Theoretical framework and hypothese

Theoretical framework and hypotheses

Sustainable competitive advantage

Only recently, organisational theorists have come to acknowledge the importance of HR competencies, capabilities, and skills as the sources of sustainable competitive advantage (Mabey et al., 1998; Ellinger et al, 2002). Researchers like Wright et al (1998) has argued that HRM capability is a source of competitive advantage as it is embedded in the collective knowledge of the firm members (inimitable), which is developed over a period of time (rare), and valuable as the firm's routines for managing people can direct employees' talent and behaviours to meet objectives and create value. The RBV of the firm argues that a firm's growth (Penrose, 1959) and competitive advantage (Wernerfelt, 1984) are function of the unique bundle of resources that it possess and deploys (Barney, 1991, 1997). According to it, firms acquire critical human resources and then establish HR systems to enhance the potential of these human resources that are most difficult to imitate (Paauwe and Boselie, 2002; Jackson et al, 2004). The theory seeks to explain the differences in the performance across firms and variance in firm's resources and human capabilities. According to RBV, resources that are valuable, unique and difficult to imitate can provide the basis for organisations' competitive advantage. In turn, these competitive advantages produce positive returns (Peteraf, 1993). The RBV perspective views employees as a valuable resource rather than administered effectively from the strategic point-of-view, and contributes significantly to organisational effectiveness. Thus it is seen as a source of competitive advantage for the organisations (Schuler and Jackson, 1987; Lengnick-Hall and Lengnick-Hall, 1988; Wright and McMahan, 1992; Wright et al, 1994; Beaumont, 1993; Rao, 1994; Mohrman and Lawler, 1999). More recently, this perspective has been extended to consider dynamic capabilities (Teece et al, 1997), which is a firm's unique "ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions" (Amit and Schoemaker, 1993). Both theories have long tied organisational outcomes to both human capital and capital asset resources (Penrose, 1959; Teece et al, 1997; Jackson and Schuler, 2001).

Organisational performance

There is an extensive empirical literature in the HRM that has investigated the relationship between HR and organisational performance, i.e. stock market performance (e.g. yield), accounting measures (return on investment) and subjective measures. The relationship between HR and business results is built on a rather simple premise that better deployment and use of HR should correlate with higher business performance (Evans, 1986; Huselid, 1995; Ulrich, 1997). The RBV argues that resources such as HR capabilities are important for firm's performance. Pfeffer (1994) asserted that HR capabilities are the pre-eminent organisational resource and the key to achieve outstanding performance. Youndt et al. (1996) found that a HR system focused on human capabilities was directly related to multiple dimensions of operational performance. Huselid and Becker (1997) found that firm effectiveness was associated with HR capabilities and its attributes. In this study, organisational performance variable covers aspects like product quality, customer satisfaction, new product development, ability to attract and retain employees and relations between management and employees.

HR capabilities

According to Lengnick-Hall and Lengnick-Hall (1990), the concept of achieving competitive advantage through HRM is based on the rationale that competitive advantage is the essence of competitive strategy. It encompasses HR capabilities, resource, relationship and decisions that permit an organisation to capitalise on opportunities in the market place and to avoid threats to its desired positions. According to Hamel and Prahalad (1990), human capital and organisational capacity have a great deal to with the organisation's "core competencies", i.e. what the organisation does best and how it differentiates itself from the competitors. The resource-based approach emphasises the ability of the organisation for managing the "appropriability" of employees' skills and knowledge. Appropriability refers to the different capacity of the organisations to benefit from the utilisation of their resources and capabilities. It includes attracting and retaining relevant personnel; building and developing their expertise through development and learning systems and relationship; rewarding and sharing expertise; and learning (Mabey et al., 1998; Richard and Johnson, 2001). Bernardin and Russell (1998) maintain that an organisational ability to sustain competitive advantage depends on its ability to attract and retain those individuals with skills needed to give the organisations the competitive edge. Attracting and retaining individuals with the skills related to the core competencies of the organisation are key HR activities directly relevant to organisational capability. Gratton (2000) in her study places the people at the centre of activities with a view for the future. This shift from the short-term to long-term is predicted on three organisational and managerial capabilities: capability to built compelling and engaging visions; to develop capabilities to sense the future; and to create a strategic approach to management of people which is capable of bridging from the realities of the present to the aspiration of the future.

