Strategic human resource management, human capital and competitive advantage: is the field going in circles?

• Published date: 01 January 2017
• Author: Dorothea Roumpi,John E. Delery
• DOI: http://doi.org/10.1111/1748-8583.12137
• Date: 01 January 2017

Strategic human resource management, human

capital and competitive advantage: is the field

going in circles?

John E. Delery and Dorothea Roumpi, Department of Management, Sam M. Walton

College of Business,University of Arkansas

Human Resource Management Journal, Vol 27,no 1, 2017, pages 1–21

The resource-based view (RBV) of the firm has been consistently used as a backdrop in strategic human

resource management (SHRM) researchand has the potential to bridge the ‘micro–macro’divide.The tension

between the SHRMand the strategic human capitalliterature, however,signifies that RBV has not reachedits

potential. In this paper, we begin with a brief review of the conceptual logic linking human resource

management (HRM) practices and firmoutcomes that aim at highlightingthe different treatment of RBV in

the SHRM and strategic human capital literatures. We then propose a conceptual model that suggests that

HRM practices are not simple levers that enable firms to create sustainable competitive advantage, as most

of the strategic human capital research postulates. On the contrary, we argue that HRM practices can

contributeto a firm’s sustainable competitive advantagenot only by enhancingemployees’ability,and offering

motivation and opportunities, butalso by shaping supply-side and demand-side mobilityconstraints.

Contact: John E. Delery, Department of Management, Sam M. Walton College of Business,

University ofArkansas, Fayetteville, AR 72701, USA. Email: jdelery@walton.uark.edu

Keywords: strategic HRM; human resource strategy; human capital theory; organisational

performance;resource-based view

INTRODUCTION

The resource-based view (RBV) (Penrose, 1959; Wernerfelt, 1984; Barney, 1991)

arguably constitutes one of the most popular theoretical frameworks in the

management literature. RBV, suggesting that sustainable competitive advantage can

be achieved through valuable, rare, imperfectly imitable and non-substitutable resources

(Barney, 1991), is especially appealing for both human resource management (HRM),

particularly strategic human resource management (SHRM) and strategy scholars. Thus,

RBV has the potential to narrow the micro–macro divide (e.g. Wright et al., 2001; Nyberg

and Wright, 2015). The extent to which RBV has managed to bridge this gap is, however,

questionable.

On the one hand, SHRM scholars argue that HRM practices can be a source of sustainable

competitive advantage (e.g. Pfeffer, 1994; Becker and Gerhart, 1996; Boxall, 1996). HRM

practices,when viewed as systems of ‘interrelatedand internally consistent’practices (MacDuffie,

1995: 198), can be unique, causally ambiguous, synergistic and difficult to imitate (Lado and

Wilson, 1994). In line with these conceptual arguments and despite some substantive

(Kaufman, 2010) and methodological concerns (Cappelli and Neumark, 2001), the SHRM

research has provided compelling evidence for the relationship between HRM practices and

various firm-level outcomes (e.g. Arthur, 1994;Huselid, 1995;MacDuffie, 1995; Delery and

Doty, 1996; Ichniowski et al., 1997; Delery, 1998; Boselie et al., 2001; Combs et al., 2006).

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL27, NO 1, 2017 1

©2017 John Wiley& Sons Ltd

Pleasecite thisarticle in pressas: Delery, J.E.and Roumpi, D.(2017) ‘Strategichuman resourcemanagement,human capitaland competitiveadvantage:

is thefield going in circles?’.HumanResource ManagementJournal 27: 1, 1–21

doi: 10.1111/1748-8583.12137

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On the other hand, advocatesof the ‘human capital advantage’(Boxall, 1998) postulate that

‘it is virtually impossible for HR practices to be rare,inimitable and non-substitutable’(Wright

et al., 1994: 318).Others contend that the evidence forthe impact of HRM practice on workforce

behaviours and skills is inadequate. For instance, Wright et al. argue that even though RBV

constitutes an appealing underlying rationale for the SHRM literature, ‘as yet no study has

demonstratedanything close to a full causal model throughwhich HR practices are purported

to impact firm performance’(2001: 709).Thus, HRM practices are treated in mostof the human

capital literature,at best, as simple ‘levers’in therelationship between human capitalresources

and sustainable competitive advantage.

With the tension between the SHRM and human capital camps in mind, the purpose of

this paper is twofold. We begin with a brief review of the conceptual logic linking HRM

practices and firm outcomes. The intent is not to present a comprehensive review but rather

to emphasise some of the major perspectives over the past three decades regarding what has

been termed as the HRM practices-firm outcomes ‘black box’(Becker and Gerhart, 1996;

Guest, 1997; Wright and Gardner, 2003; Wall and Wood, 2005). The ultimate goal of this

journey through the SHRM conceptual logic is to highlight the debate between SHRM and

strategic human capital research regarding the treatment of RBV. Acknowledging the

strategic human capital literature has made important steps forward in theory development

by explicating the differences between basic concepts (e.g. human capital and human capital

resources) and offering complex models of human capital resources (e.g. Ployhart and

Moliterno, 2011; Brymer et al., 2014; Ployhart et al., 2014), we emphasise that the inability

to test these complex human capital models, the broader measurement issues and the

imperfections of the labour market (e.g. Campbell et al., 2012b) constitute important

drawbacks in this research stream. We further argue that, given the criticality of the

management of human capital resources in creating and capturing value (e.g. Wright et al.,

1994; Sirmon et al., 2007; Wright and McMahan, 2011; Nyberg et al., 2014), the human capital

stream of research brings us back to the importance of HRM practices and systems in

generating and sustaining competitive advantage.

The second objective of this paper is to add to this ongoing debate between SHRM and

human capital scholars by arguing that HRM practices are not simple levers that enable

firms to generate sustainable competitive advantage. Drawing on Campbell et al. (2012b)

framework and the ability–motivation–opportunity (AMO) model (Appelbaum et al., 2000;

Purcell and Hutchinson, 2007), we offer a conceptual model that sheds light on how high-

performance work practices (HPWPs) not only enhance employees’knowledge, skills,

abilities and other characteristics (KSAOs), and offer motivation and opportunities to

leverage these resources, but also contribute in shaping the supply-side and demand-side

mobility constraints thought to enable firms to generate competitive advantage through

these resources. Thus, we propose that firms can gain competitive advantage only through

the interplay between human capital resources and HRM practices –each shaping and

bringing about the other.

REVIEW OF THE CONCEPTUAL LOGIC

This review of the conceptual logic linking HRM practices and firm outcomes focuses on

identifying the major perspectives, namely, early SHRM, behavioural perspective, AMO and

RBV that have dominated the relevantliterature. Even though we discussthese four rationales

as distinct from one another and in a specific order, in reality, the evolution of the SHRM

SHRM and HC: is the fieldgoing in circles?

2 HUMANRESOURCE MANAGEMENT JOURNAL,VOL 27, NO 1, 2017

©2017 John Wiley& Sons Ltd.