HR Value Chain and Resource-Based View

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Questions and Answers

What is the general consensus regarding the relationship between HR practices and firm performance?

HR practices negatively affect firm performance.

HR practices have a modest positive impact on firm performance. (correct)

HR practices have no relationship with firm performance.

HR practices have a strong positive impact on firm performance.

What aspect of HRM research has been criticized, particularly from the second stream of research?

The high quality of data used in studies.

The overwhelming empirical support for performance impact.

The lack of HR practices in organizations.

Research designs and methodologies. (correct)

Which statement about HR practices is true?

HR practices are irrelevant to performance in organizations.

HR practices are solely compliance-based activities.

HR practices shape the employment relationship in an organization. (correct)

HR practices are unchanging across different organizations.

Since 2000, what has been a key focus of HR research with respect to performance?

The methods used to determine the added value of HRM. Signup and view all the answers

Which of the following statements reflects an area of disagreement identified by Boselie regarding HRM?

The definition of Performance in organizations. Signup and view all the answers

What is the starting point for determining competitive advantage in the HR value chain?

Ultimate business goals Signup and view all the answers

Which of the following factors is NOT a critical factor that creates competitive advantage?

Job satisfaction Signup and view all the answers

According to the resource-based view, what does the characteristic 'inimitable' refer to?

Resources that are hard to copy Signup and view all the answers

Which of the following is NOT classified as an internal resource in the resource-based view?

Market demand Signup and view all the answers

What does the VRIO framework stand for?

Value, Rareness, Inimitability, Organizational support Signup and view all the answers

Which HR practice is mentioned as positively affecting employee attitudes and behaviors?

Selective recruitment and selection Signup and view all the answers

Which of the following does NOT align with the resource-based view of a firm?

Focus on external market positioning Signup and view all the answers

Which of the following describes a characteristic of human capital as a source of competitive advantage?

Difficult to imitate Signup and view all the answers

What does the inimitability of resources indicate in the context of achieving competitive advantage?

Resources are rare and cannot be easily imitated. Signup and view all the answers

Which of the following factors makes a resource difficult to imitate according to the VRIO framework?

Path dependency of resources. Signup and view all the answers

What does organizational support enhance according to the VRIO framework?

The performance of resources. Signup and view all the answers

The critical HR goal of social legitimacy focuses on which of the following?

Maintaining the organization's reputation among employees. Signup and view all the answers

What are distal outcomes in the context of HRM?

Market value and similar long-range business effects. Signup and view all the answers

Which of the following is NOT a level of performance output defined in the VRIO framework?

Sustained competitive loss. Signup and view all the answers

What type of flexibility encompasses the organization’s capacity to adapt to changes in its environment?

Organizational flexibility. Signup and view all the answers

Which of the following statements about the role of critical HR goals is TRUE?

There is a natural tension between cost-effectiveness and flexibility. Signup and view all the answers

Which of these factors is NOT associated with causal ambiguity?

Direct link between resources and competitive advantage. Signup and view all the answers

Which of the following describes the impact of employee scandals on organizations?

They can negatively affect the organization's reputation. Signup and view all the answers

What is a primary risk of linking distal outcomes with HRM?

Attributing too much influence from HR on those outcomes. Signup and view all the answers

Which of the following statements correctly represents the organizational component of the UBGs?

Integrating adequate returns for shareholders and sustained competitive advantage. Signup and view all the answers

Which type of flexibility relates to the varying use of employees based on demand?

Numerical flexibility. Signup and view all the answers

What are intended HR practices primarily concerned with?

Policies and new HR practices planned by the HR department Signup and view all the answers

Who predominantly implements actual HR practices within an organization?

Line managers Signup and view all the answers

What is primarily influenced by employees' perceptions of HR practices?

HRM outcomes Signup and view all the answers

Which of the following best describes a professional organization?

An organization aiming for continuity and employee livelihood Signup and view all the answers

In the context of HRM, which role do line managers play?

They directly implement HR policies and practices Signup and view all the answers

What aspect is NOT a primary concern when defining critical HR goals?

The organization’s marketplace strategy Signup and view all the answers

Which factor is closely linked to the effectiveness of an HR value chain?

Definition of relevant HR outcomes Signup and view all the answers

How should organizations view their employees according to effective HRM principles?

As core assets that add value Signup and view all the answers

What is the focus of the Work Ability Index?

Measuring, predicting, and training work ability Signup and view all the answers

Which of the following best defines employability?

The ability to add value to an organization while recognizing personal value Signup and view all the answers

What can managers do to combat the fear of investing in employees' employability?

Invest in employee development to build commitment Signup and view all the answers

What do the factors that significantly influence work ability include?

Organizational and personal factors Signup and view all the answers

What is a proposed benefit of communication in an organization?

It encourages positive questions and engagement Signup and view all the answers

Which of the following dimensions supports the concept of employability?

Learning climate and career involvement Signup and view all the answers

How should organizations adapt to ensure sustainability?

By being agile and connected to outside changes Signup and view all the answers

According to the discussion, what is a significant misconception about employees in HRM?

Employees are solely resources to be managed Signup and view all the answers

What is the relationship between work ability and career success?

Higher work ability contributes to career success Signup and view all the answers

Which of the following is not a factor in retaining employees?

