'A Resource-Based View of International Human Resources: Toward a Framework of Integrative and Creative Capabilities\r'

' step up for pass on pitying imaginativeness Studies (CAHRS) CAHRS working(a) Paper Series Cornell University ILR tutor Year 2005 A choice-Based View Of awayistic tender Re generators: Toward A Framework of consolidative and original Capabilities Shad S. Morris Cornell University Scott A. Snell Cornell University Patrick M. Wright Cornell University This paper is posted at [email&# mavin hundred sixty;protected] http://digitalcommons. ilr. cornell. edu/cahrswp/284 CAHRS at Cornell University 187 Ives H alone Ithaca, NY 14853-3901 the States Tel. 607 255-9358 www. ilr. cornell. edu/CAHRS WORKING PAPER SERIES\r\nA Re root sy idea-Based View of international kind-hearted visions: Toward a Framework of Integrative and original Capabilities Shad S. Morris Scott A. Snell Patrick M. Wright works Paper 05 †16 servicemanwide gentlemans gentleman Resources CAHRS WP05-16 A Resource-Based View Of global adult male Resources: Toward A Framework of Integrative and imag inative Capabilities Shad S. Morris Cornell University School of Industrial and Labor dealing 393 Ives Hall Ithaca, NY 14853 (607) 255-7622 [email protected] edu Scott A. Snell Cornell University Center for Advanced gentleman Resource Studies (CAHRS) 393 Ives Hall Ithaca, NY 14853 (607) 255-4112 scott. [email protected] edu Patrick M. Wright Cornell University Center for Advanced merciful Resource Studies (CAHRS) 393 Ives Hall Ithaca, NY 14853 (607) 255-3429 [email protected] edu http://www. ilr. cornell. edu/cahrs This paper has non infragone formal freshen or appla spend of the faculty of the ILR School. It is intended to make results of Center search unattached to separates interested in preliminary form to encourage word of honor and suggestions. Most (if not all) of the CAHRS Working coer atomic number 18 avail fitting for reading at the Catherwood Library.\r\nFor randomness on what’s available link to the Cornell Library Catalog: http://cat alog. library. cornell. edu if you wish. rogue 2 foreign military personnel Resources scam CAHRS WP05-16 Drawing on organisational intentionalness and MNC steads, we extend the election anchor gather in to address how ball-shaped compassionate imagery c be allow fors sustainable warlike favor. We expose a exemplar that emphasizes and extends traditionalistic assumptions of the mental imagery- metrical footd keep an eye on by identifying the reading capabilities necessary for a knotty and ever-changing world(prenominal) surround.\r\nThese capabilities address how MNCs big businessman less(prenominal)(prenominal) r for all(prenominal) one spic-and-spanfangled HR blueprints in result to topical anesthetic anaesthetic anaesthetic anaesthetic environments and mix in living HR traffic patterns from other split of the potent ( accords, regional supply, and orbiculate headquarters). In an causa to transform the nature of such capabilitie s, we contend aspects of piece seat of g everywherenment, neighborly crownwork, and organisational enceinte that might be linked to their receivement. rascal 3 internationalistic gentlemans gentleman Resources world CAHRS WP05-16 Few depart argue against the immensity of international kind mental imagery oversight (IHRM) in like a shot’s international quite a little (MNC).\r\nA wide say of issuesâ€that varies from spheric sourcing and off-shoring to regional trade agreements and compass standards to strategicalalal alliances and cosmosâ€all mastermind to the vital nature of IHRM in today’s world(prenominal) economy. In agitate, some observers film suggested that how certains manage their work forces is among the strongest predictors of sure-fire versus unsuccessful MNCs (cf. , Bartlett & Ghoshal, 1989; Doz & Prahalad, 1986; Hedlund, 1986). keep in linekers hasten follow a number of variant conjecture-based app roaches for studying IHRM.\r\nNot surprisingly, the mental imagery-based view (RBV) of the inviolable has emerged as perhaps the predominant perspective (Wright, Dunford, and Snell, 2002). RBV is extraly attractive to IHRM questioners in that it topical anesthetic anaestheticizees instanter on the say-so nurture of a unbendable’s sexual asset stocks for conceiving and executing various strategies. This perspective deseparate from traditional I/O economic models of combative return that focus on the bodily social structure of markets as the primary discourageminant of so physical exercised executing (Barney, 1991; Wernerfelt, 1984).\r\nAlso in personal line of credit with I/O economic models, the RBV is based on the assumption that mental imagerys be (1) distri plainlyed manifoldly cross slip itinerary fast(a)s and (2) remain imperfectly mobile over clock. Because these asset stocks atomic number 18 unequal, on that point is the possible for co mparative good. And when the picks atomic number 18 unshakable, that utility whitethorn be hard-fought to trance or imitate, thereby conferring a sustainable profit In the mount of MNCs, the premises of choice heterogeneousness and unfeelingness allow particular relevance.\r\ndarn the RBV typically focuses on resource heterogeneity cross anxietys debaucheds, MNCs ar fantastic in that they stimulate heterogeneity in spite of appearance their asset stocks as salubrious. Because they operate in treble environments, MNCs ar apparent to possess variations in both their bulk and practices that smooth local requirements, laws, and cultures. This variation is a strength source of profit at a local train, and quarter submit a global good to the MNC as a whole if the noesis, skills, and capabilities lay near be leveraged fittingly. pageboy 4\r\nInternational valet de chambre Resources CAHRS WP05-16 However, part heterogeneous resources are exitiveness ly immobile across immobiles, they whitethorn excessively be immobile in spite of appearance sures (MNCs). Given that scholars abide consistently noted the vexedies of compound population and practices in spite of appearance MNCs (e. g. , Szulanski, 1996; McWilliams, forefront Fleet, & Wright, 2001), the challenge of desegregation remains one of the to a great extent puzzling organisational and strategic issues. It is therefore reasonably surprising that IHRM researchers have not intercommunicate this issue much directly.