A lot of interest is being generated in performance measurement of human resource management capability (HRMC). Unlike conventional assets, HRMC as an intellectual or organisational capital, is largely invisible, and cannot appear on the firm's balance sheet (Tomer, 1987; Analoui, 1998a). There is not much evidence of determining the value addition of HRC, except simple data on indicators of performance especially in the context of Indian organisations. Other than Saini and Khan (2001), no empirical research has been conducted to show how the HRC helps in sustainable competitive advantage. Though there have been studies conducted by Pattanayak (2001) and Diwedi (2002), where the focus is more on the role of HR practices on organisational performance. But in our view organisations should focus on HRMC with a strategic focus, link between HR policies and practices, its business strategy and its performance. They should also include the size and composition of the workforce, retention and motivation of employees, the skills and competencies necessary for success and training to achieve these, remuneration and fair employment practices and career planning. The current study focuses on this lacunae in research and tries to establish linkages between HRMC; firm performance, i.e. market indicators, which are profits of the organisation, competencies, company image and turnover of the organisation (Sharma and Sharma, 2002); firm type (Huit et al., 2003); and sustainable competitive advantage (Barney, 1991, 1997; Jackson et al., 2004). This forms the basis for our first research hypothesis.

H1. There is a close relationship between HRMC and organisational performance in Indian global companies.

Exploring the role of HRC in sustainable competitive advantage in Indian global organisations is the basis for our second hypothesis. Effective HR management focuses on the factors that really predict and affect the long-term success of the business and by definition is related to strategy. And consistent with that, it aims systematically to analyse, measure and evaluate how people policies and practices add value to the enterprise. According to Golden and Ramanujam (1985), the link between human resource as a strategic asset of a firm and strategy can be integrated in nature. Therefore, the linkage between HRC and the processes involved in decision making, such as formulation of business strategy, play an internal role in the firm's competive advantage (Wright et al., 1998). Our second hypothesis is:

Hasil (Bahasa Indonesia) 1:

