Go from HRM Practices to HRM capabilities: A Dynamic Capabilities Perspective

Abstract

While a resource-based view (RBV) has been widely used as a theoretical framework to explain the role of HRM practices in enhancing firm performance, the HRM practices suggested by strategic HRM researchers do not truly satisfy the assumption of “valuable, rare, inimitable, and non-substitutable (VRIN)”, resulting in the failure to obtain Ricardian rents. Hence, we find mixed results regarding the effects of HRM practices on firm performance in current longitudinal studies. As an extension of RBV, the dynamic capabilities theory does not emphasize superior resources, per se, but instead this theory focuses on its capabilities of sensing, seizing, and reconfiguring resources. Accordingly, in this paper we propose the concept of HRM capabilities, which represents firm capabilities in terms of utilizing human resources to secure entrepreneurial rents. Specifically, we argue that HRM capabilities could lead to the change and transformation of generic and firm- specific human capital resources (HCRs), which will further mediate the relationship between HRM capabilities and long-term firm performance. In this way, we link strategic HRM literature with strategic human capital literature and explicate the paths through which HRM may influence long-term firm success.