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European Managemen fournal Vol. 17, No. 2, pp. 174-181, 1999

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Human Resources
Management Processes:
A Value-Creating Source
of Competitive

Advantage

RAPHAEL AMIT, University of British Columbia

MONICA BELCOURT, York University

HRM processes refer to the deeply-embedded, firm-

specific, dynamic routines by which a firm attracts,
socializes, trains, motivates, evaluates, and compen-
sates its human resources. This perspective inte-
grates economic considerations with contextual
social legitimacy aspects. It provides new lenses on
the tacit, and evolutionary aspects of HRM and the
value it creates. © 1999 Elsevier Science Ltd. All
tights reserved

The recognition that the management of human

resources plays a critical role in firm performance is
a relatively recent development. Over the last cen-
tury, the dominant view of the personnel function
has evolved from a purely maintenance perspective
(with an emphasis on controlling labor costs) to one
that includes compliance (due to the increasing num-
ber of laws and regulations surrounding the
employer-employce relationship). However, two
decades of restructuring (mergers, acquisitions,
downsizing and rapid growth in some sectors)
coupled with intense global competition has led man-
agement to re-evaluate the cost-control and com-
pliance roles of the human resources management
(HRM) function. Managers are now asking whether
and how HRM can add economic value. Organiza-
tions are assessing the potential role of HRM in
reaching organizational goals and in realizing their
market strategies.

Two paradigms in the literature describe the contri-

bution of HRM to firm performance. The first assigns

174

value to a firm’s stock of human-capital as a way of

measuring the contribution of human resources to
firm performance (Stewart, 1997). Although organi-
zaticns recognize that by the year 2000, 85 per cent
of al. jobs in North America will be knowledge-based
(Quinn et al., 1996), this knowledge asset is not for-
mally recognized in balance sheets of organizational
assets. The human-capital advocates in this first para-
digm attempt to formalize, capture and leverage this
asset (intellectual capital) to produce a higher-valued
product (Stewart, 1997).

The second branch attempts to identify ‘best prac-

tices’ (Becker and Gerhart, 1996; Huselid, 1995; Koch
and Gunter-McGrath, 1996). Researchers in this
movement specify and measure the bundles or
typologies of HRM practices associated with high-
performance or labor productivity. The basic idea is
that companies improve performance by copying
others’ practices. The imitator can benefit only from
the codified elements of the practices that are being
copied; the path that led to the development of the
practice at the innovator firm cannot be duplicated.

This article introduces a new perspective on the con-

tribu:ion of HRM to a firm’s financial performance.
The ‘process’ perspective of HRM developed here,
which is anchored in both the resource-based view of
the firm and in institutional theory, links the human-
capital and best-practices paradigms discussed
above. It focuses on the unique ways in which
organizations draw on past experiences, current cul-

European Management Journal Vol 17 No 2 April 1999

HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

ture, and social norms to marshal its human

resources to execute market strategies. Moreover, it
builds on the organizational capital perspective,
which views systems as ways to capture and deploy
human-capital. This paper explains how adapting a
‘process’ perspective of HRM leads to the conclusion
that an organization’s ability to build, deploy, and
renew its productive human-capital through trans-
formational routines in ways that cannot be easily
replicated by other organizations generates a com-
petitive advantage in the markct.

The paper is organized as follows: the next section

provides the theoretical foundations of the process
view of HRM. The section begins with a discussion
of the resource-based theory and institutional theory
that form the basis of the HRM process view
developed here. The section proceeds with compari-
sons between the HRM process perspective and the
human-capital and HRM best practices perspectives.
This is followed by the theory development and an
articulation of the sources of value creation that are
embedded in the HRM process perspective. The final
section discusses the implications of the process per-
spective of HRM for both theory and practice.