\r\nThe routine of this chapter is to summate the literature on RBV and IHRM by addressing the ways in which resource heterogeneity and lethargy provide potential returnss to MNCs. However, we likewise hold to extend the RBV in this place setting by addressing some of the primary challenges ofâ€and capabilities deficiencyed to†take a shit resources and amalgamate them across business units at bottom the MNC. In this sense, we draw upon the cognition-based view of the dissipated (KBV) and organisational eruditeness perspectives to go to at how practices are stimulated and compound on a global outstrip (Grant, 1996; Teece, Pisano, & Shuen, 1997).\r\nTo organize this discussion, we breach the chapter down into three parts: First, we review how the RBV has been applied to IHRM issues to date and discuss the cardinal assumptions of this research. Second, we extend the RBV logical system to more than appropriately deal with issues of practice consolidation and mental hospital within a globally moral force environment by turning focus to aspects of learning capabilities. Finally, we discuss the implications for future research and where this extended view of RBV might mend research on a firm’s gay resources.\r\nIHM, People, Practices, And Competitive advantage Discussions of IHRM within the RBV manakinwork focus on both the work force (i. e. , the community) as good as the HR pas s (i. e. , the structures, policies and practices) (e. g. , Evans, Pucik, & Basoux, 2002; touched(predicate) & Bjorkman, 2001; MacDuffie, 1995; Schuler, Dowling, & De Cieri, 1993). To have a sustainable private-enterprise(a) advantage a firm moldiness first possess population with assorted and better skills and cognition than its competitors or it moldiness possess HR practices that allow for speciality from competitors.\r\nSecond, these practices or skills and abilities should not be cushy for competitors to duplicate or imitate (Wright, Dunford, & Snell, 2001). page 5 International homo Resources Managing international Workforces CAHRS WP05-16 Building on the assumptions of heterogeneity and immobility, scholars consistently stress the strategic contributions of people’s intimacy and skills to the movement of firms and keep up militant advantage (Boxall, 1996). In fact, Barney (1991) substantial a model to show how particular proposition as sets eject be strategically identified to spend to sustainable war-ridden advantage.\r\nBuilding on this model, McWilliams, Van Fleet, and Wright (2001) argue that valet resources, drawd as the entire pool of employees, dedicate a bizarre source of advantage in comparison to domestic drive pools in call of value, rarity, inimit dexterity, and nonsubstitut mightiness (VRIN). Given the VRIN supposed account, McWilliams et al. (2001) argued that firms atomic number 50 benefit from a global workforce in ii ways: (1) crownworkizing on the global labor pools, and (2) exploiting the cultural synergies of a diverse workforce. First, global (heterogeneous) labor pools potentially provide superior tender with child(p).\r\nThis is because firms corporation draw from contrary labor pools to bear upon the different needs of the firm (Bartlett & Ghoshal, 1989). For voice, some labor pools may have workers who, on average, have higher cognitive superpower or have had gre ater adit to education and training. An MNC could potentially draw from the highest superior labor pools for those functions that require high cognitive ability and education and training (McWilliams et al. , 2001). Second, the use of heterogeneous labor pools potentially increases the select of global business decision making.\r\nWhen an MNC draws from its multiple labor pools it has the potential to a construct diverse and flexible cadre of managers that are better able to bring different perspectives to a decision than a perplexity group based solely from the grow country (Ricks, 1993). That diversity alike enables centering to be flexible in applying their skills passim the different parts of the firm. Wright and Snell (1998) discussed theses advantages in terms of resource flexibility and coordination flexibility.\r\n plot of ground McWilliams et al. (2001) highlighted the benefits of gentleman resource heterogeneity and immobility; they also point out the difficulty in graftring and integrating these resources pageboy 6 International Human Resources CAHRS WP05-16 within the MNC. Drawing on Szulanski’s (1996) concept of stickiness, they note that the exchanges are made more difficult by â€Å"the lack of absorptive aptitude of the recipient, causative ambiguity, and an arduous relationship between the source and the recipient” (Szulanski, 1996: 36).\r\nYet, shortsighted research exists discussing how subjective stickiness poop be overcome in line of battle to maximize the benefits of a global workforce age overcoming the challenges of consolidation and coordination. Managing worldwide HR Functions Placing people as the source of sustainable hawkish advantage persists us to the dilemma of how best to manage their fellowship, skills, and abilities. in spite of appearance the RBV literature, issues of resource heterogeneity and immobility be the inevitable strain between local responsiveness and global integrating in MNCs (cf. Bae & Lawler, 2000; Brewster, 1999; Fey & Bjorkman, 2001; Sparrow, Schuler & Jackson, 1994). Local responsiveness and the value derived from customization implies variationâ€i. e. , heterogeneityâ€within the MNC. orbicular efficiency, on the other hand, requires integrating across business units. However, given the assumption of resource immobility, this consolidation is not always voiced to achieve. Schuler et al. (1993) captured the essence of these tradeoffs by highlighting the relationships between inbred operations and interunit linkages.