The Role of Human Capital Management in Organizational Competitiveness

By Lin, Chuan; Wang, Christina Yu-Ping et al. | Social Behavior and Personality: an international journal, January 2017 | Go to article overview

The Role of Human Capital Management in Organizational Competitiveness


Lin, Chuan, Wang, Christina Yu-Ping, Wang, Chen-Yu, Jaw, Bih-Shiaw, Social Behavior and Personality: an international journal


The dynamics of business competition require firms to utilize organizationspecific resources, such as employees' knowledge and capabilities, in a flexible manner, particularly in a context-specific environment (Kim, Hoskisson, & Lee, 2015; McIver, Lengnick-Hall, Lengnick-Hall, & Ramachandran, 2013). In general, talented people are the most essential resource to sustain an organization's competitive advantage (Ready & Conger, 2007). Therefore, effective human capital management, which includes attraction, development, deployment, and inimitability, is crucial to increase organizational performance (Hatch & Dyer, 2004).

Human capital management has been widely discussed in the fields of human resource management (Hitt, Biermant, Shimizu, & Kochhar, 2001; Mahoney & Kor, 2015), strategic human resource management (Nyberg, Moliterno, Hale, & Lepak, 2014), knowledge-based management (Turner & Makhija, 2014), and dynamic capability research (Wang, Jaw, & Tsai, 2012). However, few researchers have empirically tested the relationships among human capital management, employees' uniqueness and value, and organizational competitiveness (Dries, 2013). Therefore, we aimed to empirically depict how organizational competitiveness can be triggered by cultivating a group of unique and valuable employees through human capital management.

Literature Review and Hypotheses Development

Role of Human Capital Management in Organizations

According to Schultz (1960), human capital is defined as employees' explicit and implicit knowledge and abilities, which lead to organizational competitiveness. Further, Lynn (2000) stated that human capital is formed through employees' skills, knowledge, and experience. Employees' contribution, thus, requires unique and valuable knowledge, abilities, and skills (Lepak & Snell, 1999). Human capital management comprises two constructs: investment, which is composed of attraction and development, and enhancement, which is composed of deployment and retention.

Human Capital Investment

The two key dimensions of human capital investment are attraction and development. Wright and Snell (1991) and Thite (2004) stated that human capital investment by organizations enables employees to achieve organizational goals. Therefore, how can an organization effectively attract people and develop their knowledge, abilities, and skills? Talented people are primarily drawn to an organization's brand attractiveness (Kucherov & Zavyalova, 2012), corporate vision, and recruiting strategy (Horwitz, Heng, & Quazi, 2003). In regard to attracting employees, organizations that differentiate their brand characteristics from competitors attract talented people (Turban & Keon, 1993). As regards development, a corporation's vision as well as its financial compensation, welfare systems, and career planning have a strong impact on people who are applying for a job. Once individuals are hired, it is vital to design a training program that improves their capabilities and skills to execute organizational practices in an effective manner (Lepak & Snell, 1999). Kaplan and Norton (2004) and Ulrich and Smallwood (2004) proposed that on-the-job training, leadership training, individual development, and career planning are important for human capital development. Further, Ready, Hill, and Conger (2008) observed that challengeable tasks, training, and a foreseeable career path are conducive to organizational development, which drives employees to achieve their long-term goals. In this way, organizational human capital can be cultivated by following a distinct learning path and through interpersonal interaction within the organization (Mahoney & Kor, 2015).

In this study, we adopted the concepts proposed by Kaplan and Norton (2004) and Ulrich and Smallwood (2004) as the key dimensions for testing the relationships among human capital development, employees' value, and organizational competitiveness. …

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