Strict management policies Signup and view all the answers

Study Notes

Reverse Approach HR Value Chain

The HR value chain represents the goal-setting and strategic decision-making of a firm.
Determine competitive advantage--this looks at the ultimate business goals (UBGs).
Determine critical factors--things that create competitive advantage (e.g., productivity, innovation, flexibility).
Determine employee attitudes, behaviors, and cognitive factors--which positively affect critical success factors (e.g., motivation and job satisfaction).
Determine HR practices--which positively affect employee attitudes and behaviors (e.g., selective recruitment and selection, extensive training and development, teamwork).

Resource-Based View (RBV) of the Firm

RBV is a dominant theory in strategic management.
It changed the approach to strategy from "outside-in" to "inside-out."
The emphasis shifted from external, industry-based competitive issues to internal resources used to start organizational success.
Sustained competitive advantage is determined by internal resources that are valuable, rare, inimitable, and non-substitutable:
- Valuable resources are economically beneficial.
- Rare resources are scarce.
- Inimitable resources are difficult to copy.
- Non-substitutable resources are difficult to replace.
Internal resources can be financial, physical, organizational, or human.

VRIO Framework

The VRIO framework represents the qualities of RBV (valuable, rare, inimitable, and non-substitutable).
It is a hierarchical framework, meaning that the previous level must be achieved to improve the position relative to competitors.
For long-term success, organizational support is crucial.
Inimitability is one of the most important characteristics of desirable resources.

A resource can be difficult to imitate for three reasons:
- Path dependency: The ability to obtain a resource is dependent on unique historical conditions.
- Causal ambiguity: The link between organizational resources and sustained competitive advantage is difficult to understand.
- Social complexity: The resource generating an organization's advantage is socially complex and difficult to understand.
Competitive advantage comes from past events, not just current choices.

Competitive Advantage & Critical HR Goals

Boxall & Purcell: Linking Competitive Advantage to Ultimate Business Goals (UBGs)
- UBGs are twofold:
  - Creating and maintaining viability with adequate returns to shareholders.
  - Striving for sustained competitive advantage.
Organizational performance is represented by critical HR goals (labor productivity) and critical non-HR goals (market share).

Linking UBGs to Critical HR and Non-HR Goals

Critical Non-HR goals include desired outcomes for sales, market share, and brand name.
Employee scandals can negatively impact a firm and damage corporate reputation.
Critical HR goals focus on desired outcomes for:
- Labor productivity: Output per unit of input.
- Organizational flexibility: The capacity to change and adapt.
- Social legitimacy: The legitimacy of an organization in the outside environment and to its employees.
There are tensions between the critical HR goals, for example:
- High cost-effectiveness can be negatively associated with flexibility.
- Too much focus on social legitimacy can negatively impact efficiency and flexibility.

HRM and Performance

The HR and performance debate involves testing the impact of HRM on performance.
There is a general agreement that HR practices are weakly linked to firm performance.
HR practices are personnel interventions or actions that shape the employment relationship in an organization.

HRM Activities and Outcomes

Three types of HR practices: Intended, Actual, and Perceived
Intended practices are policies and goals set by HR departments
Actual practices are implemented by line managers
Perceived practices are employees' perceptions of HR practices, influenced by their direct supervisors
Line managers play a significant role in translating HR policies into actual practices

The HR Value Chain

The HR value chain connects organizational strategy to HR outcomes
It involves five steps:
- Define critical HR goals
- Identify intended HR practices
- Implement HR practices
- Assess HR outcomes
- Measure the impact on organizational performance

Guest Lecture by Lucienne Stavenuiter

Employees are not resources, but the core assets and capital of an organization
They add value and should not be viewed as costs
The impact of technology:
- Head work - Technology & data design, clever use of analyzed data
- Handwork - Robotisation
- Pass-through data tasks - ICT (e.g., secretaries)
HRM as a staff function has no direct influence on performance and is outdated

Work Ability

Defined as the physical and mental condition to work, now and in the future
Work Ability Index is a validated tool for measuring, predicting, and training work ability
House of Workability includes factors influencing work ability:
- Personal: health, coping style, personality
- Organisational: norms & values, learning climate, personnel management/policies
- Functional: competencies, time in function, career involvement
- Manager: inspiration, learning value, work-home interference
- Mentor: social network, position on labor market

Five Dimensions of Employability

Employability: The ability of a person to add value to an organization today and in the future, recognizing the value of the work for themselves
Five dimensions of employability:
- Good - Delivering quality products or services
- Agile - Adapting to change
- Flexible - Adapting to changes and recovering from setbacks
- Connected - Aware of external trends
- Balanced - Meeting all needs and maintaining a healthy work environment

Employability and Work Ability

Management/employability paradox: Managers are hesitant to invest in employee development for fear of losing them to competitors
Research shows that investing in employee development increases their commitment and reduces turnover
The combination of work ability and employability leads to:
- Career success
- Higher productivity
- Innovation
- Flexibility
- Agility
- Less absence
- Retention

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Description

Explore the HR value chain and the resource-based view of firms through this quiz. Understand how strategic decision-making and internal resources contribute to competitive advantage and employee effectiveness. Test your knowledge on critical success factors and HR practices.