Ultimately the paper examines the link between strategy and SHRM within the RBV framework. RBV has provided a bridge between the two fields. There is more information in certain areas of SHRM than strategy, whilst strategy is stronger than SHRM in certain fields. Wright et al have found that both fields could benefit greatly from sharing respective areas of expertise. They also discuss that future interdisciplinary researches conducted jointly by SHRM and strategy could “contribute to the generation of new knowledge regarding the roles that people play in organizational competitive advantage” (Wright et al, 2001.)
Many of the finding from lecture 7 have been similar to that the finding of the paper. What we found from the lecture is that many theorists reckon the most valuable asset in an organisation is their employees, whilst the paper emphasises this fact, and that many authors have said employees could be creative source of competitive advantage for a firm, however without the right management and control of HR activities, firms may fail to build any sort of competitive advantage.
Even though RBV has been a popular theory and well accepted among strategists, it does have some critics, looking forward to lecture 10, there are authors and researchers who challenge it, particularly Priem and Butler, their paper from 2001. They have shown concern regarding the lack of critical evaluation of the RBV, in terms of its theory status, and also its potential contribution to the field of strategic management. Priem and Butlers’ article aims to provide a more precise critique and clarification of the RBV by addressing two elemental questions.
(1) Is the RBV actually theory? (2) Is the RBV likely to be useful for building understanding in strategic management? The “degree to which the RBV is likely to enrich strategy research depends, in part on the extent to which it becomes a theory of competitive advantage” (Priem and Butler 2001). To receive theory status RBV has to meet a certain criteria. The definitions proposed by Runder. “A theory is a systematically related set of statements, including some law like generalizations that is empirically testable” (Priem and Butler 2001).
This means that at least some of the statements must: (1) are generalized conditionals (“if/then” statements), (2) have empirical content and (3) exhibit nomic necessity. After assessing the RBV against these criteria Priem and Butler state that the RBV does have generalized conditions. Although, they claim that in its current state it doesn’t meet the overall law like status, as it doesn’t contain empirical content (Priem and Butler 2001. ) Priem and Butler go on to further present proof that the RBV is not yet theory by dismissing Barneys claims, regarding testability and tautology.
However what the lecture slide has already discussed is that RBV can be used to help managers to fully realise the potential of its existing resources. It offers potential and underlines the possibility of resources Literature does suggest that much remains in terms of empirical validation by RBV, however some progress have been made in recent years (Fahy 2001. ) Most SHRM empirical studies recently have at least mentioned RBV. The case studies in the paper were picked based on popularity within SHRM literature. Barney has recognised that most research has failed to test fundamental concepts within RBV.
Barney has mentioned that “… the focus is on the performance implications of some internal attributes of a firm–and is not really direct tests of the theory developed in the 1991 article. ” (Wright et al, 2001. ) Most of the empirical studies assess only two variables: HR practices and performance. The paper considers moving forward means they must go beyond application of RBV logic towards research that directly tests the RBV’s core concepts (Wright et al, 2001. ) Empirical SHRM research should involve focusing primarily on the competencies and capabilities of the firm and the role management systems play in developing these.
So rather simply theorising a relationship between HR practices and competitive advantage, one must understand people management systems might impact this advantage in a variety of ways (Wright et al, 2001. ) Before RBV, strategist’s attention had been towards focusing on the external environment by Porters publication and his five forces framework. The introduction of the RBV highlighted essential flaws in Porters model and has now allowed strategists to look internally, which is something I appreciate about the framework itself.
It has improved our understanding, and has increased debate in the area of internal resources and their associated link to competitive advantage. It will be interesting to see the future of RBV research in relation to strategy and SHRM.
One major strength of the paper I thought was its detail, as well as one of its flaws, at times I felt the paper was repeating it self. Furthermore I felt the paper was very one sided I would’ve liked to see more counter arguments in support of Butler and Priem. To help me choose which side I would be on, at the moment I would say am on the fence. However the paper has reinforced to me the importance of the internal environment and it resources, particularly the employees.
Barney, J (1991) Firm resources and sustained competitive advantage, Journal of Management, Vol. 17, No. 1, pp. 99-120 Donnellan, B (2006) The Transfer and Diffusion of Information Technology for Organizational Resilience, Springer Fahy, J (2001) The Role of Resources in Global Competitio, 1st Ed, Routledge Priem, R. L. and Butler, J. E. (2001) Is the Resource-Based “View” a useful perspective for strategic management research? , Academy of Management Review
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