Resource-based Perspective of Education: A Multi-level Analysis of the Value of Creating Human Capital

Abstract

(ProQuest: ... denotes formulae omitted.)IntroductionEffectively handling resources is fundamental to organizations and is a prominent focus in an abundance of management research. Possessing and/or acquiring resources others lack often provides the foundation to develop competitive advantage. Several streams of management literature offer valuable insight into how resources are pooled and leveraged to establish an advantage over others, such as that included in dynamic capabilities (Eisenhardt & Martin, 2000), knowledge-based view (Grant, 1996), managerial rents (Castanias & Helfat, 2001), and the resource-based view (Barney, 1991). For these reasons, organizations invest a great deal of money and time to acquire, create, develop, and maintain valuable resources (Teece, Pisaso, & Shuen, 1997). While this literature explains that competitive advantage is attained through the use of valuable resources, they focus almost exclusively on the maximization potential of internal resources. Therefore, little (if any) research has examined the resource capabilities of actors outside businesses - mainly, the individual resources themselves. In this paper, we turn the dial - somewhat - away from the business to examine how human resources attempt to manage their own capabilities.Fundamental to organization success is the ability to deliver something of value to customers. That framework is a quintessential part of creating and sustaining competitive advantage (Peteraf, 1993). Advantages over competitors occurs because customers select products and services based on the perceived values those offerings will provide to them. Simply put, value derives from the ability of a good or service to satisfy a need better than alternatives, or at a superior price. Thus, strategic decision makers position their organizations' products and jockey with other industry occupants to deliver superiority in feature or cost. According to resource-based theory (Barney, 1996), firms with superior resources (or resource bundles) that are valuable, rare, inimitable, and non-substitutable are better able to satisfy customers' needs with goods and services that have greater value (Barney, 1991).One notable aspect of the resource-based view (RBV) is that human resources can provide the basis for setting one organization above another (Boxall, 2003). That fact prompts organizations to go to great lengths to hire, train, and retain valuable employees (Wagar & Rondeau, 2006). While this view is well established in management literature, it takes a somewhat raw material viewpoint in regards to human resources - examining human capital in terms of that which the firm already possesses. Though this stream of research on human resources emphasizes the hiring of talented candidates, research is scarce regarding how the actual human resources manage their own capabilities. One of the purposes of this study is to shift this focus to include the individual (resource) and the process of developing value.A second goal here is to examine a higher level inspection of developing human resources. A well-known line of research in this area is related to competitive advantage of nations, regions, or counties (Porter, 1990). The factor conditions, including human resources, are one of the four major determinants of the competitive advantage of a region, as highlighted in the famous diamond model of the structure of economic competitiveness (Porter, 1990). The research on sustainable competitive advantages suggest that the pool of skilled employees in a region (a) increases the attractiveness of the location for businesses, (b) increases purchasing power of the residents, (c) spurs new venture creation, and (d) promotes future skill developments.In this paper, we draw from resource-based theory to examine the fundamental role human capital plays in the individual's ability to be perceived as valuable. Specifically, we consider the crucial role education has on developing human capital before organizations utilize employees as resources to manage. …