Theory Development

Resource-Based View (RBV) Theory

Resource-Based View (RBV) theory is anchored in the

notion that a firm’s resources and capabilities are het-
erogeneous. It is this heterogeneity that explains
variability in performance across firms within an
industry (Amit and Schoemaker, 1993; Peteraf, 1993;
Barney, 1991). A firm’s resources are stocks of trans-
ferable input factors owned or controlled by the firm.
Examples of input factors include tradeable ‘know-
how’, financial and physical assets, and human-capi-
tal. ‘Capabilities’ refers to a firm’s ability to deploy
and coordinate its resources to reach a desired end.
Capabilities are information-based, tangible and
intangible firm-specific decision-making patterns
(routines) that an organization develops through
experience. Capabilities thus refer to the mechanisms
used by firms to develop, combine, deploy and pro-
tect resources to convert them into outputs. Dynamic
capabilities reflect the organization’s capacity to
draw on its past experiences to renew, reconfigure,
and integrate new processes to remain competitive in
a changing market environment (Teece et al., 1997).

The firm-specific, tangible and intangible, resources

and capabilities that bestow a company’s competitive
advantage are its ‘strategic assets’ (Amit and Schoe-
maker, 1993). Strategic assets are the resources and
capabilities that enable the firm to realize superior
economic performance (ic. capture economic rents),
and are thus subject to imitation by other firms. For a
firm to sustain its superior profitability, it must create

European Management Journal Vol 17 No 2 April 1999

isolating mechanisms (Rumelt, 1984). That is, the firm

must make it difficult for other firms to gain access
to similar strategic assets. Valuable strategic assets
have the following properties: they enable the
execution of a firm’s market strategy, and thereby
enhance revenue and/or reduce costs, are difficult to
trade or iraitate (i.e. are subject to market failures),
are worth more in combination with other capabili-
ties than in isolation, are rare, are robust and get bet-
ter with use, and are not substitutable with other
capabilities (Amit and Schoemaker, 1993).

Institutional Theory

Whereas the resource-based view of HRM centers on

economic issues, the institutional perspective focuses
on the social context, values, and norms within which
an organization functions. Decision-making in the
institutione] framework is influenced by social legit-
imacy concerns rather than by concerns of profit
maximization (Oliver, 1997, 1996, 1991; Zukin and
DiMaggio, 1990). The institutional perspective cen-
ters on institutionalized organizational behaviors,
and on the cultural persistence and endurance of
such stable repetitive and enduring activities (Oliver,
1992). The justification for managerial activities, such
as the allccation of resources, is either taken for
granted or justified by the culture of the firm, and is
not necessarily based on economic or financial
reasoning. Activities and decisions thus become insti-
tutionalized by the habits, norms, and traditions of
the firm. This paradigm suggests that the regulatory
environment and the social context within which an
organization exists contribute to homogeneity among
firms since decision-makers are driven by the need
for external conformity and acceptance. Oliver (1997)
imtroduces the concept of ‘normative rationality,’
which refers to the justification of managerial choices
on the basis of historical precedent and social norms.
Managers in an institutional framework are bound
by social judgment, historical limitations, and inertia.

The Process View of HRM

Rooted in a firm’s culture and social norms, yet stra-

tegically-oriented, HRM processes are deeply-embed-
ded, firm-specific, dynamic mechanisms by which a
firm attracts, socializes, trains, motivates, evaluates,
and compensates its human resources. These pro-
cesses encompass an ordered set of coordinated and
complimentary activities as well as the information
exchange ard decision-making procedures for chang-
ing them; they integrate economic and normative
rationality. HRM processes lead to enhanced pro-
ductivity and strategic flexibility, which, in turn, cre-
ate value ard enable the firm to carry out its chosen
market strategy. Consider a hypothetical firm that
produces and successfully markets computers. The
‘process’ by which the firm produces and markets
computers is more than the sum of the individual

175
HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

‘practices’ involved. The firm may have developed a

successful training program for employees, for
example. It is of limited value to a competitor to copy
this training program without an understanding of
the evolutionary path that led to its development, its
internal alignment with other managerial processes,
and the external alignment with the firm’s market
strategy. Furthermore, it is difficult to copy all
elements of a practice as some elements may be tacit
and not codifiable. Context is critical.