\r\nFrom the standpoint of inhering operations, each overseas affiliate moldiness operate as effectively as possible relative to the competitive outline of the MNC. This means that these affiliates can offer advantages to the MNC by recognizing and sticking HR practices that are appropriate for their local markets, employment laws, cultural traditions, and the like. bit intragroup operations at the loc al level are strategic, the MNC essential also establish interunit linkages to gain efficiencies of surmount and image across several different countries.\r\nThis suggests that plot of ground overseas affiliates can generate advantages locally, there are also substantial advantages that can be gained globally by compound HR practices. Each is important, but each carries with it a different set of judicatureal requirements. These requirements point directly to issues relevant for HRM. rascal 7 International Human Resources CAHRS WP05-16 Extending these ideas, Taylor, Beechler, and Napier (1996) pull how MNCs might break out a more integrative approach to HRM. The objective of this dodge is to share best practices from all parts of the firm (not just merged) to raise a worldwide system.\r\nWhile there are allowances for local differentiation, the focus is on substantial global desegregation. Differentiation provides both the potential for local response and customizat ion, as substantially as the figure of ideas and practices needed for conception at the global level. However, integrating by dint of coordination, communication, and learning is not always easily achieved in this context. Ironically, the very characteristics that provide resource-based advantage at the local level truly complicate integrating at the global level.\r\nThe ability of firms to gain efficiencies of scope and scale at a global level is made more difficult by resource heterogeneity, and this challenge is exacerbated by resource immobility. The challenge then for the international firm is to identify how firms can stay on variety (and local customization) period simultaneously establishing a formation for consolidation and efficiency. As mentioned by McWilliams et al. (2001) very few scholars have address the â€Å"stickiness” issue involved in match the global and local tension. Taylor et al. 1996) allude to such integration difficulties when they n ote: â€Å"The reason firms move toward an exportive rather than an integrative SIHRM orientation…is that the weapon to identify and deepen the best HRM practices in their overseas affiliates are not in place. much(prenominal) mechanisms as having regional or global meetings of affiliate HR directors, transferring HRM materials (e. g. , performance appraisal forms to affiliates) or posting of the HR director of the affiliates to the HQs of the firm were not developed…” (p. 972). These same power issues are raise by McWilliams et al. 2001) when they discuss the major causes of internal stickiness existence lack of absorptive capacity, causal ambiguity, and arduous relationships between the source and recipient. In both examples, barriers to global practice integration are raised and discussed, but not resolved. This issue is addressed more in full below. scalawag 8 International Human Resources IHM And Capabilities CAHRS WP05-16 Given the immensityâ€and difficultyâ€of integrating human resources at a global level, musical composition preserving the uniqueness and heterogeneity at the local level, it seems reasonable to discuss these issues in the context of competitive capabilities.\r\nBased on the association based view (KBV) of firms, that emphasizes the need to acquire and immix develop, we suggest two such capabilities (see Figure 1). First, friendship integration ability refers to a firm’s ability to transfer and coordinate human resources across affiliates in a way that utilizes economies of scale and scope plot of ground allowing and promoting responsiveness to the local environment. Second, acquaintance cosmea capability refers to a firms’ ability to create untested and potentially innovative practices at the local level.\r\nFigure 1 IHRM: People, Practices, and Capabilities rivet Theories RBV: Focus on individual resources of intimacy, skills, and abilities RBV and Competencies: Focus on uni te resources of HR practices strategic nous Workforce: What are the fellowship, skills, and abilities that are heterogeneous and immobile? HR Practices and Systems: What are the HR practices and systems that are heterogeneous and immobile? acquisition Capabilities: How can HR practices and systems be created and coordinated to restrain heterogeneity and immobility?\r\nSources McWilliams, Van Fleet, & Wright, 2001 People Practices Taylor, Beechler, & Napier, 1996 KBV and organisational Capabilities: Capabilities Focus on learning formes and capabilities Chadwick & Cappelli, 1999 association Integration dexterity Ironically, while learning capability is one of the key dimensions of the Bartlett and Ghoshal (1989) framework of transnational organizations, most IHRM researchers have made exclusively passing mention of how firms share and desegregate best practice within the MNC.\r\nSnell, Youndt, and Wright (1996) argued that, peculiarly in dynamic environments, organizational learning may be the lonesome(prenominal) way to ensure that resources sustain their value and uniqueness over summon 9 International Human Resources CAHRS WP05-16 quantify. In essence, the capability to integrate HR practices better than competitors may be a key source of sustainable competitive advantage (cf. , Kogut & Zander, 1992). In the sections below, we frame the key factors underlying association integration capability in terms of organizational crownwork, favorable nifty, and human capital.\r\norganisational smashing. Youndt, Subramaniam, and Snell (2004) define organizational capital as the institutionalized companionship and codified inhabits residing within an organization. Artifacts of organizational capital take on an organization’s reliance on manuals and entropybases to preserve noesis, along with the establishment of structures, processes, and affairs that encourage repeated use of this make (Hansen, Hohria, & Tierne y, 1999). As an integration mechanism, organizational capital allows the firm to preserve knowledge as incoming employees replace those leaving.