Wednesday 19 October 2016
Sunday 24 October 2010
Wednesday 14 May 2008
The Consequences of Globalisation for Labour.
Stoik Musah,
LBS.Leicester.
stoikmusah@gmail.com
This essay critically examine the effect of internationalisation of economic activity for employees and labour movement. It considers the contribution of Multinational Corporations in the subject and trace the origin by linking it to the neo liberal structural economic reforms by powerful western countries. It also highlight how globalisation has accelerated trade union movement in the international level. In the end, it argues the inability of an international code of workers right to manage the impact of globalisation on labour worldwide and introduce possible solution for labour to build international working class power.
Literature abounds with various definitions of globalisation. Perhaps this may arise as a result of the fact that the concept has achieved a huge degree of popularity in recent years. This is evident judging by the number of publications on the subject in various social and humanities disciplines. According to Giddens (1990), globalisation is the intensification of world wide social relations which links distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa. This involves a change in the way we understand geography and experience localness. In a sense globalisation implies a borderless world. Under this perspective, the speed of communication and exchange, the complexity and size of the network involved, the volume of trade that is carried out within short time frame has all given this phenomenon a peculiar force that attract attention(Yaw 1999 ).
From industrial relations perspective, this phenomenon is transforming events in the workplace. It is also changing the nature of the entire world labour markets and employment practices (Dolvik 2001). For example there is evidence( Chaykowski and Giles 1998) suggesting that the transformation of working life in some European Union countries have been greatly affected by this phenomenon. For instance, the emergence of the service economy in developed countries, changes in work systems in developed countries(i.e. the rise of contingent workers, and flexible work practice), rapid technological innovations worldwide(i.e. digitalization), cultural and ideological changes around the globe, the rise of education and business schools, the evolution of gender relations in the workplace etc.(Dolvik 2001)
Equally important is the separation of work from home. Organisation has adopted new technologies that involve people in less face to face interaction. Today most organisations engage in outsourcing some aspect of their operations to enable them concentrate on those activities in which it can establish distinct core competences (Hamel and Prahalad 1994). These development has been brought about by the frequent pressure from organisations stakeholder groups on management to constantly streamline the way business operates. Under this consideration, it becomes interesting to know that outsourcing has become one option on a larger menu of strategies required for efficient business processes. This is because other strategies as corporate restructuring, downsizing, the use of child labour, redundancy and plant closure are sometimes utilized as credible alternative to effect improve business performance (Laabs 1993 )
Within the parameters of these manifestations, tension and pressure emerge in the contractual relationship between capital owners, management and employees (Willmot, 1997). Employees are therefore disciplined by a variety of audits and performance monitoring processes which are intended to secure their cooperation and trust (willmot, 1997). The employer- employee relationship becomes essentially a cost- profit relationship which is governed by a tight financial framework involving penalty for failing to meet performance criteria (Cook, 2006). Employees are sometimes subjected to accept frequent wage cuts and reduction of pension benefits in exchange for job security- since in most cases companies threaten to shut down plants and move to areas where the cost of production is less- which in some cases has resulted in competition between workers from different countries who possess thesame knowledge skill and ability. Like for instance Studies(Heery 2002) on this subject reveals that from the 1980s through the 1990s changes in the UK domestic market exposure to globalisation has frustrated the capacity for trade unions to either block via collective bargaining the transfer abroad an organisation’s operations or block changes in staffing levels using immigrant workers(Heery 2002). This form of unionism based on bargaining is becoming unsustainable as organisation employ the use of sophisticated human resource management practices as selective recruitment, the use of contigent workers and contract workers to promote lean workforce management and greated levels of commitment among employees in the organisation. In consequence, rendering trade union activities less effective among employees (Kochan and Lansbury 1997).
However these actions on the part of multinational corporations can be traced to the benefit accrued from the neo liberal policies of powerful economies after the cold war((Brien 2000 ).This is because at the end of the cold war, the variety of policy responses that have been initiated to deal with structural economic transformation and challenges of increased competition across different nation states was geared towards the promotion of labour market flexibility. This was also carried out as an remedy to allow these countries competitive among other nation states. As a rsult policies as deregulation and privatisation of government managed institutions were introduced to facilitate increased competition between private actors(Brien 2000). Automatically the continue support given to these structural economic transformation by the state simultaneously challenge the power of organised workers. For instance, the extent of independent workers organisation activities interfering in the market was reduced(Brien 2000). Legislation backing these activities- that was required for workplace union participation was also removed and market forces were allowed freedom to dominate the scene(Brien 2000).
Within this broad legal paradigm, scholars(Dolvik 2001) of industrial relation will argue that when such legislative provisions that supports unionisation purpose is removed Trade Union hardly possess strong legal backing to effectively utilize their core power resources of national unionism, which is the legal backing to mobilise membership, engage in collective bargaining, take industrial action, channel voice at the workplace, and use these sources and its weight in elections to gain societal influence through various institutionalised modes of interest representation and political exchange with the state. For example in the UK the neo-liberal policies of the conservative government was bent on weakening trade union influence in the work place and to create circumstances within which management could re assert authority among employees (Waddington 2003).
In the same way the labour constitutional reform of the 1990 which was accompanied by a parallel initiative to diversify sources of funding to the union also contributed to the weakening of the scope of unionisation mobilization in the United Kingdom(Bach 2002; Waddington 2003). This was the main point of conflict between the unions and the party in Tony Blairs second term. The aftermath of this conflict of interest was the questioning of the source of financing the labour party, the eventual expulsion of the rail, marine and transport union for supporting non union labour candidates, the withdrawal of the fire brigade union and the success in union election of anti-Blair candidate to name just a few (Bach 2002).
All these restriction on the legal possibility for Trade Unions to mobilise gave multinational companies more influence to benefit from these neo- liberal policies. And with the help of transnational institutions, as the World Trade Organisation (WTO) and the International Monetary Fund (IMF), other countries that were seeking structural adjustment policy help from the IMF and its sister institutions i.e World Bank- were convinced of these recipes to economic recovery(Brien 2000). It is for this reason that studies on comparative industrial relation assert that multinational corporations and transnational institutions are the key driving force of internationalization of economic activities (Brien 2000).
Consequently, the effect of this evolutional process implies that labour will have to seek new ways to make its existence relevant in the new world order. A movement in this direction is seen in trade union alliance with company’s management in most European Union Member state multinational corporations. This is facilitated by the European Union (EU) workers council directive, which in recent years has lead to the setting up of six hundred and seventy European Workers council in multinational companies operating in European Union states(Dolvik 2001). In the United Kingdom this is reflected in the activities of state institutions as The Department of Trade and Industries- Partnership Funds, which has provided support and knowledge resources to locate new management-union relations(Rainbird 2004).One advantage of such approach to labour policy is that it sometimes serves as a buffer for home company’s - against the power of global market force and also afford unions an opportunity to deepen their institutional roles at various levels at the workplace(particularly strategic areas)(Arkers and Payne 1998). On the other hand, such policy can restrain trade union core power resources of national unionism and even force Trade Union to legitimate workplace change programme that trade off employment security with greater work intensification (Taylor and Ramsey 1998).
Other recent development as the above is the manner at which Multinational companies have now become more dependent in public reputation and credibility. This has made companies more sensitive to campaigns and boycott instigated by Non Governmental Organisations, sometimes in cooperation with Unions to disclose dubious social, environmental and labour practices. In a way this increasing campaign for ethical trade and labour practices has lead to the increasing concern for corporate social responsibilities- an avenue which trade union has exploited greatly to their advantage.
Other recent development for Trade Union as the above is the gradual development of an international trade union structure. This attempt to stimulate renewed labour has led to an inter- relationship with other social movements globally(Brien2000). For instance a grass root mobilisation with focus on women, youth and immigrant workers (since these group of individuals consist of a large part of the working population) (Global Labour Institute 1999). This broad outlook has forced unions to expand its activity in international trade unionism.
A recent development in this direction in Europe is associated with the build up of viable systems of industrial relations, unionism and social protection in some Eastern European Countries and some loosely Trade Union network in other part of the world (Global Labour Institute 1999).This is aimed at making sure that multinational companies do not exploit these countries as havens for socially unprotected, low cost production.(Dolvik 2001). It is however interesting to also include here that the key drivers of global unionism have observed that building trade union strength internationally depend on the organization of the informal sector. This is because a vast majority of the world’s workers, including the poorest - who most need self-defense through organization - are in the informal sector (Global Labour Institute 1999). For instance in Africa, Asia, Latin America, Central and Eastern Europe evidence indicates that the informal sector is rapidly growing as State enterprises are privatized and unemployment increases (the same applies to China).(Global Labour Institute 1999).
Amidst this development a report by the Global Labour Institute (1999) reveals that these informal sectors workers are already organizing partly- into associations which are sometimes unknowingly referred to as Non Governmental Organizations which often have international networks. Unions on their part have observe this trend, that activities and organizations created this way are valuable resources and point of leverage for the entire trade union movement at the international level( Global Labour Institute 1999). In other words if we consider the amount of employees that has been dispersed away from the formal sectors into informal enterprises due to excessively contracting out of various organizational business processes- which eventually has lead to the decline in TU membership in the workplace/formal sector. It is common sensical that by organizing this loosely held workers base, trade union can acquire the critical mass in terms of membership and representativity it lost in the formal sector. For this reason Union has taken this bold step by specifically tailoring programmes to recruit and organize informal sector workers.
An example has been the Self Employed Women’s Association (SEWA) in India, which started twenty-five years ago with a few hundred members and now numbers over 210,000 members in four Indian federal states (Global Labour Institute1999). SEWA organizes home workers, street vendors, paper pickers and refuse collectors, etc. In return the association has created an infrastructure of flanking services for these workers i.e a bank providing microcredit, a vocational and trade union training program at different levels, producers’ cooperatives (artisans, agricultural producers), service cooperatives (health, housing) etc. Also in the UK, are many informal enterprises local projects (NGOs or local authority schemes), and other similar campaigning organization called the National Group on Home Working. This group has led the campaign for home workers to be included in the national minimum wage and has been a major influence on government policy, public awareness and trade union policy on home working (Global Labour Institute1999).
However, in as much as this developments by unions is praised in some quarters, critics condemn the lack of coherence and integration of Trade Unions structures globally unlike their European case, which historically in many aspects remains the backbone of any international union movement worldwide(Dolvik 2001). For instance the present International Trade Union bodies lack strong links with other Trade Union bodies in developing countries and other emerging economies that is playing host to many multinational corporations off shoring operations (Dolvik 2001). The reason for this has been their limited ability to secure political influence through institutionalised representation, and political channels across these areas (regions). For this reason the Trade Union movement in most cases rely on indirect mode of representation using these nation states national affiliate to reach out to members (Dolvik 2001).
Another implication of these recent development for Trade Union is in the various internal problems generated between key International Trade Union Bodies, as they move to revitalise the movement amidst the increasing effect of powerful globalisations forces(Brien 2000, Dolvik 2001). The various International Trade Union bodies has been confronted with magnitude of political reinterpretations of individual objectives and divergent positions on various issues on how to reposition the movement internationally. This has lead to the rift between the ICFTU and the WCL- the two global trade union bodies that should be in the forefront of driving global trade union change agenda and international diplomacy(Crouch 1993, Visser 1995). These obstacles has been compounded by the international absence of adequate political third parties and institutions with rule making power, which historically played a crucial role in the evolution of unionism in Europe(Crouch 1993,Visser 1995).
Furthermore the internet has also contributed to the changing Trade Unions too. For instance the global transnational trade union networks discussed above is being made possible as a result of the internet. This is because new communication technologies create new possibilities for trade unions. Therefore by increasing investment on cyber unionism, to develop transnational union information networks and new ways of mobilisation, unions can now communicate with their entire membership on a daily basis, using email and the web (waterman, 1998). Historically information sharing among members was limited by tight budget discipline on the number of printed newsletters and mail to be distributed to members- which sometimes do not get to their destinations(Centre for Economic Performance 2002). Today the internet has played a big role in strengthening unions by helping to share information across continents to union members. It has also facilitated new ways of mobilisation and recruitment strategies i.e. the emergence of cyber unionism.On the other hand the Internet is a disruptive, even a threatening, technology for those who currently run the trade union movement through traditional, centralised, hierarchical power structures (Centre for Economic Performance 2002). Like for instance, when an individual member obtain full details of an agreement any time of the day or night from the union's Web site, the power of the head office official to control and interpret this information is challenged (Centre for Economic Performance 2002). For this reason, progressive officials will see this new technology as opportunities to democratise the union and empower members, but many of them will feel challenged by technologies that they do not understand and cannot control and they will endeavour to limit its use and development. (Centre For Economic Performance2002)
Another topic for discussion is the increasing literature on the issue of setting a “fair labour standard” globally. This is aimed at reducing the burden of capital flight on labour. In this context, the key issue of concern is on the question of universality of the standards sort, and the appropriateness of the legal enforcement of such standard. Under this consideration, scholars (Hanami 1997, Luce 2005) of industrial relations will argue that many people in the world consider workers right -as presented in various types of legal documents, have their roots in the west and do not belong to them, i.e. secular Middle East and Chinese societies. In other words, these values that are most important in the west are less important in these societies. This is seen in politics and other literature studies where writers and politicians strongly criticize the effort of the west in inducing other people to adopt their ideas concerning democracy and human rights.
For instance Luce (2005), argues that if some of the international labour organisation conventions are ratified universally, it can result in putting workers and employers of poorer countries at a competitive disadvantage. This is as a result of the changing picture of industrial relations and labour market in different parts of the world (i.e. countries where majority of employment is home base production or micro enterprise which has nothing to do with trade union).
Second, is the issue of enforcement of these international standards, which- in some poorer countries can come at a high economic cost(Hanami 1997). For example, the argument for enforcing a universal labour standard will lack strong popularity in poor countries where families only survive through child labour or other labour abuse to children i.e unpaid work in a family business or other informal enterprise. Under these consideration, the only reasonable proposition for setting up a fair international code of workers right can only arise if such provisions allows for varying its strictness or allowing for temporary exceptions in some less competitive countries(Hanami 1997).
