Strategic human resource management and supply chain orientation

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Abstract

Most SHRM research has concentrated on single, focal organizations and on activities taking place within the firm. The purpose of this article is to lay a foundation for studying SHRM in the supply chain. We present a framework which identifies factors that influence whether adopting a supply chain orientation (SCO) is effective, and articulates the contingencies that shape SHRM practices needed to achieve and capitalize on SCO. We make several contributions to the strategic human resource management and supply chain literatures. First, we highlight this neglected area of research. Second, we expand the boundary conditions of strategic human resource management and HR systems from a primarily single firm, intra-organizational focus to one which includes both intra- and inter-organizational relationships. Third, we provide a framework for understanding the links between HR systems, SCO, and strategic outcomes. Fourth, we build upon previous theorizing in strategic human resource management and provide a framework for research in the supply chain context. And finally, we offer propositions for future research, along with a decision making model which has implications for both research and management practice.

Highlights

► HR systems that support collaborative supply chain relationships lead to competitive benefits. ► Five HR system design principles support an integrative supply chain orientation. ► Three supply chain attributes determine the benefit of a tight fit among HR practices across firms. ► Choice of an adaptive, exportive, or integrative approach to SHRM is contingent upon five factors. ► A decision model is provided to aid in selecting the most effective HR system design.

Introduction

Despite Schuler and MacMillan's (1984) groundbreaking article discussing strategic human resource management (SHRM) applied to the supply chain, only limited research has addressed this important topic (Lengnick-Hall, Lengnick-Hall, Andrade, & Drake, 2009). Most SHRM research has focused on single, focal organizations and on activities taking place within the firm. Even Wright and McMahan's (1992, 298) widely accepted definition of SHRM as “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals” appears to imply a single, intra-organizational perspective. However, both internal and external relationships and activities contribute to strategic goal attainment and superior performance (Barney, 1986). Studying SHRM in the supply chain expands the boundaries of the field to include inter-organizational relationships that contribute to goal attainment. This complements the customer human resource (HR) orientation introduced in the SHRM literature in the late 1990s (e.g., Lengnick-Hall & Lengnick-Hall, 1999) and recent shifts in supply chain management theory from total cost to customer-value market orientation driven theory (e.g. Bowersox et al., 2000, Lancioni, 2000, Mentzer et al., 2001, Min et al., 2007).

Recent trends in supply chain research emphasize potential benefits from integration and collaboration among supply chain members including improved cooperation and coordination (Smith, Carroll, & Ashford, 1995), increased efficiency stemming from co-development and co-production (Ragatz, Handfield, & Petersen, 2002), innovative cost reduction strategies (Niezen, Weller, & Deringer, 2007), and greater information sharing among supply chain partners (Lee, So, & Tang, 2000). Better collaboration, in turn, contributes to greater adaptability and resilience across the supply chain (Christopher & Peck, 2004), and enables an enhanced competitive action repertoire building on speed, quality, and flexibility (Niezen et al., 2007). Firms are said to have adopted a supply chain orientation (SCO) (Mentzer et al., 2001) when integrative and collaborative supply chain management activities are explicitly the result of an emphasis on customer focus, customer value-creation, coordinated marketing, and profit generation (Kohli and Jaworski, 1990, Narver and Slater, 1990, Slater and Narver, 1994).

Ketchen and Hult (2007) argue that effective collaborative supply chain management offers a substantial and largely untapped source of potential competitive advantage for many firms. Supply chain activities can impact a wide range of performance outcomes including return on assets, return on investment, growth, and market share (Coyle et al., 2003, Crook et al., 2008, Hult et al., 2007, Min et al., 2007, Slone et al., 2007). Performance across the entire supply chain is expected to benefit from each member adopting a SCO and thereby working collectively (Min et al., 2007).

This evolution in supply chain management thinking has substantial implications for human resource management. Supply chain researchers are re-examining traditional jobs, roles, responsibilities, and skill requirements, within and between functional areas including marketing, logistics, operations, and procurement. They are also rethinking jobs, roles, and relationships between firms (Mentzer, Stank, & Esper, 2008). We propose that HR systems (i.e., HR architecture, principles, philosophy, policies, and programs (Arthur and Boyles, 2007, Becker and Gerhart, 1996, Lepak et al., 2004, Takeuchi et al., 2009)) play a vital role as carriers of institutional themes and as mechanisms for operationalizing responsibilities and relationships within supply chains. However, crucial contingencies that shape the strategic context of supply chain relationships have not been examined from the perspective of HR systems that might be used to realize these sources of competitive advantage. While the evolution of supply chain management research has integrated management processes (e.g. resource efficiency and cost reduction) and marketing processes (e.g., customer service) into their frameworks, there appears to have been little attention to understanding how HR could influence supply chain management performance (Gowen & Tallon, 2003). We propose that a contingency perspective on SHRM (Lengnick-Hall and Lengnick-Hall, 1988, Milliman et al., 1991, Wright and Snell, 1998) and HR systems is a particularly useful lens for examining this gap.

The purpose of this article is to build on the work of Schuler and MacMillan (1984), Borgatti and Li (2009), and others to create a foundation for studying SHRM and HR systems in the supply chain context. We consider important contingencies related to supply chain characteristics, incorporate emerging perspectives on supply chain relationships, and identify characteristics of HR systems that facilitate the ability to obtain strategic benefits from adopting a supply chain orientation (SCO). Our focus is on providing insight into how human resource management can contribute to achieving and leveraging the benefits from SCO.

This paper is organized as follows. First, we summarize recent research in supply chain management and explain the rationale for emphasizing SCO as a dominant theme. We then explain how HR systems might be designed to support adoption of a supply chain orientation and enable a firm to gain and sustain competitive advantage. Emphasis is placed on a contingency approach to the strength of HR systems within a supply chain. A general conceptual model, a decision tree for selecting effective strategic HRM approaches, and a set of propositions are offered to complement our discussion and guide future research and managerial practice.

Section snippets

Current themes and contingencies in supply chain management research

Supply chains have been in existence, at least in their constituent parts, as long as there has been dependence on others outside an organization for sourcing inputs, transforming them, and/or delivering output in the market exchange process. Early research in the domain enhanced the importance of – and the ability – to manage and coordinate outbound and inbound transportation and storage. The emergence of the value chain concept (Porter, 1985) expanded strategic consideration of inbound (i.e.

Crafting an HR system to support SCO

In one of the first efforts to expand the scope of SHRM, Schuler and MacMillan (1984) explained how the HR function could be deployed to affect competitive advantage, not only in the focal organization, but in its value chain as well. Some organizations are fully vertically integrated, creating their products or providing their services from beginning to end. American Apparel, for example, which operates the largest U.S. garment factory, performs all manufacturing activities (e.g. knitting,

SHRM alternatives for designing inter-organizational HR practices

A stream of SHRM research that originated in the international HRM domain also has particular relevance for strategic HRM in the supply chain. Relationships between corporate and subsidiary HR practices and the dual needs of providing consistency across units while allowing for local adaptations (Bartlett and Ghoshal, 1998, Schuler et al., 1993) have many parallels with the relationships among firms in a supply chain. Taylor, Beechler, and Napier (1996) posited that multinational corporations

Discussion and conclusions

To recap our framework for HR system design and supply chain orientation, we argue that firms with a supply chain orientation will increase organizational (and supply chain) performance if they enable an effective blend of alignment and flexibility among their HR systems. Fit, or alignment, in this context involves adjusting the design of human resource systems to reflect five characteristics of the supply chain (relationship duration, strength of dependence, type of interdependence,

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