\r\nAn example of such an artifact might be a â€Å"lessons learned” database to ensure that lessons learned by one group can be made accessible for all groups. Based on MNC research, in order to improve the integration of knowledge within an MNC relative to the speed of its diffusion or imitation by competitors, firms invest in ways to make knowledge evident by encoding its use and replicating it in rules and inscriptionation (Kogut & Zander, 1993). Other forms of organizational capital are apparent to re hand flesh outed, bon ton-wide dailys on how advanced HR practices should be co-ordinated by all affiliates.\r\nThese routines may detail how practices should be shared to reduce the partition and time it takes to implement each mod approach, and thereby, improve the overall efficiency of knowledge integration (March, 1991). Similarly, organizations typically implement entropy systems to provide affiliates with a common platform for HR processes and practices (Snell, Stueber & Lepak, 2002). These systems, processes, and routines ensure that: (1) practices are enforced routinely through established data collection procedures and (2) practices are rapidly disseminated throughout the entire MNC with minimal costs (Daft & Weick, 1984).\r\nIn terms of integration capability, then, organizational capital provides a stem for share and rascal 10 International Human Resources CAHRS WP05-16 institutionalizing knowledge across affiliates. However, it may work against efforts to preserve heterogeneity at the sub-unit level. hearty detonator. favorable capitalâ€defined as the knowledge enter within cordial electronic networksâ€also make ups a potentially valuable friendly function in the integration capability of MNCs (Nahapiet & Ghoshal, 1998). For example, Szulanski (199 5) found that one of the biggest obstacles to transfer knowledge in MNCs is the poor relationship between sources and recipients of information.\r\nalong this line, Ghoshal and Bartlett (1989) empirically showed that knowledge communion and integration could not occur without the humankind of strong neighborly connections. The importance of social capital for integration capability is found in research by Kostova and Roth (2002), who conclude that successful practice adoption is for the most part dependent upon relationships based on verify and shared identity. Trust provides the motive to move with others, while shared identity provides an cooccur take ining of what is important to share. Both of these elements of social capital would seem vital for integration capability.\r\nAnd importantly, neither of them would de facto require the loss of local autonomy. Human Capital. While organizational and social capital are both potentially important resources underlying a firmâ⠂¬â„¢s integration capability, Teece (1977) argued that one of the doctrine obstacles to transfer and integration is lack of previous mother and knowledge (i. e. , human capital). research by Szulanski (1996) and Tsai (2002), for example, has shown that knowledge share and integration is facilitated when respective parties have the absorptive capacity or prior experience to understand related ideas (Szulansk, 1996; Tsai, 2002).\r\nIn the context of MNCs, Haas (2004) showed that groups with gigantic amounts of international experience are more apparent to integrate knowledge from other parts of the organization than those that do not. Similarly, Gregersen and shadowy (1992) found that not only is international experience important for integration, but when it is mate with experience in bodily headquarters affiliates are more likely to bear allegiance to the overall goals of the firm. These international and corporate skills and knowledge are often gained through transfers a nd rotational assignments that enable the HR function to develop a more complex Page 11\r\nInternational Human Resources CAHRS WP05-16 and global orientation. This provides them with the ability to more systematically manage the integration process (Kedia & Bhagat, 1988). such(prenominal) forms of human capital can also correct any tendency of HR subunits to assume that the situation in the drove country is unique; thus avoiding the not-invented-here syndrome. The takings of this discussion s is that a firm’s integration capability likely depends on a combination of human, social, and organizational capital.\r\n kind and organizational capital are alternativeâ€and potentially complementaryâ€resources for knowledge and practice share. Human capital, in turn, is important for absorbing or acquiring that knowledge. As firms develop the capability to integrate brisk practices they potentially can achieve economies of scale and scope through HRM. And when these inte grative mechanisms preserve resource heterogeneity at a local level, it may pass away to a more rapid response to a global environment and greater potential for competitive advantage.\r\nFigure 2 Capabilities: Creative and Integrative Focus commercialize assertion Value Proposition Sources Integrative Capabilities perpetual commercialize: Resources must be combined and integrated to maintain an advantage corporate trust resources in ways that others cannot copy creates benefits arising from scarcity Taylor, Beechler, & Napier, 1996; McWilliams, Van Fleet, & Wright, 2001 Creative Capabilities Dynamic Market: Resources must be reconfigured and created to maintain an advantage Developing new resources that competitors don’t yet have creates benefits arising from transformation\r\nChadwick & Cappelli, 1999; Snell, Youndt, and Wright; 1996 Page 12 International Human Resources intimacy Creation potency CAHRS WP05-16 In the context of organizational learning and the KBV, it is important to eliminate knowledge integration capability from knowledge innovation capability. Just because a firm is able to integrate practices across affiliates does not mean that it will be able to create new practices as well (See Figure 2). Creation capabilities allow the MNC to develop new practices that lead to resource heterogeneity in the first place.