Consequently, from the above analysis and discussion so far on the above subject issue, one will argue that the debate on globalisation vis a vis capital- labour relationship is a zero sum game. Taken a holistic perspective on the dynamics of the entire phenomenon discussed one is left with little doubt that, as the influence of big capital grows the influence of labour recedes . At the same time the reverse will be the case if labour influence in the new world order grows, as it will be seen that the influence of capital will recede. The reality is that most of the agenda behind the origin of globalisation has been about expanding the influence of capital and protecting multinational companies investments in other countries (disguised under the economic power tussle between the western bloc and the rest of the world) – renewed labour internationalism is labours response to this.
Given that labour is on the defensive at this point, the challenge for labour is to find any possible leverage to increase its power relative to that of capital. In the end, the best alternative for labour is to make the most of any opportunity available, to aid in further organising to increase its influence in the new world order and not so much agitating changes in employment relationship, or agitating changes in labour market reforms, or critiquing fairness in labour standard or otherwise. The best alternative for labour is to call for union strategies that combine mobilisation through political and industrial channels with construction of transnational structures with capacity to link together trade union and civil society efforts at the grass root, national, regional, and global levels. In such a situation the interaction with public interlocutors with political authority to regulate the relevant markets for capital and labour is a crucial prerequisite for the construction of viable structures of industrial relations and trade unionism (Crouch 1993, Hyman 2001). In this way Trade Union can build organisational structures and links that can pool resources to equip their global network with the necessary clout and mandates to coordinate and influence industrial policies across different regions around the world.
REFERENCE.
Arkers. P and Payne.J (1998) British Trade Union and Social Partnership: Rhetoric, Reality, and Strategy. An International Journal of Human Resource Management, Vol9,No3,pp529-549.
Taylor.P and Ramsay.H(1998)Union Partnership and HRM: Sleeping with the Enemy? An International Journal of Employment Studies,Vol6,No2,pp115-143.
Rainbird.H (2004) Assessing Partnership Approaches to Lifelong Learning: A New and Modern Role for Trade Union, In: Stuart M and Martinez Lucio.M (eds) Partnership and Modernisation in Employment Relations. Routledge Publishers, London.
Yaw.A Debrah (1999) Introduction : Globalization, Employment and the Workplace- Responses for the Millenium.
Centre For Economic Performance(2002) The Internet and the International Trade Unionism. Being Paper Presented at the Networked Labour Conference Held at the London School of Economics 6/12/2002.
Giddens .A (1990) The Consequences of Modernity, Cambridge .
Dolvik .J (2001) European Trade Unions: Coping With Globalisation. Being Paper Presented at the ETUC Conference on Globalisation, Europe and Trade Union, Brussels 7/02/2001.
Dolvik, J. E. ed. (2001) At Your Service? Comparative Perspective on Employment and Employment in the European Private Sector Services, PIE Peter Lang, Brussels
Chaykowski.R and Giles.A (1998) Globalisation ,Work and Industrial Relations, Relations Industrielles- Industrial Relations, Vol53,No1,pp3-12.
Hamel .G and Prahalad.C(1994) Competing for the Future, Havard Business School Press, Boston.
Laabs.J (1993) Why HR is Turning to Outsourcing. Personnel Journal.
Wilmot.H (1997) Rethinking Management and Management Work: Capitalism, Control and Subjectivity. Human Relations, Vol50,No11.
Cooke.F(2006) Outsourcing of Public Services and Its Implications for Managerial Knowledge and Careers. A Journal of Management Development,Vol25,No3.
Heery .E (2002) Partnership Versus Organising: Alternative Future for British Trade Unionisms. Industrial Relations Journal, Vol33,No1,pp20-35.
Kochan.T and Lansbury .R (1997) Lean Production and Changing Employment Relations in the International Auto Industry. Economic Industrial Democracy, Vol18,567-579.
Brien.R(2000) Workers and World Order: The Tentative Transformation of the International Union Movement. A Review of International Studies, Vol26,533-555.
Waddington.J(2003) Heightening Tension in Relations Between Trade Unions and the Labour Government in 2002. British Journal of Industrial Relations, Vol41,No2,pp335-358.
Bach.S(2002) Public Sector Employment Relations Reforms Under Labour: Muddling Through or Modernization? A British Journal of Industrial Relations,Vol40,No2,pp319-339.
Global Labour Institute (1999) Notes on Trade Unions and the Informal Sectors. ILO Bureau of Publication, Geneva.
Crouch.C (1993) Industrial Relations and European State Traditions, London: Sage.
Visser.J (1995) Trade Unions From a Comparative Perspective, In Rysseveldt.V etal (eds) Comparative Industrial and Eployment Relations, London Sage.
Waterman.P (1998) Globalisation, Social Movements and New Internationalisms.Mansell. London
Luce .S (2005) The Case for International Labour Standards- a Northern Perspective. An IDS Working Paper.