Kerangka teoritis dan hipotesisKeunggulan kompetitif yang berkelanjutanOnly recently, organisational theorists have come to acknowledge the importance of HR competencies, capabilities, and skills as the sources of sustainable competitive advantage (Mabey et al., 1998; Ellinger et al, 2002). Researchers like Wright et al (1998) has argued that HRM capability is a source of competitive advantage as it is embedded in the collective knowledge of the firm members (inimitable), which is developed over a period of time (rare), and valuable as the firm's routines for managing people can direct employees' talent and behaviours to meet objectives and create value. The RBV of the firm argues that a firm's growth (Penrose, 1959) and competitive advantage (Wernerfelt, 1984) are function of the unique bundle of resources that it possess and deploys (Barney, 1991, 1997). According to it, firms acquire critical human resources and then establish HR systems to enhance the potential of these human resources that are most difficult to imitate (Paauwe and Boselie, 2002; Jackson et al, 2004). The theory seeks to explain the differences in the performance across firms and variance in firm's resources and human capabilities. According to RBV, resources that are valuable, unique and difficult to imitate can provide the basis for organisations' competitive advantage. In turn, these competitive advantages produce positive returns (Peteraf, 1993). The RBV perspective views employees as a valuable resource rather than administered effectively from the strategic point-of-view, and contributes significantly to organisational effectiveness. Thus it is seen as a source of competitive advantage for the organisations (Schuler and Jackson, 1987; Lengnick-Hall and Lengnick-Hall, 1988; Wright and McMahan, 1992; Wright et al, 1994; Beaumont, 1993; Rao, 1994; Mohrman and Lawler, 1999). More recently, this perspective has been extended to consider dynamic capabilities (Teece et al, 1997), which is a firm's unique "ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions" (Amit and Schoemaker, 1993). Both theories have long tied organisational outcomes to both human capital and capital asset resources (Penrose, 1959; Teece et al, 1997; Jackson and Schuler, 2001).Kinerja organisasiAda literatur empiris yang luas di HRM yang telah menyelidiki hubungan antara HR dan kinerja organisasi, yaitu kinerja pasar saham (misalnya hasil), akuntansi langkah-langkah (laba atas investasi) dan langkah-langkah yang subjektif. Hubungan antara HR dan bisnis hasil dibangun pada premis yang agak sederhana penyebaran yang lebih baik dan penggunaan HR harus berkorelasi dengan kinerja bisnis yang lebih tinggi (Evans, 1986; Huselid, 1995; Ulrich, 1997). RBV berpendapat bahwa sumber daya seperti kemampuan SDM penting untuk kinerja perusahaan. Pfeffer (1994) menegaskan bahwa HR kemampuan adalah sumber organisasi unggulan dan kunci untuk mencapai kinerja yang luar biasa. Youndt et al. (1996) menemukan bahwa sistem SDM yang difokuskan pada kemampuan manusia berhubungan langsung dengan beberapa dimensi kinerja operasional. Huselid dan Becker (1997) menemukan bahwa efektivitas perusahaan terkait dengan kemampuan SDM dan atributnya. Dalam studi ini, kinerja organisasi variabel mencakup aspek seperti kualitas produk, kepuasan pelanggan, pengembangan produk baru, kemampuan untuk menarik dan mempertahankan karyawan dan hubungan antara manajemen dan karyawan.Kemampuan SDMAccording to Lengnick-Hall and Lengnick-Hall (1990), the concept of achieving competitive advantage through HRM is based on the rationale that competitive advantage is the essence of competitive strategy. It encompasses HR capabilities, resource, relationship and decisions that permit an organisation to capitalise on opportunities in the market place and to avoid threats to its desired positions. According to Hamel and Prahalad (1990), human capital and organisational capacity have a great deal to with the organisation's "core competencies", i.e. what the organisation does best and how it differentiates itself from the competitors. The resource-based approach emphasises the ability of the organisation for managing the "appropriability" of employees' skills and knowledge. Appropriability refers to the different capacity of the organisations to benefit from the utilisation of their resources and capabilities. It includes attracting and retaining relevant personnel; building and developing their expertise through development and learning systems and relationship; rewarding and sharing expertise; and learning (Mabey et al., 1998; Richard and Johnson, 2001). Bernardin and Russell (1998) maintain that an organisational ability to sustain competitive advantage depends on its ability to attract and retain those individuals with skills needed to give the organisations the competitive edge. Attracting and retaining individuals with the skills related to the core competencies of the organisation are key HR activities directly relevant to organisational capability. Gratton (2000) in her study places the people at the centre of activities with a view for the future. This shift from the short-term to long-term is predicted on three organisational and managerial capabilities: capability to built compelling and engaging visions; to develop capabilities to sense the future; and to create a strategic approach to management of people which is capable of bridging from the realities of the present to the aspiration of the future.A lot of interest is being generated in performance measurement of human resource management capability (HRMC). Unlike conventional assets, HRMC as an intellectual or organisational capital, is largely invisible, and cannot appear on the firm's balance sheet (Tomer, 1987; Analoui, 1998a). There is not much evidence of determining the value addition of HRC, except simple data on indicators of performance especially in the context of Indian organisations. Other than Saini and Khan (2001), no empirical research has been conducted to show how the HRC helps in sustainable competitive advantage. Though there have been studies conducted by Pattanayak (2001) and Diwedi (2002), where the focus is more on the role of HR practices on organisational performance. But in our view organisations should focus on HRMC with a strategic focus, link between HR policies and practices, its business strategy and its performance. They should also include the size and composition of the workforce, retention and motivation of employees, the skills and competencies necessary for success and training to achieve these, remuneration and fair employment practices and career planning. The current study focuses on this lacunae in research and tries to establish linkages between HRMC; firm performance, i.e. market indicators, which are profits of the organisation, competencies, company image and turnover of the organisation (Sharma and Sharma, 2002); firm type (Huit et al., 2003); and sustainable competitive advantage (Barney, 1991, 1997; Jackson et al., 2004). This forms the basis for our first research hypothesis.H1. Ada hubungan antara HRMC dan kinerja organisasi dalam perusahaan-perusahaan global India.Menjelajahi peran HRC dalam keunggulan kompetitif yang berkelanjutan di India organisasi global adalah dasar bagi hipotesis kita kedua. Efektif manajemen HR berfokus pada faktor-faktor yang benar-benar memprediksi dan mempengaruhi keberhasilan jangka panjang bisnis dan definisi berhubungan dengan strategi. Dan konsisten dengan itu, bertujuan secara sistematis menganalisis, mengukur dan mengevaluasi bagaimana orang kebijakan dan praktik yang menambah nilai perusahaan. Menurut Golden dan Ramanujam (1985), hubungan antara SDM sebagai aset strategis perusahaan dan strategi dapat diintegrasikan di alam. Oleh karena itu, hubungan antara HRC dan proses yang terlibat dalam pengambilan keputusan, seperti penyusunan strategi bisnis, memainkan peran internal dalam keuntungan kompetitif perusahaan (Wright et al. 1998). Hipotesis kedua kami adalah: