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Resource-based theorists argue that human assets can be a source of sustainable advantage because tacit knowledge and social complexity are hard to imitate. However, these desirable attributes cause dilemmas that may prevent firms from generating an advantage. This article develops a framework for analyzing and coping with these challenges. Although the problem arises from the strategy literature, the solutions are drawn from the organizational behavior, human resource management, human capital, and professions literatures. Finally. I examine implications for how insights from these diverse literatures can be integrated to guide future strategy research.
Like human assets, an oil field may be a strategic asset. However, once acquired, an oil field 1. Cannot quit and move to a competing firm. 2. Cannot demand higher or more equitable wages. 3. Cannot reject the firm's authority or be unmotivated. 4. Need not be satisfied with supervision, coworkers, or advancement opportunities. Resource-based theorists argue that sustainable competitive advantage stems from unique bundles of resources that competitors cannot imitate (Barney, 1991; Wernerfelt, 1984). Following this, prescriptive advice to managers revolves around identifying and acquiring these critical resources. Thus, Barney (1991: 110) noted, "physical technology, whether it takes the form of machine tools or robotics in factories or complex information management systems, is by itself typically imitable." In contrast, human assets are often hard to imitate due to scarcity, specialization, and tacit knowledge (Lippman & Rumelt, 1982; Polanyi, 1962; Teece, 1982).
However, human assets differ from an oil field. Merely having talented employees does not mean that a sustainable advantage exists. Such assets are hard to imitate because they are difficult to understand and observe (Barney, 1991; Peteraf, 1993). If tacit knowledge cannot be conveyed, how can management organize employees to attain an advantage? Tacitness may be desirable because it is hard to imitate, but as a result, firms must face serious management problems.
Unfortunately, while resource-based theory extols the benefits of human assets, it does not examine how the related management dilemmas may prevent firms from generating an advantage. Compared to physical assets, human capital is associated with serious information problems and the threat of voluntary turnover (Cascio, 1991; Chiang & Chiang, 1990; Steffy & Maurer, 1988). In this article, I argue that firms cannot achieve a sustainable advantage from...