Contemporary Issues in HRM Chapter 2

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Questions and Answers

Which of the following best defines the VRIO framework?

Value, Relevance, Imitation, Organisation

Volume, Rarity, Imitation, Overall

Variety, Rarity, Intervention, Organisation

Value, Rarity, Imitability, Organisation (correct)

What is a critical requirement for an organisational resource to contribute to sustainable competitive advantage (SCA)?

It must be valuable, rare, and imperfectly imitable (correct)

It must be freely accessible

It must be readily disposable

It must be extensively documented

Which of these groups is NOT listed as a type of organisational resource?

Financial capital resources

Cultural capital resources (correct)

Physical capital resources

Human capital resources

How does 'strategic fit' relate to an organisation?

It refers to the organisation's alignment with its environment Signup and view all the answers

What role does HRM play in the context of sustainable competitive advantage?

HRM practices form a system to attract, develop, motivate, and retain employees Signup and view all the answers

What must an organisation possess to effectively exploit its valuable resources?

Organisational ability Signup and view all the answers

Which statement about dynamic capabilities is true?

They encompass the use of processes and managerial skills to respond to changes Signup and view all the answers

What is essential for achieving diversity as a source of competitive advantage?

Prioritizing employees, context, and removing barriers Signup and view all the answers

What is the primary characteristic of sustained competitive advantage (SCA)?

It allows for the maintenance of market share and an increase in profit. Signup and view all the answers

Which framework aligns HRM practices to enhance organisational performance?

Ability-Motivation-Opportunity (AMO) framework Signup and view all the answers

What does the term 'vertical fit' refer to in strategic management?

The alignment between an organisation’s strategy and its business strategy. Signup and view all the answers

What role do human resources play in achieving sustained competitive advantage?

They unlock employee potential and shape organizational culture. Signup and view all the answers

Which of the following statements about competitive advantage is true?

Competitive advantage involves value-creating strategies not utilized by others. Signup and view all the answers

What does contingency theory suggest about employee management?

Employee management should be tailored to the unique environment of each organization. Signup and view all the answers

In what way can HRM practices contribute to organizational performance?

By ensuring alignment between HR practices and organizational strategies. Signup and view all the answers

Which factors are likely to create a sustained competitive advantage?

Internal strengths that meet external opportunities. Signup and view all the answers

Study Notes

Contemporary Issues in Human Resource Management

This document is a collection of notes on contemporary issues in Human Resources Management (HRM).
The book/presentation is edited by Nicole Dodd with contributions from various authors.

Chapter 2: Human Resources, Dynamic Capabilities, and Sustained Competitive Advantage

Sustained Competitive Advantage (SCA) is the distinctive factors that set an organization apart from competitors, enabling the maintenance of market share and profit growth.
Factors crucial for SCA can be specific to an organization (sometimes based on a combination of HRM practices).
HRM plays a crucial role in unlocking employee potential and enhancing organizational design for profit maximization.
HRM shapes the organizational culture and responsiveness.
Strategic management necessitates HRM's opportunity for success.

Learning Outcomes

Explain the concept of sustained competitive advantage.
Discuss exploitation and exploration strategies linked to SCA.
Outline the role of HRM in achieving SCA.
Distinguish between different sources of SCA.
Explore various paradigms concerning HRM's contribution to organizational performance.

Sustained Competitive Advantage

Sustained Competitive Advantage (SCA) encompasses a range of elements that differentiate an organization from its competitors.
These elements allow for the maintenance of market share and profit growth.
Organization-specific factors can lead to SCA.
HRM professionals can identify and cultivate employee potential.
Effective organizational design can enhance profitability.
HRM deeply impacts organizational culture and responsiveness.
HRM is essential for strategic management success.

HRM and Organizational Performance

Research explores the link between HRM and organizational outcomes.
Some early research posited the existence of "best practices" for superior performance across all organizations.
Contingency theory counters this, highlighting unique organizational environments and the absence of a universal optimal management approach.

Ability-Motivation-Opportunity Framework

Vertical fit assesses the alignment of organizational strategy with business strategy.
Horizontal fit refers to the alignment of HRM practices within the organization.
Expectancy theory suggests that motivation arises when employees perceive a link between their efforts and valued rewards.
The AMO framework aids in achieving horizontal fit through the strategic use of HRM bundles.

Competitive Advantage and SCA

Competitive advantage revolves around value-creation strategies not adopted by competitors.
Sustained competitive advantage relates to rare and difficult-to-imitate sources of competitive advantage.
Sustainable competitive advantages (SCAs) often originate from leveraging internal strengths to capitalize on external opportunities.
SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a tool for identifying and evaluating internal and external factors.

Resource-Based View of SCA

The resource-based view of SCA employs four aspects (Value, Rarity, Imitability, Organisation - VRIO framework) to evaluate resources.
Internal strengths enable organizations to exploit external opportunities and mitigate threats.
The resource-based view emphasizes the significance of human resources to organizational success.

Organizational Strategy

Organizations can achieve SCA through strategies like exploitation or exploration.
Exploitation strategies leverage existing capabilities.
Exploration strategies seek new opportunities through risk-taking.
Business functions must align to support organizational strategies.
Tensions can exist between short-term and long-term goals and objectives.

Organizational Resources

Four key organizational resource categories include: financial capital, physical capital, human capital, and organizational capital.
Resources driving SCA must be valuable, rare, difficult to imitate/duplicate, and non-substitutable.
Organizations need the capability to effectively use their resources.
Strategic fit refers to alignment with the external environment.
Strategic flexibility allows for adaptation to changing conditions.

Capabilities Versus Dynamic Capabilities

Capabilities represent the core operational functions of an organization.
Dynamic capabilities refer to the organizational ability to adapt and respond to market changes.
Dynamic capabilities rely on managerial skills for effective use of organizational processes.

Diversity in the Workplace

HRM managers prioritize employee diversity and its supportive contexts for organizational success.
Removing barriers to workplace diversity and inclusiveness is imperative.
Transformation efforts should be deliberate, inclusive, and provide marginalized groups with meaningful voices.

Criteria for HRM practices and human capital to contribute to SCA

Questions to consider about a resource, including its value, rarity and inimitability, are key.

The Role of HRM and Human Capital in SCA

HRM practices form a system that attracts, develops, motivates, and retains employees.
Effective HRM ensures organizational human capital aligns with objectives.
A combination of effective HRM practices and exceptional human capital creates sustained competitive advantage (SCA).
Organizations often enhance SCA by providing special treatment and opportunities to employees with strategic competencies.
HRM's positive impact can significantly enhance products, services, innovation, and problem-solving.

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Description

Explore Chapter 2 of Nicole Dodd's edited book on Human Resource Management, focusing on the link between Human Resources, dynamic capabilities, and sustained competitive advantage. This chapter outlines how strategic HRM practices can enhance organizational performance and market positioning.