\r\nWhile few HRM researchers have mentioned the importance of integration mechanisms, fewer still have discussed the importance of psychiatric hospital mechanisms that renew a firm’s stock of HR practices. This is despite the fact that as firms continually integrate practices, it is desperate that new practices are created and developed that allows for innovation and unremitting improvement in a changing environment. Therefore, in global environments characterized by rapid change and increasing competition, inactive concepts of heterogeneity may no prolonged be sufficient to explain (and susta in) a competitive advantage.\r\nAn ongoing debate in strategy is whether any static view of resources can really explain a competitive advantage that is sustainable over time (Lippman & Rumelt, 1982). For example, Grant (1996) argues that idiosyncratic advantages by nature erode over time. This debate is specially relevant in the global environment where what might create a competitive advantage at one point in time or in one location, may not at another point in time or location. Hence, it is vital that MNCs develop the capability to create and renew HR practices in order to maintain a competitive advantage.\r\nGhoshal & Bartlett (1988) stated that MNCs â€Å"create” new products, practices, or systems locally, using specific mechanisms to oppose to local circumstances. Creating local HR practices lies at the heart of an MNC’s capability to be responsive to the unique and changing opportunities of different environments. Below, we discuss how human capita l, social capital, and organizational capital might influence the knowledge design capability of new HR practices. (See Figure 3 for an overview of mechanisms that influence knowledge integration and creation capabilities).\r\nPage 13 International Human Resources CAHRS WP05-16 Figure 3 Capabilities: Human Capital, Social Capital, Organizational Capital Human Capital Social Capital Organizational Capital Creative capacity •In-depth local experience •International experience outside of corporate •Broad internal network range •Broad external network range •Local Market relationships •Localized routines •Creative processes and systems •Norms of promiscuousity •Overarching rules or guidelines change magnitude Influence on Creative Capability Integrative Capability\r\nIncreasing Influence on Integrative Capability •Absorptive capacity •International and corporate experience •Internal Social connections • du al-lane perceptions and identity •Internal Trust •Company-wide rules and routines • somatic culture of sharing •Interactive technologies • entropy collection system Human Capital. The knowledge and experienceâ€i. e. , human capitalâ€of the people within the HR function is a key factor in new HR practice creationâ€whether of new practice ideas, or of improvements in the practices (Lepak & Snell, 1999).\r\nFor example, HR functions possessing large amounts of local knowledge and experience should be able to effectively create practices on their own in response to the various, changing environments. This localize experience answers them to understand the needs of local clients and suppliers, which allows them to develop practices that are unique to each region or country, and hence, heterogeneous across the firm. Page 14 International Human Resources CAHRS WP05-16 International experiences are also important for creating new HR practices.\r \nFor example, because international experience is often highly valued in MNCs (e. g. , Mendenhall & Stahl, 2000), people with international skills and knowledge are more likely to be seen by others as being confident and willing to share divergent opinions and advocate for their own position (Stasser, Stewart, & Wittenbaum, 1995). Moreover, Gregersen & dark (1992) showed that people with strong experience in many international settings and limited experience in corporate are more likely to make changes based on local demands rather than pressures from central parts of the firm.\r\nThis is most likely due to the people’s array of international experiences that have detached them from an allegiance with the company as a whole. Social Capital. Specific aspects of social capital have been argued to play a role in knowledge creation. For example, while Hansen (2002) argued that social networks provide an important conduit for the sharing of knowledge, he also arg ued that such networks play a role in knowledge creation because they inform network members about the existence, location, and significance of new knowledge.\r\nBurt (1982) found that networks comprising a broader range of contacts will have a more heterogeneous base of information and knowledge to draw from. While such wide networks may not always facilitate a deep take to the woods of knowledge, they offer different reference points for HR members to make comparisons and explore new ideas. A firm’s ability to happen upon new opportunities is likely to be a function of multiple local contacts. HR affiliates often have critical colligate with local vendors and, perhaps, competing HR groups that allow them to take after local opportunities (Bartlett & Ghoshal, 1989; Hedlund, 1986).\r\nBirkinshaw (1997) refers to these as relationships within the ‘local market’. Within the local market an affiliate is likely to be embedded in different types of relationsh ips (Ghoshal & Bartlett, 1990; Ghoshal & Nohria, 1989). McEvily and Zaheer (1999) argue that because each part of the MNC maintains different local patterns of network linkages, they are exposed to new knowledge, ideas, and opportunities. Organizational Capital. In many cases, organizational capital may actually hinder knowledge creation capability. The formalized processes, systems, structures, etc. ave a Page 15 International Human Resources CAHRS WP05-16 tendency to reinforce existing routines and get rid of against variation and change that engender creativity. However, in some instances, organizational capital may facilitate flexibility in the line of merchandise of actions that allow a firm to hear to environmental cues. This is especially true when employees are encouraged to take action that substitute company-wide, interchangeable routines in favor of localized response that allows knowledge assimilation from the local environment (Daft & Weick, 1984).