Hanami. T(1997) Globalisation of Employment and the Social Clauses. Being Paper Submitted to the 1st World Law Congress “ Motion in Law”, Brussels,9/09/1996.
Crouch. C (1993) Industrial Relations and European State Traditions,Sage ,London.
Hyman.R(2001) Understanding European Trade Unionism Between Market,Class and Society, Sage, London.
BIBLIOGRAPHY.
Cooke .N(2005) Excercising Power in Prisoners Dilemma: Transnational Collective Bargaining In an Era of Corporate Globalisation? Industrial Relations Journal, Vol36,No4,pp283-302.
Munck.R and Waterman.P (1999) Labour Worldwide in the Era of Globalisation: Alternative Union Models in the New World Order, Macmillan,London.
Waterman.P (2001) Globalization, Social Movements and the New Internationalisms. Continuum: London.
LBS.Leicester.
stoikmusah@gmail.com
This essay critically examine the effect of internationalisation of economic activity for employees and labour movement. It considers the contribution of Multinational Corporations in the subject and trace the origin by linking it to the neo liberal structural economic reforms by powerful western countries. It also highlight how globalisation has accelerated trade union movement in the international level. In the end, it argues the inability of an international code of workers right to manage the impact of globalisation on labour worldwide and introduce possible solution for labour to build international working class power.
Literature abounds with various definitions of globalisation. Perhaps this may arise as a result of the fact that the concept has achieved a huge degree of popularity in recent years. This is evident judging by the number of publications on the subject in various social and humanities disciplines. According to Giddens (1990), globalisation is the intensification of world wide social relations which links distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa. This involves a change in the way we understand geography and experience localness. In a sense globalisation implies a borderless world. Under this perspective, the speed of communication and exchange, the complexity and size of the network involved, the volume of trade that is carried out within short time frame has all given this phenomenon a peculiar force that attract attention(Yaw 1999 ).
From industrial relations perspective, this phenomenon is transforming events in the workplace. It is also changing the nature of the entire world labour markets and employment practices (Dolvik 2001). For example there is evidence( Chaykowski and Giles 1998) suggesting that the transformation of working life in some European Union countries have been greatly affected by this phenomenon. For instance, the emergence of the service economy in developed countries, changes in work systems in developed countries(i.e. the rise of contingent workers, and flexible work practice), rapid technological innovations worldwide(i.e. digitalization), cultural and ideological changes around the globe, the rise of education and business schools, the evolution of gender relations in the workplace etc.(Dolvik 2001)
Equally important is the separation of work from home. Organisation has adopted new technologies that involve people in less face to face interaction. Today most organisations engage in outsourcing some aspect of their operations to enable them concentrate on those activities in which it can establish distinct core competences (Hamel and Prahalad 1994). These development has been brought about by the frequent pressure from organisations stakeholder groups on management to constantly streamline the way business operates. Under this consideration, it becomes interesting to know that outsourcing has become one option on a larger menu of strategies required for efficient business processes. This is because other strategies as corporate restructuring, downsizing, the use of child labour, redundancy and plant closure are sometimes utilized as credible alternative to effect improve business performance (Laabs 1993 )
Within the parameters of these manifestations, tension and pressure emerge in the contractual relationship between capital owners, management and employees (Willmot, 1997). Employees are therefore disciplined by a variety of audits and performance monitoring processes which are intended to secure their cooperation and trust (willmot, 1997). The employer- employee relationship becomes essentially a cost- profit relationship which is governed by a tight financial framework involving penalty for failing to meet performance criteria (Cook, 2006). Employees are sometimes subjected to accept frequent wage cuts and reduction of pension benefits in exchange for job security- since in most cases companies threaten to shut down plants and move to areas where the cost of production is less- which in some cases has resulted in competition between workers from different countries who possess thesame knowledge skill and ability. Like for instance Studies(Heery 2002) on this subject reveals that from the 1980s through the 1990s changes in the UK domestic market exposure to globalisation has frustrated the capacity for trade unions to either block via collective bargaining the transfer abroad an organisation’s operations or block changes in staffing levels using immigrant workers(Heery 2002). This form of unionism based on bargaining is becoming unsustainable as organisation employ the use of sophisticated human resource management practices as selective recruitment, the use of contigent workers and contract workers to promote lean workforce management and greated levels of commitment among employees in the organisation. In consequence, rendering trade union activities less effective among employees (Kochan and Lansbury 1997).
However these actions on the part of multinational corporations can be traced to the benefit accrued from the neo liberal policies of powerful economies after the cold war((Brien 2000 ).This is because at the end of the cold war, the variety of policy responses that have been initiated to deal with structural economic transformation and challenges of increased competition across different nation states was geared towards the promotion of labour market flexibility. This was also carried out as an remedy to allow these countries competitive among other nation states. As a rsult policies as deregulation and privatisation of government managed institutions were introduced to facilitate increased competition between private actors(Brien 2000). Automatically the continue support given to these structural economic transformation by the state simultaneously challenge the power of organised workers. For instance, the extent of independent workers organisation activities interfering in the market was reduced(Brien 2000). Legislation backing these activities- that was required for workplace union participation was also removed and market forces were allowed freedom to dominate the scene(Brien 2000).