The firm-specific HRM processes are established by

developing and exchanging information throughout
an entire organization. This process, sometimes
called ‘organizational learning,’ creates, transfers,
and institutionalizes knowledge, which increases an
organization’s adaptability (Snell ef al., 1996). This
implies that the organizational HRM _ processes
within a firm are evolutionary, ie. continuously
evolving and adapting by drawing on past experi-
ences to refine the effectiveness of processes and to
meet the changing needs of the organization. Con-
sider again the computer firm introduced above. The
training program for employees is not static. Rather,
the program will evolve as new information about
the effectiveness of previous programs becomes
available (ie. as the firm gains
experience and learns what
works). As well, the training
program evolves with the firm’s
changing markct strategy.

There are no substitutes for a

firm’s HRM processes, which
are continuously refined to bet-
ter fit a firm’s strategy. Further-
more, the processes are more valuable to a firm’s
shareholders when deployed in conjunction with
other organizational processes in product develop-
ment, customer service, etc. Indeed, the firm’s HRM
processes become one of its strategic assets (Amit and
Schoemaker, 1993) as they enable the firm to realize
superior profitability. The value of this asset stems in
part from its being based on organization-specific
past experience and therefore not easily or cheaply
reproduced by other firms.

The HRM process perspective captures dimensions

of management that foster the establishment and con-
tinuation of a firm’s competitive advantage that the
‘best practices’ and ‘human-capital’ perspectives can-
not. Since processes are firm-specific, their value in
some next-best alternative use is low. The cost of
developing them will thus not be reflected in the
market. As well, because the processes are indivis-
ible, it is impossible for individuals to capture their
value in some other context. Unlike human-capital
services, for which there is a market, the market for
processes is more tenuous. This is not the case with
‘best practices’ since they may be codified to a large
extent and thus generally transferable. HRM pro-
cesses change over time as a result of internal organi-

176

Efuman resources are not

‘owned’ by the firma and can
Hus not be bought and sold

like physical capital

zational experience and feedback from the market on

their effectiveness. The next two sections elaborate on
the differences between the HRM process view and
the human-capital and best-practices views.

HRM Processes Versus Human-Capital

Perspectives

As Coff (1997) observed, the human-capital of a firm

is often viewed as a strategic assct. Human-capital
has advantageous attributes distinct from the attri-
butes of other assets. The first is that it grows with
use. The learning and application of new knowledge
leads to even greater knowledge, as well as to a
motivation to acquire more. Intellectual capital can
be shared without being depleted. In fact, sharing
results in increased feedback, acquisition of new
knowledge, and modifications and adjustments to
current knowledge. However, the problems associa-
ted with formally valuing human-capital are complex
and often intractable.

Hurnan-capital also has other characteristics distinct

from the attributes of other assets, such as physical
capital. Human resources are not ‘owned’ by the firm
and can thus not be bought and
sold like physical capital.
Rather, the firms hire the ser-
vices of its employees who, if
they so choose, can quit the
firm and relocate at a compet-
ing firm. As well, employees
have the ability to continually
extract a higher portion of the
wealth they create by asking for
higher compensation. They have the ability to defy
authority or channel energies in directions inconsist-
ent with the firm’s overall direction. Coff (1997) lab-
els tne problems associated with these characteristics
the ‘turnover’ and ‘information’ problems.

The process view of HRM that we propose, in con-

trast to the human-capital perspective, maintains that
the processes used to create human-capital remain
with the firm, even if individuals leave. In other
words, the processes used by the firm to attract, train,
motivate, retain and replace human resources are not
threatened by the turnover of workers. The human-
capital approach is an output perspective; ours is a
process perspective. Our approach builds on Becker
ef al, (1997); Coff (1997) and Stewart (1997), who
describe human-capital dilemmas and prescribe cap-
ture and retention strategies. The human-capital
approach to human resources management high-
lights the role of capital stock and is essentially a
static view. In this perspective, the knowledge and
skills of workers can become obsolete if external fac-
tors render a firm’s products or services obsolete.
Furthermore, a firm may decide to pursue different
strategies, thus diminishing the value of its current
human assets.