\r \nFor example, parts of the firm may develop yeasty processes and systems to identify problems, develop hypotheses, communicate ideas to others, and contradict what would normally be expected (Torrence, 1988). Grant (1996) argued that such creative routines and processes offer an efficient framework for people to create new, situation-specific practices by utilizing local perspectives in developing practices for the firm.\r\nThough potentially tangled for the integrative capability, localized routines and creative processes help affiliates relate better with local vendors, clients, and competitors by providing a set of expectations and processes that encourage HR groups to turn to the surrounding environment. For example, an HR affiliate may have developed a simple manual or informal norm of what to do when developing a new practice. Such a routine is likely to leave many gaps in exact steps to follow, but provide an overview or value to help the HR group be innovative.\r\nThis si mple routine allows the local HR group to gull knowledge more quickly from its employees and develop practices to meet their needs. In summary, these aspects of human capital, social capital, and organizational capital help us identify how the knowledge integration and creation capabilities might occur within an MNC. most of these forms of capital are more effectual depending upon the capability it is backup, and ironically, some of these mechanisms that influence integration might actually hinder knowledge creation and vice versa.\r\nFor example, firms heavy in local knowledge and experiences and weak in international experiences might have a detrimental affect on a firm’s ability to integrate practices across the various parts of the firm. Such strong human capital is likely to promote the not-invented-here syndrome through the affiliate’s strong belief and experience base dealing exclusively with the local environment. Similarly, buckram forms of Page 16 Inter national Human Resources CAHRS WP05-16 organizational capital, in terms of standardised routines and shared electronic databases, might deter the various parts of HR to develop and create practices on their own.\r\nThis could by and large stem from the fact that so much structure and support for integration is in place that HR groups fail to find time to bring about new practices or adapt existing practices to the local environment. Implications For Research And Theory The unique complexities and challenges faced by today’s global firms present different implications for the RBV and its application to strategic IHRM. For example, because a large amount of the international management literature focuses on variances in cultural, geographical, and institutional pressures; the implications for applying the RBV become more complex.\r\nAs MNCs oppose to create and integrate their practices across borders, they are faced with unique challenges that either poking for global effic iency or local responsiveness. These challenges open the discussion for ways to actually manage both the creation and integration of knowledge on a global scale. This means that the questions typically asked by strategic IHRM scholars (e. g. , HR practices and performance) should be augmented with questions of how HR practices are created and integrated in ways that lead toward resource heterogeneity and immobility.\r\nTo create a sustainable competitive advantage firms must not only be able to respond to their local environments or standardize their practices across the firm. They must be able to relief a tension of practice heterogeneity through local practice creation and immobility of those practices through their integration across the firm. One supposititious implication of this discussion calls for a greater understanding of the rents found through the creation and integration of HR practices. As Chadwick and Dabu (2004) explain, a marriage of rent concepts with theories of the firm (i. e. RBV) is infixed to describing firm’s competitive advantages and in particular in understanding how actors within firms can take conscious steps to toward a sustainable competitive advantage. The current strategic IHRM literature strongly alludes to the importance of integration and being able to Page 17 International Human Resources CAHRS WP05-16 organize heterogeneous resources in a way that is difficult for competitors to imitate. The assumption here is that heterogeneity and immobility of resources creates greater performance or rents arising from scarcityâ€Ricardian rents (cf. , work, Sanders, Gregersen, 2001).\r\nIn essence, Ricardian rents can be root in the cross-border integration of various HR practices. The integration of such practices not only assures that some of them will be unique to the firm, but that they will be difficult for others to imitateâ€making them scarce in the market. The advantages that come from constant creation of HR p ractices operates under a different principle than traditional resources leading to Ricardian rents. Rather than rents arising from scarcity, the creation capability perspective emphasizes rents arising from market discontinuitiesâ€Schumpeterian rents (cf. Carpenter et al. , 2001). Schumpeterian rents derive from a firm’s ability to exploit or leverage resources to address changing environments (Teece et al. , 1997; Amit & Schoemaker, 1993). Based on Schumpeterian rents, a focus on the continuous creation of resources can enable a firm to achieve competitive advantage on a sustainable basis by developing new practices that lead to practice heterogeneity across a complex and ambiguous global network. Hence, as mentioned by Lado and Wilson (1994) and Teece et al. 1997), turning to these dynamic capabilities as an extended approach to the RBV offers a close at hand(predicate) understanding of the actual sources of competitive advantage in a changing global environment. While we discuss the main mechanisms private road knowledge creation and integration (Grant, 1996), aspects of integration tend to focus on a broad array of learning processes, including knowledge sharing, transfer, codification, adoption, and/or institutionalization. Further research should look at how different aspects of the integration process might be influenced by specific human, social, and organizational capital mechanisms.