The resource-based view (RBV) expresses the belief that it is the range of resources in an organization, including its human resources, that produces its unique character and creates competitive advantage. As described in Chapter 2, it is based on the ideas of Penrose (1959), which were expanded by Wernerfelt (1984). Barney (1991) suggested that resources that are valuable, rare, inimitable and non-substitutable will lead to competitive advantage. He later defined human resources as including ‘all the experience, knowledge,
judgement, risk taking propensity and wisdom of individuals associated with a firm’ (Barney, 1995: 50). Hamel and Prahalad (1989) declared that competitive advantage is obtained if a firm can obtain and develop human resources that enable it to learn faster and apply its learning more effectively than its rivals.
Unique talents among employees – including superior performance, productivity, flexibility, innovation, and the ability to deliver high levels of personal customer service – are ways in which people provide a critical ingredient in developing an organization’s competitive position. People also provide the key to managing the pivotal interdependencies across functional activities and the important external relationships. It can be argued that one of the clear benefits arising from competitive advantage based on the effective management of people is that such an advantage is hard to imitate. An organization’s HR strategies, policies and practices are a distinctive blend of
processes, procedures, personalities, styles, capabilities and organizational culture. These provide what Boxall (1996: 67) refers to as ‘human process advantage’.
The resource-based view provides a practical justification for key aspects of a firm’s HR policies and practices such as human capital management, talent management, knowledge management, and learning and development. Kamoche (1996: 214–15) stated that: ‘In the resource-based view, the firm is seen as a bundle of tangible and intangible resources and capabilities required for product/market competition’. In his opinion, the RBV builds on and provides a unifying framework for the field of strategic human resource management. Boxall (1996: 66) pointed out that: ‘The resource-based view of the firm provides a conceptual basis, if we needed one, for asserting that
key human resources are sources of competitive advantage.’
The strategic goal emerging from the resource-based view will be to ‘create firms which are more intelligent and flexible than their competitors’ (Boxall, 1996: 66) by hiring and developing more talented staff and by extending their skills base. Resource-based strategy is therefore concerned with the enhancement of the human or intellectual capital of the firm. As Ulrich (1998: 126) commented: ‘Knowledge has become a direct competitive advantage for companies selling ideas and relationships. The challenge to organizations
is to ensure that they have the capability to find, assimilate, compensate and retain the talented individuals they need.’
It was asserted by Becker et al (1997: 47) that there are ‘two features of organizational systems that increase their inimitability and would apply to high performance work systems: path dependency and causal ambiguity. Path dependency refers to policies that are developed over time and cannot be easily purchased in the market by competitors. Causal ambiguity focuses on the numerous and subtle interrelationships in such a system that are not easily observed from outside the firm.’
Allen and Wright (2007: 98) also noted that: ‘Labelled as path dependency by Becker and Gerhart (1996), the unique historical conditions under which HRM is formed in individual firms may make its understanding and replication very difficult’.
The significance of the resource-based view of the firm is that it highlights the importance of a human capital management approach to HRM. This provides the justification for investing in people through resourcing, talent management, and learning and development programmes as a means of enhancing competitive advantage with an emphasis on building flexibility and developing the integrative linkage.