European Management Journal Vol 17 No 2 April 1999

HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

Our view is that it is not the specific knowledge

(stock) of the firm that results in sustainable competi-
tive advantage. Rather, it is the ongoing, dynamic
organizational HRM process that renews and adjusts
the ways in which the firm selects, trains, sucializes,
evaluates and compensates, its human-capital that
enable a firm to effectively execute its strategy (flow).
People come and go, processes stay and improve in
the firm. The HRM process is the engine of renewal
used to transform new employees. HRM processes
are about how things are done, not what is produced.
The HRM process perspective sees as its goal the
firm-specific mechanisms that produce a broad range
of human capabilities (knowledge, skills, flexibility,
and attitudes such as motivation and commitment)
to facilitate strategy implementation.

By viewing the HRM role as a way to build pro-

ductive human-capital capable of strategy implemen-
tation, we capture the firm-specific and dynamic nat-
ure of such processes. We focus on the ways to create
and deploy the firm’s human-capital such that the
competitive advantage of the firm is enhanced.

HRM Processes Versus HRM Practices

Perspectives

Traditional perspectives view the management of

human resources as a collection of practices, policies,
and underlying philosophies (Jackson and Schuler,
1995). The goals of these inter-related practices are to
attract, develop, assess, maintain, and retain an
organization’s human assets (Lado and Wilson,
1994),

An HRM practice is a specific activity, such as using

a selection test to differentiate between the attributes
of many candidates. Organizations may bundle prac-
tices, such as selection tests, orientation programs,
and incentives with the goal of selecting and motivat-
ing productive employees. However, these human
resource practices (or activities) may not be internally
consistent or aligned with corporate strategy. In other
words, they may lack fit with each other and with
corporate objectives and action plans. Indeed, recent
research (Becker et al., 1997; Capelli and Crocker-
Hefter, 1996) recognizes that a universal set of best
practices cannot be advocated in light of the need for
internal alignment (with other HRM practices) and,
more importantly, alignment with the firm’s market
stratepy.

Institutional theory suggests that organizations adopt

codified best practices for social legitimacy reasons
believing that this will lead to enhanced organiza-
tional effectiveness, and thereby economic advan-
tages. However, the universal adoption of these prac-
tices leads to firm homogeneity which, in turn,
reduces a firm’s competitive advantage.

HRM processes are more than a collection of activi-

European Management Journal Vol 17 No 2 April 1999

ties or best practices. HRM processes are firm-specific

ordered and coordinated transformational mech-
anisms that enable information exchange and
decision-making. The HRM process view captures
past experiences, yet is forward looking in that it
allows progression along an evolutionary path con-
sistent with the firm’s stated goals. This is at the heart
of HRM processes, and is not captured by the prac-
tice perspective. Industry insiders are well aware of
companies that use not only high quality inputs but
have a reputation for high quality HRM pracesses.
McKinsey & Co., which provides management con-
sulting services to companies, has a unique process
for training its management consultants. Procter and
Gamble, known for its high quality brand names in
packaged consumer products, also has a reputation
as an academy, producing brand managers. Both
these companies have recognized that their profita-
bility critically depends on their internal HRM pro-
cesses that have been difficult for competitors to imi-
tate.

Becker ef al. (1997) provide empirical support for

aligning HRM best practices with a firm’s market
strategy. However, their focus is on identifying ‘high-
performance work systems’ to build human-capital
rather thar. on the dynamic, path dependent, and
tacit processes leading to a productive, flexible, and
creative warkforce.

HRM processes are not mindless repetitions of cer-

tain practices. They are a set of possible choices, a
sequence cf actions, enabled and constrained by
organizational and cognitive structures (Pentland
and Reuter, 1994). The glue that holds these together
is the shared vision of an organization’s strategy.
Indeed, an organization's strategy may be influenced
by the types of competencies it already possesses
(Capelli and Crocker-Hefter, 1996). For example, if
the human resources department has excelled in its
ability to attract, hire, orient and train new employees
rapidly for fast-growing corporate ventures, then a
firm can more easily consider corporate venturing as
a strategic option.

