Business strategy, human resources, labour market flexibility and competitive advantage

Abstract

This paper contributes to the strategic human resource management literature by testing the three main approaches -the universalistic ('best practice'), contingency and configurational -against an original database. Specifically, we examine: (1) the relationship between HR and firm performance, (2) the links between strategy, HR and the use of flexible employment contracts and (3) the moderating effects of strategy on the links between HR, flexible labour and firm performance.Using original data collected from manufacturing and service-sector companies, we find positive relationships between HR policies and practices and performance; that the relationship between HR and performance is dependent upon business strategy; and that companies pursuing an integrated approach to HR coupled with an innovator/qualityenhancer focus within their business strategy perform best. The use of external flexible labour reduces the effectiveness of HR, especially for those pursuing an innovator/qualityenhancer approach.

The Effect of Labor Flexibility on Firm Performance in Indonesian Telecommunication Industry

“…Michie and Sheehan (2001) explain that the company's business performance will increase when there is a fit between business strategy and human resources. All the policies and practices of human resources should be consistent with the corporate strategy (Miles and Snow, 1978).…”

Performance, labour flexibility and migrant workers in hotels: An establishment and departmental level analysis

“…For example, the study conducted by Michie and Sheehan (2005) examines the relationship of HR practices including external labour flexibility (proportion of part-time, temporary contracts or seasonal/casual contracts) to labour productivity, in UK manufacturing and service-sector firms. The results showed the negative effect of external flexible labour on productivity, due to the notion of pursuing a cost-based strategy as opposed to enhancing the innovation and quality of the services.…”

“…This is particularly significant in hotels, given the highly variable demand, the uno-actu feature of being unable to stockpile unsold supply (Jones and Lockwood 2002) and competitive markets. Several forms of flexible working can be utilised with the aim of enhancing performance (Lockwood and Guerrier 1989;Kelliher 1989), but with contradictory evidence as to whether these have positive or negative impacts on productivity (Michie and Sheehan 2005). Another labour market feature is increasing migrant employment in the hospitality sector in the UK and most other developed economies (Markova et al 2013), although the contribution of migrant workers to labour productivity is contested (Huber et al 2010) and surprisingly underresearched at the micro as opposed to the macro level (Kangasniemi et al 2009) largely due to data constraints.…”

The Valuation of Skill and the Configuration of HRM

“…Often, differences between models reflect the assumptions management makes about employee motivation: the so-called 'soft' and 'hard' models (Truss et al, 1997). For the most part, these models have been used in attempts to find a relationship between human resource policy and practice and organizational effectiveness under the banner of HRM being a source of competitive advantage (Michie and Sheehan, 2005). The results are very tentative, with positive findings confined to high-tech industries, Elsewhere, the issue as to how far these models actually represent reality is one which is constantly asked (Darrah, 1994;Caldwell, 2004).…”