Academic journal article Journal of Comparative International Management

Human Capital Availability, Competitive Intensity and Manufacturing Priorities in a Sub-Saharan African Economy

Academic journal article Journal of Comparative International Management

Human Capital Availability, Competitive Intensity and Manufacturing Priorities in a Sub-Saharan African Economy

Article excerpt

Several studies have been done on the relationships between human resources management (HRM) practices and manufacturing activities. However, most of these studies have been confirmed to well-developed economies where the focus of FIRM practices is mostly on the investment in human capital to facilitate the use of advanced manufacturing technology. In less developed economies, the primary HRM concern is attracting and retaining skilled, knowledgeable and experienced labor. In this study, we examine the relationships between human capital availability competitive intensity and their interactive effects on manufacturing priorities in a Sub-Saharan African economy--Ghana. We found that competitive intensity is an important determinant of the emphasis firms plan to place on manufacturing priorities (low-cost, quality, flexibility, and delivery). However, human capital availability affects the emphasis firms plan to place on low-cost and delivery. Furthermore, competitive intensity moderates the relationship between human capital availability and the emphasis that firms plan to place on the manufacturing priorities of low-cost and quality.

INTRODUCTION

Researchers studying manufacturing issues have often focused on the link between business-level strategies and the key capabilities or competitive priorities, which define a firm's manufacturing performance. One aspect of this relationship that has been studied is the impact of human resource management (HRM) practices on manufacturing performance. HRM practices generally consist of a comprehensive set of employee recruitment and selection procedures; incentive compensation and performance management policies; and extensive employee training, participation and involvement in decision making (Becker and Gerhart, 1996). Arthur (1994), Corbett and Harrison (1992), and MacDuffie (1995) provide evidence to show that HRM practices improve manufacturing performance because they involve the upgrading of employee skills and knowledge bases to meet the changing demands of advanced manufacturing technology. However, this is for the most part appropriate in manufacturing environments where there is readily available human capital that firms can build upon through training and development initiatives (Lepak and Snell, 1999).

In most emerging economies, manufacturing firms do not have the requisite human capital and are struggling to attract and/or keep their skilled, knowledgeable and experienced employees for their productive activities. This makes the availability of human capital a more pressing issue in those areas of the world than the use of HRM practices. By human capital we mean the knowledge, skills and expertise embodied in the labor force that is available within a firm and/or the relevant labor market. This study seeks to understand how manufacturing managers' perceptions of human capital availability affect their manufacturing priorities. Manufacturing priorities refer to the emphasis that firms place on achieving low cost, producing high quality outputs, maintaining delivery dependability and ensuring flexibility in their manufacturing activities so as to achieve competitive advantage.

In Sub-Saharan Africa, many governments have introduced and embarked on the implementation of structural adjustment programs (with the assistance of the International Monetary Fund (IMF) and/or the World Bank). These programs are designed to promote manufacturing productivity growth, international competitiveness, and economic development. The backbone of the structural changes has been the privatization of state-owned enterprises and the liberalization of these economies through the removal of price controls, the removal of government subsidies to local manufacturers, the reduction of tariffs on imports, et cetera. While the privatization and economic liberalization programs have made it easier to obtain needed raw materials and inputs for production, it has also affected manufacturing activities more than other activities in these economies by influencing the level of competition, the availability of human capital, the level of wages, and the prices of local and imported inputs (Amoako-Gyampah & Boye, 200l; Steel & Webster, 1992). …

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