Achim Krausert
Associate Professor
May 2025
Lecture 5
HRM and the Resource-Based View
of the Firm
Agenda
Theories from strategy that analyse conceptually how competitive
advantages come about
• Resource-based view of the firm
• Organizational learning theory
• Complex systems theory
Discuss how they have been applied in strategic HRM/strategic human
capital
Overarching (practical) question addressed today:
• How do some industry-leading firms gain sustained (lasting) competitive
advantages? What role does HRM play in it, if any?
Resource-based view of the firm (RBV)
• Explains how resources relate to competitive advantages
• Resources
• Assets/production inputs that are owned, controlled or accessed by an
organization
• Examples of resources
• Rare skills; just-in-time production processes; strong employer brand;
patents; unusual machinery/technology
• Resource categories
• Financial, physical, technological, human, organizational, reputational
• RBV contrasts with market-based views of the firm
• Competitive advantages arise from resources vs. market positioning
Barney, 1991; Grant, 1991
Assumptions of the RBV
• Resources are potentially imitable
• Resources are potentially tradeable in factor markets (e.g., markets
for supplies; labour markets)
• Rational firm behaviour
• If a resource creates a competitive advantage, other firms will imitate
that resource or bid for it in the market
• All firms have the same resources or, if not, scarce, advantageous
resources are more costly (equivalent to the value they add)
Three ways in which resources can relate to the
competitiveness of firms
Requirement for
Source of Source of
competitive
temporary sustainable
parity (“table
advantage advantage
stakes”)
Examples Just-in-time, flexible Technology in the Battery technology
manufacturing mobile phone in the auto
processes in the auto industry industry
industry
VRIO framework
Four attributes of resources that create sustainable
competitive advantages
Valuable Rare
Inimitable Organization
Barney (1991)
Resources in the HR space
• Skills (“human capital”) of particular individuals—star employees
• E.g., marketing/engineering genius; outstanding CEO/founder;
• Human capital mix in teams/in the organization as a whole
• People who are compatible, people with complementary strengths/weaknesses
• Organizational culture
• Employer brand
• HR practices—HR-related processes (e.g., recruitment, performance
management, organizational learning etc.)
• “HR systems”—the mix of HR practices
• Bundles of complementary, mutually reinforcing HR practices
Discrete vs systemic resources
Discrete resources Systemic resources
Human resources Human capital of Team-/firm-level human
individual employees capital mix
Organizational resources Individual HR practices HR systems (bundles of
HR practices)
Competitive advantages through discrete human
resources—”scarce human capital”
• Skills and abilities that are in short supply in the labour market
• People with rare talents—”stars” (e.g., marketing/engineering genius)
• Technical skills that are in short supply (e.g., data science skills; AI-related
skills)
• Foundational and soft skills (e.g., maths skills; reading comprehension; social
skills; problem-solving skills etc.)
• Competition for scarce human capital in the labour market
• Scarce human capital is tradeable in the labour market—firms can offer
higher wages to attract people with respective human capital
• Scarce human capital is expensive to firms
• Effects on operational performance do not fully translate into effects on
financial performance
Becker (1964), Coff (1997, 1999), Crook et al. (2011)
Firm-specific human capital
• Skills/knowledge that are useful at » Firm-specific human capital not
one company but not equally useful tradeable in the labour market
at other companies
• E.g., middle managers require » Wage is not driven up as much
knowledge/skills that are firm- » Firms gain a bigger share in the
specific relating to specific
products, strategies, processes, financial returns on human capital
culture, networks etc. in relation to firm-specific vs.
• Middle managers who change generic human capital
companies don’t always perform
equally well at the new company
• Human capital that helped them
succeed at old company is not
equally applicable at new company
Crook et al. (2011)
Summary—sustainable advantages through
“discrete human resources” (individual skills)
• Individual skills can be source of sustainable advantage esp. if they
are scarce
• Effects on operational performance bigger than on financial
performance (higher wages)
• However, this is not the case (or to a lesser extent) if skills are firm
specific
• Employers capture bigger share of the financial returns on firm-specific skills
compared to generic skills
• Difference between operational and financial performance effects is smaller
• The implication is not that firm-specific skills are more important
than generic skills!
To be continued in the workshop
