Theoretical perspectives for strategic human resource management

Journal of Management, June, 1992 by Patrick M. Wright, Gary C. McMahan

Critics have argued that the field of human resource management

(HRM) lacks a coherent theoretical framework. This article attempts to

further the theoretical development of SHRM through discussing six

theoretical models (behavioral perspective, cybernetic models,

agency/transaction cost theory, resource-based view of the firm,

power/resource dependence models, and institutional theory) that are

useful for understanding both strategic and non-strategic determinants

of HR practices. Finally, the implications of a stronger theoretical approach

to SHRM research and practice are discussed.

Introduction

The past decade has seen an increasing interest in the "strategic management" of organizations in the United States. Numerous models of strategic management have been proposed (e.g., Hofer & Schendel, 1978; Miles Snow, 1978; Porter,

1980). This interest in strategic management has resulted in various organizational functions becoming more concerned with their role in the strategic management process. The Human Resource Management (HRM) field has similarly sought to become integrated into the strategic management process through the development of a new discipline referred to as Strategic Human Resource Management (SHRM).

This field of study has produced a number of conceptual and practitioner-oriented articles proposing the particular human resource (HR) practices that would be associated with various business strategies (Miles & Snow, 1984; Schuler & Jackson, 1987; Wils & Dyer, 1984). In addition, recent research has begun to examine the determinants of HR practices from a strategic perspective (Dean & Snell, 1991; Jackson, Schuler & Rivero, 1989; Snell, in press).

Given the relative infancy of this field of study, two deficiencies in this literature need to be addressed before significant progress can be made. First, at present there is no clear agreement regarding the delineation of the field of strategic human resource management (SHRM), particularly with regard to its definition. Thus, it has been difficult to differentiate between HRM and SHRM. Second, until recently there has been little in the way of strong theoretical models to aid in understanding both the role of HRM in organizations and the determinants of various HR practices. Similarly, without a strong theoretical foundation for understanding the determinants of HR practices, it is difficult to distinguish between HRM and SHRM.

Thus, the purpose of this article is to provide a foundation to guide future SHRM research and practice by (a) clearly defining SHRM, distinct from HRM, and (b) reviewing alternative theoretical frameworks that have and can be applied to help explain the role of SHRM in strategic management. In order to accomplish this task, we will first review the components of theory construction and its importance to the SHRM research process. In the context of theory construction, we offer a specific definition of the construct of SHRM, distinguishing it from HRM. We will then present a variety of theoretical perspectives that may provide the necessary foundation for understanding both the strategic and non-strategic determinants of HR practices and thus enable researchers to take a strategic approach to HRM. Finally, we will discuss the implications of the presence or absence of a strong theoretical foundation for the field of SHRM.

The Role of Theory in SHRM

According to Dubin (1976), theory is "the attempt ... to model some aspect of the empirical world," (26). Theories, if accurate, fulfill the objectives of prediction knowledge of the outcome) and understanding (knowledge of the process) regarding the relationships among the variables of interest. Thus, a good theory enables one to both predict what will happen given a set of values for certain variables, and to understand why this predicted value should result.

Although the primary goals of theorist-researchers and practitioners may differ (Dubin, 1976), a strong theoretical model has great value to both. Practitioners are primarily concerned with the accuracy of prediction of a theoretical model in order to guide their decision making; thus, an accurate theoretical model allows for better decision making in conditions of uncertainty. Theorist-researchers, on the other hand, have greater concern for understanding the why behind the prediction. For them, a well developed theoretical model allows for testing of the model and, based on these tests, revision of the model to increase its accuracy.

Due to the applied nature of SHRM, it is exceedingly important that the field develop or use theoretical models that allow for both predicting and understanding the effects of HR practices on organizational functioning. However, until very recently, one of the most glaring inadequacies of SHRM was the lack of a strong theoretical basis for viewing the HRM function (Mahoney & Deckop, 1986) within the larger organization.

In a call for HRM research to be grounded in the organizational context, Zedeck and Cascio (1984) stated "HRM issues are part of an open system, and research is theoretically bankrupt unless placed in the broader context of organizations," (463). Similarly, Dyer's (1985) review of SHRM research pointed out that the field lacked a strong theoretical foundation. He stated with regard to the dependent variables of SHRM research, that it would be helpful to "have a fully articulated theory of personnel and human resource management on which to draw," (10). In fact, in his discussion of the criteria for evaluating theory, Bacharach (1989) noted SHRM research as one glaring example of the lack of theory. He specifically pointed to this area as one which is characterized by descriptive typologies, rather than good theory that helps us to understand the why, how, and when of relationships between business strategy and HRM practices.