Within this broad legal paradigm, scholars(Dolvik 2001) of industrial relation will argue that when such legislative provisions that supports unionisation purpose is removed Trade Union hardly possess strong legal backing to effectively utilize their core power resources of national unionism, which is the legal backing to mobilise membership, engage in collective bargaining, take industrial action, channel voice at the workplace, and use these sources and its weight in elections to gain societal influence through various institutionalised modes of interest representation and political exchange with the state. For example in the UK the neo-liberal policies of the conservative government was bent on weakening trade union influence in the work place and to create circumstances within which management could re assert authority among employees (Waddington 2003).
In the same way the labour constitutional reform of the 1990 which was accompanied by a parallel initiative to diversify sources of funding to the union also contributed to the weakening of the scope of unionisation mobilization in the United Kingdom(Bach 2002; Waddington 2003). This was the main point of conflict between the unions and the party in Tony Blairs second term. The aftermath of this conflict of interest was the questioning of the source of financing the labour party, the eventual expulsion of the rail, marine and transport union for supporting non union labour candidates, the withdrawal of the fire brigade union and the success in union election of anti-Blair candidate to name just a few (Bach 2002).
All these restriction on the legal possibility for Trade Unions to mobilise gave multinational companies more influence to benefit from these neo- liberal policies. And with the help of transnational institutions, as the World Trade Organisation (WTO) and the International Monetary Fund (IMF), other countries that were seeking structural adjustment policy help from the IMF and its sister institutions i.e World Bank- were convinced of these recipes to economic recovery(Brien 2000). It is for this reason that studies on comparative industrial relation assert that multinational corporations and transnational institutions are the key driving force of internationalization of economic activities (Brien 2000).
Consequently, the effect of this evolutional process implies that labour will have to seek new ways to make its existence relevant in the new world order. A movement in this direction is seen in trade union alliance with company’s management in most European Union Member state multinational corporations. This is facilitated by the European Union (EU) workers council directive, which in recent years has lead to the setting up of six hundred and seventy European Workers council in multinational companies operating in European Union states(Dolvik 2001). In the United Kingdom this is reflected in the activities of state institutions as The Department of Trade and Industries- Partnership Funds, which has provided support and knowledge resources to locate new management-union relations(Rainbird 2004).One advantage of such approach to labour policy is that it sometimes serves as a buffer for home company’s - against the power of global market force and also afford unions an opportunity to deepen their institutional roles at various levels at the workplace(particularly strategic areas)(Arkers and Payne 1998). On the other hand, such policy can restrain trade union core power resources of national unionism and even force Trade Union to legitimate workplace change programme that trade off employment security with greater work intensification (Taylor and Ramsey 1998).
Other recent development as the above is the manner at which Multinational companies have now become more dependent in public reputation and credibility. This has made companies more sensitive to campaigns and boycott instigated by Non Governmental Organisations, sometimes in cooperation with Unions to disclose dubious social, environmental and labour practices. In a way this increasing campaign for ethical trade and labour practices has lead to the increasing concern for corporate social responsibilities- an avenue which trade union has exploited greatly to their advantage.
Other recent development for Trade Union as the above is the gradual development of an international trade union structure. This attempt to stimulate renewed labour has led to an inter- relationship with other social movements globally(Brien2000). For instance a grass root mobilisation with focus on women, youth and immigrant workers (since these group of individuals consist of a large part of the working population) (Global Labour Institute 1999). This broad outlook has forced unions to expand its activity in international trade unionism.
A recent development in this direction in Europe is associated with the build up of viable systems of industrial relations, unionism and social protection in some Eastern European Countries and some loosely Trade Union network in other part of the world (Global Labour Institute 1999).This is aimed at making sure that multinational companies do not exploit these countries as havens for socially unprotected, low cost production.(Dolvik 2001). It is however interesting to also include here that the key drivers of global unionism have observed that building trade union strength internationally depend on the organization of the informal sector. This is because a vast majority of the world’s workers, including the poorest - who most need self-defense through organization - are in the informal sector (Global Labour Institute 1999). For instance in Africa, Asia, Latin America, Central and Eastern Europe evidence indicates that the informal sector is rapidly growing as State enterprises are privatized and unemployment increases (the same applies to China).(Global Labour Institute 1999).
