The rapid technological change and the increased flows of information have shifted the customer demands and loyalties. Traditional sources of success such as product and process technology, protected or regulated markets, access to financial resources, and economies of scale can still provide competitive leverage, but to a lesser degree now under the fierce global competition (Pfeffer, 1994). More and more organizations recognize that they must improve performance through internal dependability and adaptability to reduce costs, increase product quality and innovation, and their speed to market (Sparrow et al, 1998). Lippman et al (Fiol, 2001) argue that human assets can achieve this performance objective as they are hard to imitate because of scarcity, specialization and tacit knowledge. This view has clearly shifted the balance of competitiveness towards human talents and skills instead of traditional sources of success (Verespej, 1999). Competitive success has become increasingly dependent on human resources (HR) but Pfeffer (1994) emphasizes that this requires managing people to derive organizational culture and capabilities for the effectiveness.
Competitive success relies on the organization’s distinct competitive advantage. Stone (1998) has defined competitive advantage as ‘the special edge that permits an organization to manage environmental influences better than its competitors do to ensure long-term success for the organization’. Barney (Barney et al, 1997) suggests a resource-based view that focuses on firm resources (physical capital resources, organizational capital resources and human capital resources) can be sources of competitive advantage within the industry.
However, physical capital resources (plant, equipment and finances, etc) and organizational capital resources (structure and systems, etc) become easier to obtain and emulate nowadays. The search for sources of sustainable competitive...