David J. Teece
David Lewin and David J. Teece
Economics-based approaches to understanding the firm-specificity of strategic human capital, such as the “isolating mechanisms” perspective, require simplifying assumptions about firms. This chapter places the management of human capital resources in a system-level strategic framework. We begin by opening the black box of employee motivation and discuss models, such as expectancy theory, for increasing employee engagement. We then examine how specific bundles of mutually reinforcing HR practices that have been widely studied can lead to a positive organizational climate and strong business performance. HR practices should differ, however, for knowledge-based and task-based work. HR practices should also be closely aligned with the firm’s strategic business processes. We show how the dynamic capabilities framework helps identify which HR alignments need to be prioritized. The combination of a company’s strong organizational capabilities, relevant and flexible strategic human capital resources, and astute management can create unique value and long-term advantage.