UGC NET COMMERCE July 2018 Q51
- Option : C
- Explanation : HR’s Tryst with Competitive Advantage: In 1950s, Peter Drucker wrote, “Some wit once said maliciously that [personnel management comprises] all those things that do not deal with the work of people and that are not management.” (Drucker, 1954). And since then HR has been struggling to be accepted as part of management (or seat at the table). An article published by J. Barney, in Journal of Management (1991), for the first time articulated clearly on the resources an organization has and their link to competitive advantage. The article built on resource-based view (RBV) theory by E.T. Penrose (1959). RBV theory has been seen as key in bridging the link between human resource management (HRM) and business strategy. As per RBV theory, any organization has tangible and intangible resources. Tangible resources are land, machinery, or money and intangible are goodwill, patents, or human capital pool.
Barney elaborated that resources can be sources of competitive advantage only if they satisfy four criteria, namely the VRIO framework:
∎ Valuable,
∎ Rare,
∎ Inimitable, and
∎ Organized.
Any resource—tangible or intangible— satisfying all the four criteria can be a source of competitive advantage. A simple analysis reveals that human capital pool is one resource which cannot be easily imitated or may be unique (rare) to the organization and, hence, has a huge potential to be the source of sustained competitive advantage.
