Human Resources, Human Resource Management, and the Competitive Advantage of Firms: Toward a More Comprehensive Model of Causal Linkages

We maintain that human resources are strategically significant in at least three cases, when these resources ( 1) help create traditional Ricardian rents; ( 2) function as components of organizational capabilities that generate nontraditional Ricardian rents; and ( 3) are the source of technological and managerial innovations that produce entrepreneurial rents. Human resource management ( HRM) activities, on the other hand, assume strategic significance by supporting the three cases above through a process that we call managerial entrepreneurship. Furthermore, HRM takes on different forms when supporting each of these types of rents. Hence, this rent-based view has greater potential to help explain the contribution of human resources to firms' competitive advantages than approaches that are grounded in the resource-based view (RBV) of the firm, which primarily reeffects the Ricardian view of rents. Moreover, a rent-based approach suggests fruitful new ways to address many of the theoretic challenges confronting the strategic human resource management (SHRM) literature.