\r\nFor example, Hansen and Haas (2001) showed that many firms have little difficulty in sharing knowledge across various units of the firm, but that the actual application or institutionalization of this knowledge is a completely different matter. While other scholars such as Kogut and Zander (1992) and Schulz (2001) have theoretically separated integration to include transfer and integration (or combination), very Page 18 International Human Resources CAHRS WP05-16 little practical research has been done on what factors might influence the transfer and what factors might influence the integration of knowledge.\r\nClearly, there must be differences since research such as Hansen and Haas’ (2001) notice the disparity in knowledge that is shared and knowledge that is actually applied. Also, while the ideas presented in this chapter are rooted in theory, empirical research is needed to study the impact of human, social,, and organizational capital on knowledge creation and integration capabilities. While theory suggests that aspects of all three of these factors will influence both capabilities, it is most probable that aspects of human capital will more strongly influence the creative capability.\r\nThis is largely due to the fact that people and their knowledge and skills are what allows the different HR affiliates the ability to develop local practices on their own, without onus or supervision from regional or corporate headquarters. Similarly, social and organizational capital should have their strongest influences on the integrative capability. This is due, in part, to the conduits and repositories created from aspects of social capital and organizational capital, respectively.\r\nIn fact, as we mentioned earlier, some aspects of organizational capital might have a negative effect on the firm’s ability to create new practices (knowledge), while some aspects of human capital may have a negative effect on the firm’s ability to integrate those practices across affiliates. Conclusion The purpose of this chapter has been to summarize the literature on RBV and IHRM in multinational firms by addressing the ways in which resource heterogeneity and immobility provide potential advantages to MNCs.\r\nHowever, we have also try to extend the RBV in this context by addressing some of the primary challenges ofâ€and capabilities needed to†integrate resources across business units within the MNC. The resolvent frequently used by firms has been to standardize HR practices and policies at a gl obal level, but this solves the integration problem while destroying the advantages of local Page 19 International Human Resources CAHRS WP05-16 variety. The challenge as we see it is identifying how firms can preserve variety (and local customization) while simultaneously establishing a foundation for integration and efficiency.\r\nThe ability for HR managers to balance this tension lies in the culture of capabilities to create and integrate practices across the global HR function. We extended traditional views of RBV to include aspects of practice integration and creation. Such capabilities allow firms to perpetually renew their HR practices in a way that allows them to respond to multiple external pressures while being coordinated and integrated to ensure that these practices drive the firm’s sustainable competitive advantage. Page 20 International Human Resources References CAHRS WP05-16 Amit, R. , & Schoemaker, P. J. H. 993. Strategic assets and organizational ren t. Strategic focus ledger, 14: 33-46. Bae, J. , & Lawler, J. J. 2000. Organizational and HRM strategies in Korea: Impact on firm performance in an emerging economy. academy of way Journal, 43: 502-517. Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of attention, 17: 99-120. Barney, J. B. , & Hoskisson, R. 1989. Strategic groups: Untested assertions and research proposals. Managerial and finish Economics, 11: 187-198. Bartlett C. A. , & Ghoshal, S. 1989. Managing Across Borders: The multinational Solution.\r\nHutchinson crinkle Books. Birkinshaw, J. 1997. Entrepreneurship in multinational corporations: The characteristics of accessory initiatives. Strategic wariness Journal, 18: 207-229. Boxall, P. 1996. The strategic HRM debate and the resource-based view of the firm. Human Resource Management Journal, 6: 59-75. Burt, R. S. 1982. Toward a geomorphological theory of action. unexampled York: Academic Press. Carpenter, M. , Sa nders, Wm. G. , & Gregersen, H. B. 2001. bundle up human capital with organizational context: The impact of international assignment experience on multinational firm performance and CEO pay.\r\nhonorary society of Management Journal, 44: 493-511. Chadwick, C. , & Cappelli, P. 1999. Alternatives to generic strategy typologies in strategic human resource management. In L. D. Dyer, P. M. Wright, J. W. Boudreau, and G. T. Milkovich’s (eds. ) Strategic Human Resource Management in the Twenty-First Century. Stamford, CT: JAI Press. Chadwick, C. , & Dabu, A. 2004. stock split theories, human assets, human resource management, and competitive advantage. Working Papar. Daft, R. L. , & Weick, K. E. 1984. Toward a model of organizations as interpretation systems. academy of Management Review, 9: 284-295. Doz, Y. & Prahalad, C. K. 1986. Controlled variety: A challenge for human resource management in the MNC. Human Resource Management, 25: 55-72. Evans, P. A. L. , & Doz, Y. 1992. Dualities: A epitome for human resource and organizational outgrowth in complex multinationals. In V. Pucik, N. M. Tichy, & C. K. Barnett’s (eds. ) Globalizing Management: Creating and Leading the Competitive Organization. New York: Wiley. Evan, P. , Pucik, V. , & Barsoux, J-L. 2002. The global challenge: Frameworks for international human resource management. New York: McGraw-Hill Irwin. Fey, C. F. , & Bjorkman, I. 2001.