Amidst this development a report by the Global Labour Institute (1999) reveals that these informal sectors workers are already organizing partly- into associations which are sometimes unknowingly referred to as Non Governmental Organizations which often have international networks. Unions on their part have observe this trend, that activities and organizations created this way are valuable resources and point of leverage for the entire trade union movement at the international level( Global Labour Institute 1999). In other words if we consider the amount of employees that has been dispersed away from the formal sectors into informal enterprises due to excessively contracting out of various organizational business processes- which eventually has lead to the decline in TU membership in the workplace/formal sector. It is common sensical that by organizing this loosely held workers base, trade union can acquire the critical mass in terms of membership and representativity it lost in the formal sector. For this reason Union has taken this bold step by specifically tailoring programmes to recruit and organize informal sector workers.
An example has been the Self Employed Women’s Association (SEWA) in India, which started twenty-five years ago with a few hundred members and now numbers over 210,000 members in four Indian federal states (Global Labour Institute1999). SEWA organizes home workers, street vendors, paper pickers and refuse collectors, etc. In return the association has created an infrastructure of flanking services for these workers i.e a bank providing microcredit, a vocational and trade union training program at different levels, producers’ cooperatives (artisans, agricultural producers), service cooperatives (health, housing) etc. Also in the UK, are many informal enterprises local projects (NGOs or local authority schemes), and other similar campaigning organization called the National Group on Home Working. This group has led the campaign for home workers to be included in the national minimum wage and has been a major influence on government policy, public awareness and trade union policy on home working (Global Labour Institute1999).
However, in as much as this developments by unions is praised in some quarters, critics condemn the lack of coherence and integration of Trade Unions structures globally unlike their European case, which historically in many aspects remains the backbone of any international union movement worldwide(Dolvik 2001). For instance the present International Trade Union bodies lack strong links with other Trade Union bodies in developing countries and other emerging economies that is playing host to many multinational corporations off shoring operations (Dolvik 2001). The reason for this has been their limited ability to secure political influence through institutionalised representation, and political channels across these areas (regions). For this reason the Trade Union movement in most cases rely on indirect mode of representation using these nation states national affiliate to reach out to members (Dolvik 2001).
Another implication of these recent development for Trade Union is in the various internal problems generated between key International Trade Union Bodies, as they move to revitalise the movement amidst the increasing effect of powerful globalisations forces(Brien 2000, Dolvik 2001). The various International Trade Union bodies has been confronted with magnitude of political reinterpretations of individual objectives and divergent positions on various issues on how to reposition the movement internationally. This has lead to the rift between the ICFTU and the WCL- the two global trade union bodies that should be in the forefront of driving global trade union change agenda and international diplomacy(Crouch 1993, Visser 1995). These obstacles has been compounded by the international absence of adequate political third parties and institutions with rule making power, which historically played a crucial role in the evolution of unionism in Europe(Crouch 1993,Visser 1995).
Furthermore the internet has also contributed to the changing Trade Unions too. For instance the global transnational trade union networks discussed above is being made possible as a result of the internet. This is because new communication technologies create new possibilities for trade unions. Therefore by increasing investment on cyber unionism, to develop transnational union information networks and new ways of mobilisation, unions can now communicate with their entire membership on a daily basis, using email and the web (waterman, 1998). Historically information sharing among members was limited by tight budget discipline on the number of printed newsletters and mail to be distributed to members- which sometimes do not get to their destinations(Centre for Economic Performance 2002). Today the internet has played a big role in strengthening unions by helping to share information across continents to union members. It has also facilitated new ways of mobilisation and recruitment strategies i.e. the emergence of cyber unionism.On the other hand the Internet is a disruptive, even a threatening, technology for those who currently run the trade union movement through traditional, centralised, hierarchical power structures (Centre for Economic Performance 2002). Like for instance, when an individual member obtain full details of an agreement any time of the day or night from the union's Web site, the power of the head office official to control and interpret this information is challenged (Centre for Economic Performance 2002). For this reason, progressive officials will see this new technology as opportunities to democratise the union and empower members, but many of them will feel challenged by technologies that they do not understand and cannot control and they will endeavour to limit its use and development. (Centre For Economic Performance2002)
Another topic for discussion is the increasing literature on the issue of setting a “fair labour standard” globally. This is aimed at reducing the burden of capital flight on labour. In this context, the key issue of concern is on the question of universality of the standards sort, and the appropriateness of the legal enforcement of such standard. Under this consideration, scholars (Hanami 1997, Luce 2005) of industrial relations will argue that many people in the world consider workers right -as presented in various types of legal documents, have their roots in the west and do not belong to them, i.e. secular Middle East and Chinese societies. In other words, these values that are most important in the west are less important in these societies. This is seen in politics and other literature studies where writers and politicians strongly criticize the effort of the west in inducing other people to adopt their ideas concerning democracy and human rights.
For instance Luce (2005), argues that if some of the international labour organisation conventions are ratified universally, it can result in putting workers and employers of poorer countries at a competitive disadvantage. This is as a result of the changing picture of industrial relations and labour market in different parts of the world (i.e. countries where majority of employment is home base production or micro enterprise which has nothing to do with trade union).
