both rapid and dramatic. One estimate puts the rate of adoption of the internet at 4,000 new users each hour (eMarketer, 1999) resulting in the expectation of 250 million people on line by the end of 2000, and 350 million by 2005 (Nua, 1999). E-commerce is expected to reach $1.3 trillion by 2003, and of that, 87 percent will go to the business to business (B2B) and 13 percent to the business to consumer (B2C) segments, respectively (Plumely, 2000)

Human Resource Practices and Organizational Commitment: A Deeper Examination

This paper examines newer conceptualizations of HRM practices in the HR-Performance Relationship as well as newer conceptualizations of commitment. Juxtaposing these categories of HR practices and types of commitment provides a clearer theoretical rational for at least some ways that HR practices can influence organizational performance, be that positive or negative. Implications for research are then discussed

Missing Variables in Theories of Strategic Human Resource Management: Time, Cause, and Individuals

Much progress has been made with regard to theory building and application in the field of Strategic Human Resource Management (HRM) since Wright and McMahan’s (1992) critical review. While researchers have increasingly investigated the impact of HR on economic success within the Resource Based view of the firm, and have developed more middle level theories regarding the processes through which HR impacts firm performance, much work still needs to be done. This paper examines how future theorizing in SHRM should explore the concepts of time, cause, and individuals. Such consideration will drive more longitudinal research, more complex causal models, and consideration of multi-level phenomena

Strategic HRM and Organizational Behavior: Integrating Multiple Levels of Analysis

[Excerpt] A few trends have emerged in the field of Strategic Human Resource Management (SHRM) over the past few years. First, and most obviously, has been the extensive effort to demonstrate a link between HRM practices and firm performance (Becker & Gerhart, 1996). Researchers such as Huselid (1995), MacDuffie (1995), Delery and Doty (1996), and Guthrie (2000) have published empirical studies showing a statistically significant linkage between HRM practices and some measures of organizational performance. A second trend has been to try to understand the mechanisms through which this relationship takes place. Authors such as Becker & Gerhart, (1996), Dyer and Reeves (1995), Guest, (1997) and Wright and Gardner (2003), have all called for research that uncovers some of the mediating relationships that must exist between the HRM practices and organizational performance. A final trend has been the recent interest in taking a multi-level approach to understanding SHRM. Wright and Boswell (2001) reviewed the SHRM literature and categorized this research as being differentiated along one dimension representing whether the focus was on single or multiple practices, and along a second dimension dealing with the unit of analysis, specifically the individual versus the group or organization. Ostroff and Bowen (2000) and more recently Bowen and Ostroff (2004) have developed the most extensive multi-level model of SHRM to date. Their theoretical approach argues that HR practices serve as communications mechanism signaling employees to engage in certain behaviors; relying on communications theory they contend that different aspects of HRM systems impede or facilitate this communication process. The purpose of this paper is related to these last two trends: we conceptually examine some of the mediating processes that might occur in the HRM – performance relationship, and try to make explicit their multilevel nature. In order to accomplish this, we will first explore the concept of variance, which is crucial to the analysis of any phenomena across multiple levels. We will show how virtually all existing SHRM research focuses on variance at one level of analysis while assuming constancy at other levels. We will next discuss the process through which HRM practices must act, and identify some of the relevant variables that have heretofore been virtually ignored in the empirical SHRM literature, specifically focusing on variance at different (unit vs. individual) levels of analysis. Finally, we will present some implications for theorizing and research in this area