A process focuses not on what a firm does, but on

how it is done. The ‘how’ is a decision-making pat-
tern embedded in a firm’s culture. The HRM prac-
tices approach lists prescriptions in isolation; the
HRM process perspective views activities as parts of
a larger process characterized by goal orientation,
coordination, and information exchange. It is about
how these activities are coordinated and combined
(Teece et al., 1997) and the evolutionary paths taken
to achieve these organizational routines. As Koch and
Gunter-McGrath (1996) observe, routines are patterns
of behavior within an organization that are difficult
to imitate, cumulative (build upon one another in a
path dependent way), continuous, and goal-directed.
HRM processes focus on the decision-making pat-
terns and the norms and values that the organization
has. An HRM process is a dynamic organism that is
constantly evolving.
ITUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

The comparison of the three perspectives discussed

thus far (human-capital; best practices and HRM
processes) is summarized in Table 1.

The Value of HRM Processes

The process theory of HRM captures critical dimen-

sions of the resource-based and institutional theories
(Amit and Schoemaker, 1993; Barney, 1986, 1991; Pet-
eraf, 1993; Oliver, 1991, 1996, 1997). Throughout our
description of HRM processes, we have alluded to
their value-creation potential. In this section, we
explicitly describe the principal characteristics of
HRM processes that render them valuable (ie. that
enhance a firm’s economic performance by enabling
it to either increase revenues and/or decrease costs).
These characteristics include: tacitness, coordinated
and complimentary, learning, path dependency,
robustness, non-substitutability, and rarity.

Tacitness. Since HRM processes are dynamic rather

than static, some of their most valuable aspects are
embedded in the tacit knowledge of the organization.
Hence, they become hard to imitate, or otherwise
trade. The dimensions that are subject to imitation
become obsolete quickly. Tacit knowledge takes two
forms. The first is knowledge in a form that is extract-
able because, with questioning, activities can be codi-
fied. Within organizations, a shared language and the
economies of a common code facilitate transfer-
ability. However, transfer of this type of tacit knowl-
edge to other organizations is impeded by a lack of
a shared language across organizations. Thus, even

Table 1 Comparison of Perspectives

though this type of tacit knowledge is transferable in

theory, transfer may be limited in practice. Further-
more, the investment needed to codify and transmit
all relevant knowledge may be prohibitively high,
and as will be shown, the information is often dated
by the time the code is copied. Also, while the codes
can be copied, the context in which it is seeded may
not be fertile. The tacitness of the firm’s HRM pro-
cesses increases the cost of imitation, and makes them
less desirable to competitors.

The second form of tacit knowledge is ‘mindless’

information, i.e. routines so well-practiced that they
are automatic and thus difficult to extract. Employees
may not be conscious of task routines if they rely on
procedural memory to complete them. It may then be
difficult to articulate processes (Cohen and Bacdayan,
1994). These routines then remain with the organiza-
tion in which they were developed (och and Gun-
ter-McGrath, 1996).
Uni: ke benchmarking and copying best practices (i.e.
transferring codified knowledge), the tacit knowl-
edge embedded in a firm’s HRM processes cannot be
copied or bought. The tacitness dimension of pro-
cesses, which makes the transfer of processes among
firms difficult, preserves the heterogencity of firms,
and hence the value-creation potential of processes.

Coordinated and complimentary. Researchers in the

area of organizational theory espouse the idea that
orgenizational success is a function of the degree of
fit between organizational variables, such as struc-
ture, and technology (Woodward, 1963; Burns and

Dimension

Human capital

Best practices

HRM process

Transferability

Complementarity

Dynamic

Rarity

Substitutability

Conformity

Path Dependency

Yes. Employees are able to

move from firm to firm.

No

No. Focuses on existing stock.

No. In general, services can be

rented. Trained and experienced
human capital may be firm
specific.

