HR as a source of shareholder value: Research and recommendations

HR as a source of shareholder value: Research and recommendations The New Strategic Role for HRM Pfeffer (1994) describes how changing market conditions have rendered many of the tradi- tional sources of competitive advantage, such as patents, economies of scale, access to capital, and market regulation, less important in the current economic environment than they have been in the recent past. This is not to argue that such assets are not valuable, but rather in a global economy that demands innovation, speed, adaptability, and low cost, these assets do not differentiate firms the way they once did. Instead, the core competencies (Hamel & Prahalad, 1994) and capabilities (Stalk, Evans, & Schulman, 1992) of employees that help to develop new products, provide world class customer service, and implement organizational strategy are relatively more influential. Unlike conventional assets, this form of intellectual or organizational capital (Tomer, 1987) is largely invisible (Itami, 1987) and therefore does not appear on the firm’s balance sheet.2 Although organizational and intellectual capital may well be “invisible,” the sources of this capital are not. They are found in a skilled, motivated, and adaptable work force, and in the HRM system that develops and sustains it. Hamel and Prahalad (1994, p. 232) argue that these “people embodied http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Human Resource Management Wiley

HR as a source of shareholder value: Research and recommendations

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Publisher
Wiley
Copyright
Copyright © 1997 John Wiley & Sons, Inc.
ISSN
0090-4848
eISSN
1099-050X
DOI
10.1002/(SICI)1099-050X(199721)36:1<39::AID-HRM8>3.0.CO;2-X
Publisher site
See Article on Publisher Site

Abstract

The New Strategic Role for HRM Pfeffer (1994) describes how changing market conditions have rendered many of the tradi- tional sources of competitive advantage, such as patents, economies of scale, access to capital, and market regulation, less important in the current economic environment than they have been in the recent past. This is not to argue that such assets are not valuable, but rather in a global economy that demands innovation, speed, adaptability, and low cost, these assets do not differentiate firms the way they once did. Instead, the core competencies (Hamel & Prahalad, 1994) and capabilities (Stalk, Evans, & Schulman, 1992) of employees that help to develop new products, provide world class customer service, and implement organizational strategy are relatively more influential. Unlike conventional assets, this form of intellectual or organizational capital (Tomer, 1987) is largely invisible (Itami, 1987) and therefore does not appear on the firm’s balance sheet.2 Although organizational and intellectual capital may well be “invisible,” the sources of this capital are not. They are found in a skilled, motivated, and adaptable work force, and in the HRM system that develops and sustains it. Hamel and Prahalad (1994, p. 232) argue that these “people embodied

Journal

Human Resource ManagementWiley

Published: Mar 1, 1997

References

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