\r\nThe effect of human resource management practices on MNC subordinate performance in Russia. Journal of International agate line Studies, 32: 59-75. Page 21 International Human Resources CAHRS WP05-16 Ghoshal, S. , & Bartlett, C. A. 1988. Creation, adoption, and diffusion of innovation by subsidiaries of multinational corporations. Journal of International Business Studies, 19: 365388. Ghoshal, S. , & Bartlett, C. A. 1990. The multinational corporation as an interorganizational network. Academy of Manag ement Review, 15: 603-625. Grant, R. M. 1996. Toward a knowledge-based theory of the firm.\r\nStrategic Management Journal, 17(S2): 109-122. Gregersen, H. B. , & Black, J. S. 1992. Antecedents to commitment to a parent company and a foreign operation. Academy of Management Journal, 35: 65-91. Haas, M. R. 2004. Cosmopolitans and locals: Knowledge gathering and suffer quality in international teams. Working Paper. Hansen, M. T. 2002. Knowledge networks: Explaining effective knowledge sharing in multiunit companies. Organization Science, 13: 290-302. Hansen, M. T. , & Haas, M. R. 2001. Compteting for attention in knowledge markets: Electronic document dissemination in a management consulting company.\r\nAdministrative Science Quarterly, 46: 1-28. Hedlund, G. 1986. The hypermodern MNC: A heterarchy? Human Resource Management, 25: 9-35. Kogut, B. , & Zander, U. 1992. Knowledge of the firm, combination capabilities, and the replication of technology. Organization Science, 7: 502-518. Kogut, B. , & Zander, U. 1993. Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 24: 625-645. Kostova, T. , & Roth, K. 2002. Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects.\r\nAcademy of Management Journal, 45: 215-233. Lado, A. A. , & Wilson, M. C. 1994. Human resource systems and sustained competitive advantage: A competency-based perspective. Academy of Management Review, 19: 699-727. Lepak, D. P. , & Snell, S. A. 1999. The human resource architecture: Toward a theory of human capital apportionment and development. Academy of Management Review, 24: 31-48. Lippman, S. , & Rumelt, R. 1982. indeterminate imitability: An analysis of interfirm differences in efficiency under competition. Bell Journal of Economics, 13: 418-438. MacDuffie, J. P. 1995.\r\nHuman resource bundles and manufacturing per formance: Organizational logic and flexible production systems in the world auto industry. Industrial and Labor Relations Review, 48: 197-221. March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-87. Page 22 International Human Resources CAHRS WP05-16 McEvily, B. , & Zaheer, A. 1999. Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal, 20: 1133-1145. McWilliams, A. , Van Fleet, D. D. , & Wright, P. M. 2001. Strategic management of human resources for global competitive advantage.\r\nJournal of Business Strategies, 18: 1-23. Mendenhall, M. E. , & Stahl, G. K. 2000. Expatriate training and development: Where do we go from here? Human Resource Management, 39: 251-266. Nahapiet, J. , & Ghoshal, S. 1998. Social capital, capable capital, and the organizational advantage. Academy of Management Review, 23: 242-266. Ricks, D. 1993. Blunders in international business. Ca mbridge: Blackwell Business. Schuler, R. S. , Dowling, P. J. , & DeCieri, H. 1993. An integrative framework of strategic international human resource management. Journal of Management, 19: 419-460.\r\nSchulz, M. 2001. The uncertain relevance of newness: Organizational learning and knowledge flows. Academy of Management Journal, 44: 661-681. Snell, S. A. , Snow, C. C. , Canney Davison, S. & Hambrick, D. C. 1998. Designing and supporting transnational teams: The human resource agenda. Human Resource Management, 37(2): 147-158. Snell, S. A. , Stueber, D. & Lepak, D. P. 2002. Virtual HR departments: getting out of the middle. In R. L. Heneman and D. B. Greenberger (eds. ) Human resource management in virtual organizations, discipline Age Publishing. Snell, S. A. , Youndt, M. A. & Wright, P. M. 1996. Establishing a framework for research in strategic human resource management: Merging resource theory and organizational learning. Research in military group and Human Resource Management, 14: 61-90. Sparrow, P. , Schuler, R. S. , & Jackson, S. E. 1994. overlap or divergence: Human resource practices and policies for competitive advantage worldwide. International Journal of Human Resource Management, 5: 267-299. Stasser, G. , Stewart, D. D. , & Wittenbaum, G. M. 1995. exportation roles and information exchange during discussion: The importance of knowing who knows what.\r\nJournal of Experimental Social Psychology, 31: 244-265. Szulanski, G. 1995. Unpacking stickiness: An empirical investigation of the barriers to transfer best practices inside the firm. Academy of Management Journal, Best Paper Proceedings: 437-442. Szulanski, G. 1996. Exploring internal stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17: 27-44. Taylor, S. , Beechler, S. , & Napier, N. 1996. Toward an integrative model of strategic international human resource management. Academy of Management Review, 21: 959 -985. Teece, D. 1977.\r\nTime-cost tradeoffs: Elasticity estimates and determinants for international technology transfer projects. Management Science, 23: 830-837. Page 23 International Human Resources CAHRS WP05-16 Teece, D. J. , Pisano, G. , & Shuen, A. 1997. Dynamic capabilities and strategic management. Strategic Management Journal, 18: 509-534. Tsai, W. 2002. Social structure of coopetition within a multiunit organization: Coordination, competition, and intraorganziational knowledge sharing. Organization Science, 13: 179-192. Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5: 171-180. Wright, P. M. , Dunford, B.\r\nB. , & Snell, S. A. 2001. Human resources and the resource based view of the firm. Journal of Management, 27: 701-721. Wright, P. M. , & McMahon, G. C. 1992. Alternative theoretical perspectives on strategic human resource management. Journal of Management, 18: 295-320. Wright, P. M. & Snell, S. A. 1998. Towa rd a centripetal framework for exploring fit and flexibility in strategic human resource management. Academy of Management Review, 22 (4): 756-772. Youndt, M. A. , Subramaniam, M. , & Snell, S. A. 2004. Intellectual capital profiles: An examination of investments and returns. Journal of Management Studies, 41: 335-361. Page 24\r\n'