Yes (for capital).

No

Yes

Incomplete. Besed on copying

codified aspects of rivals. The
evolutionary path that led to the
best practice cannot be copied.
Value of transferability is thus
limited.

Incomplete. Prasent when copying

a system of HR best practices but
linkage with other organizational
processes is a nbiguous.

No

No. Transferable to some extent.

Yes. There are many practices to

choose from.
Yes. Social conformity.

No. Focus is on what is currently

done and choasing ‘best’ option.

No. Very limited due to tacitness.

Yes. Complete.

Yes. Focuses on flow, renewal,

learning from past experiences,
preparing for the future.

Yes. HRM processes are unique

and entirely firm specific.

No

Yes. integrate social legitimacy

with economic reasoning.

Yes. Reflects past organizational

experience and learning.

European Management Journal Vol 17 No 2 April 1999

HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

Stalker, 1961; Rowe and Wright, 1997). In the present

article, ‘fit’ refers to internally consistent practices in
HRM. Rumelt (1984) observed that the strategic firm
is epitomized by a bundle of linked and idiosyncratic
resources and resource-transformation activities.
Huselid (1995) demonstrated that organizations that
bundle HRM practices achieve superior returns. The
various operations that form part of the HRM pro-
cesses reinforce each other and enable strategy.

The transformation of inputs into more valuable out-

puts relies on the coordination of processes along
three lines: alignment of processes with strategy; fit
across HRM functional areas, and fit within HRM
functional areas.

Consider a company that continuously leads the mar-

ket in new product development, and selects job can-
didates for their ability to learn. Employees are then
taught to value and use learning through culture
management. They are given many learning opport-
unities, are evaluated for learning acquired and
implemented and compensated for the achievement
of goals related to the use of new knowledge and
their ability to transfer that knowledge into new pro-
ducts. Each activity within the sub-process reinforces
other activities. For example, pre-training activities
(such as discussions with the supervisor about gaps
in performance) are coupled with post-training
activities (ie. setting performance goals after the
course) (Saks and Belcourt, 1997; Belcourt and
Wright, 1995). The collective decision-making, ability
embedded in this type of process cannot be emu-
lated.

Learning. HRM processes evolve to meet the chang-

ing needs of particular organizations. At the individ-
ual level, learning is a process that results in more
effective job performance. Learning is characterized
by not only the acquisition of new skills, but also by
the increased capacity to learn more, and to recognize
learning opportunities. At the organizational level,
these advantages increase exponentially. Organiza-
tional learning is about information exchanges and
how the members of the organization make use of
these exchanges. Cultures (involving coded langu-
age, common patterns, and routines) are developed
through these information exchanges, thus increasing
tacitness and decreasing opportunities for trade or
transfer.

In Schumpeterian fashion, the creative destruction of

HRM processes results in more adept processes. New
processes are created internally through experience,
experiments, and accidents, and externally through
joint ventures or acquisitions, the hiring of new
employees with new skills, networking, and the
acquisition of research-based knowledge.

These processes benefit from practice, through which

they become more refined, more productive, and

hence more valuable because they become more

European Management Journal Vol 17 No 2 April 1999

effective in enabling the strategy of the firm. The

ability to learn and update processes faster than com-
petitors is critical to maintaining the competitive
advantage of the firm. The process must allow for
continual updating and evolution to enhance the fit
between a firm’s market strategy and its internal
management system. In that sense, we view the HRM
processes as enabling strategy.

Path dependency. HIRM processes build upon past

experiences by reinforcing those activities that work
and eliminating those that lead to failures. The effect
of past investments in human resource activities and
the emergence of successful routines constrain the
ability of sompetitors to copy. These routines are
complex and causally ambiguous (Reed and De Fil-
lipi, 1990). Competitors who attempt to copy a firm’s
HRM processes will face substantial time com-
pression diseconomies (Dierickx and Coal, 1989.).

