Searching for Competitive Advantage in the HRM-Firm Performance Relationship

Abstract

Although the strategic HRM (SHRM) stream of research has made impressive progress in recent years, the majority of it has become centered on the “universalistic” relationship of a particular kind of HR system, most commonly labeled as a high performance work system (HPWS), with firm level dependent variables. We argue that a broader perspective on strategy, applied to HRM, leverages strategic factor market theory within the resource-based view of the firm (RBV) to suggest novel kinds of research questions for SHRM. In particular, we highlight four specific under-researched areas of inquiry for SHRM: 1) HRM capabilities, 2) intangible strategic assets, 3) the “market” for HR practices, and 4) complementarities. Our discussion of these topics shares a common emphasis on the causes and consequences of firm level heterogeneity with respect to HRM. The strategic perspectives discussed in this paper suggest new ways to consider where, in the relationship between HRM and firm performance, such heterogeneity and, relatedly, competitive advantage through people, may be found.