Robustness. A principal advantage of HRM _ pro-

cesses is their robustness. While grounded in the
firm’s culture and social norms, they incorporate
damage attenuation and absorption capabilities. This
makes thera less vulnerable to catastrophic accidents
{Perrow, 1686). These processes permit flexibility and
responsiveness to changing conditions, which engen-
ders the evolution of more appropriate processes. No
individual :s of critical importance to the process; and
if one individual leaves the firm, the process remains
behind. Processes are flexible and are changing
through learning. They become more robust with use
as the organizational experience grows.

Non-substitutability. To the extent that imitating a

firm’s HRM processes is costly and time consuming,
rivals might attempt to find substitutes for HRM pro-
cesses. Yet, these may not be available, and outsourc-
ing this cazability may not be cheaper or revenue
enhancing.

Rarity. The most valuable HRM processes are unique

and firm-specific: as no other firm is likely to possess
the same strategy-enabling mechanisms, revenues
are likely to increase with the deployment of HRM
processes that are configured to enable the firm to
capture the opportunities it faces.

Although HRM processes are difficult to articulate

and codify, they can be identified by the above
characterist.cs. Processes that can be described by
these characteristics are likely to be strategy-enabling
and value enhancing.

Implications

The HRM process perspective offers a theory for

understanding how the management of human
resources can generate a competitive advantage.
While it builds on recent work in HRM (Snell ef al.,

179
HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

1996; Becker et al., 1997) it provides new lenses on

the tacit, dynamic, and evolutionary aspects of HRM.
Further, the process perspective of HRM integrates
economic/ financial considerations with contextual
social legitimacy aspects.

Managers who understand the strategic role of HRM

processes are able to make better use of resources
(evidenced by higher productivity per worker) and
are able to mobilize their resources to execute market
strategies. Espousing the HRM process approach
generates the recognition that the source of a firm’s
strategic assets is internal and firm-specific rather
than external and generally applicable across firms.
An understanding of the HRM process perspective
enables managers to focus on aligning these pro-
cesses with strategy while auditing their evolution to
make them more effective. [t forces management to
make decisions about HRM for both internal and
external alignment. The HRM _ process approach
presented in this article provides a framework for
appreciating the role of HRM in firm performance,
and may facilitate the development of guidelines to
inform managers. As well, the process perspective on
HRM opens the doors for a wide range of ficld and
empirical studies, both cross sectional and longitudi-
nal, which hold the promise of providing value cre-
ating insights on the composition, evolution, and role
of HRM processes.

Acknowledgements

We are most grateful to Dr Jennifer Wohl for her constructive

and helpful contributions, to Christophe Zott for beneficial
dialogues, and to Keith Brigham for research assistance. We
also express our gratitude to the SSHRC (Grant No. 412-93-
0005), for financial support.

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European Management Joumal Vol 17 No 2 April 1999

HUMAN RESOURCES MANAGEMENT PROCESSES: A VALUE-CREATING SOURCE OF COMPETITIVE
ADVANTAGE

RAPHAEL AMIT, Faculty

im «oof Commerce and Business
| Administration, University
of British Columbia, 2053
Main Mall, Vancouver,
British Columbia, Canada
V6T 122.

Raphael Amit is the Peter

Wall Distinguished Pro-
fessor at the University of

British Columbia. He is the

founding Director of the W. Maurice Young
Entrepreneurship and Venture Capital Research
Centre. His research and teaching interests centre on
entrepreneurship in independent and corporate settings
and on strategic management.

MONICA BELCOURT,
Department of Administrat-
ive Studies, Atkinson Col-
lege, York University, 4700
Keele Street, North York,
Ontario, Canada M3] 1P3.

Dr Monica Belcourt is
Associate Professor —_ of
Human Resource Manage-
ment at York University.
She is the lead author of the
best-selling Managing Human Resources (1996,
1999), Performance Management Through Train-
ing and Development (1995, 1999), and Strategic
Human Resources Planning (1999), all published by
ITP Nelson. She created and edited the Research

Forum and the HR Research Quarterly.

European Management Journal Vol 17 No 2 April 1999

181