Second, is the issue of enforcement of these international standards, which- in some poorer countries can come at a high economic cost(Hanami 1997). For example, the argument for enforcing a universal labour standard will lack strong popularity in poor countries where families only survive through child labour or other labour abuse to children i.e unpaid work in a family business or other informal enterprise. Under these consideration, the only reasonable proposition for setting up a fair international code of workers right can only arise if such provisions allows for varying its strictness or allowing for temporary exceptions in some less competitive countries(Hanami 1997).
Consequently, from the above analysis and discussion so far on the above subject issue, one will argue that the debate on globalisation vis a vis capital- labour relationship is a zero sum game. Taken a holistic perspective on the dynamics of the entire phenomenon discussed one is left with little doubt that, as the influence of big capital grows the influence of labour recedes . At the same time the reverse will be the case if labour influence in the new world order grows, as it will be seen that the influence of capital will recede. The reality is that most of the agenda behind the origin of globalisation has been about expanding the influence of capital and protecting multinational companies investments in other countries (disguised under the economic power tussle between the western bloc and the rest of the world) – renewed labour internationalism is labours response to this.
Given that labour is on the defensive at this point, the challenge for labour is to find any possible leverage to increase its power relative to that of capital. In the end, the best alternative for labour is to make the most of any opportunity available, to aid in further organising to increase its influence in the new world order and not so much agitating changes in employment relationship, or agitating changes in labour market reforms, or critiquing fairness in labour standard or otherwise. The best alternative for labour is to call for union strategies that combine mobilisation through political and industrial channels with construction of transnational structures with capacity to link together trade union and civil society efforts at the grass root, national, regional, and global levels. In such a situation the interaction with public interlocutors with political authority to regulate the relevant markets for capital and labour is a crucial prerequisite for the construction of viable structures of industrial relations and trade unionism (Crouch 1993, Hyman 2001). In this way Trade Union can build organisational structures and links that can pool resources to equip their global network with the necessary clout and mandates to coordinate and influence industrial policies across different regions around the world.
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Rainbird.H (2004) Assessing Partnership Approaches to Lifelong Learning: A New and Modern Role for Trade Union, In: Stuart M and Martinez Lucio.M (eds) Partnership and Modernisation in Employment Relations. Routledge Publishers, London.
Yaw.A Debrah (1999) Introduction : Globalization, Employment and the Workplace- Responses for the Millenium.
Centre For Economic Performance(2002) The Internet and the International Trade Unionism. Being Paper Presented at the Networked Labour Conference Held at the London School of Economics 6/12/2002.
Giddens .A (1990) The Consequences of Modernity, Cambridge .
Dolvik .J (2001) European Trade Unions: Coping With Globalisation. Being Paper Presented at the ETUC Conference on Globalisation, Europe and Trade Union, Brussels 7/02/2001.
Dolvik, J. E. ed. (2001) At Your Service? Comparative Perspective on Employment and Employment in the European Private Sector Services, PIE Peter Lang, Brussels
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Hamel .G and Prahalad.C(1994) Competing for the Future, Havard Business School Press, Boston.
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Cooke.F(2006) Outsourcing of Public Services and Its Implications for Managerial Knowledge and Careers. A Journal of Management Development,Vol25,No3.
Heery .E (2002) Partnership Versus Organising: Alternative Future for British Trade Unionisms. Industrial Relations Journal, Vol33,No1,pp20-35.
Kochan.T and Lansbury .R (1997) Lean Production and Changing Employment Relations in the International Auto Industry. Economic Industrial Democracy, Vol18,567-579.
Brien.R(2000) Workers and World Order: The Tentative Transformation of the International Union Movement. A Review of International Studies, Vol26,533-555.
Waddington.J(2003) Heightening Tension in Relations Between Trade Unions and the Labour Government in 2002. British Journal of Industrial Relations, Vol41,No2,pp335-358.
Bach.S(2002) Public Sector Employment Relations Reforms Under Labour: Muddling Through or Modernization? A British Journal of Industrial Relations,Vol40,No2,pp319-339.
Global Labour Institute (1999) Notes on Trade Unions and the Informal Sectors. ILO Bureau of Publication, Geneva.
Crouch.C (1993) Industrial Relations and European State Traditions, London: Sage.
Visser.J (1995) Trade Unions From a Comparative Perspective, In Rysseveldt.V etal (eds) Comparative Industrial and Eployment Relations, London Sage.
Waterman.P (1998) Globalisation, Social Movements and New Internationalisms.Mansell. London
Luce .S (2005) The Case for International Labour Standards- a Northern Perspective. An IDS Working Paper.
Hanami. T(1997) Globalisation of Employment and the Social Clauses. Being Paper Submitted to the 1st World Law Congress “ Motion in Law”, Brussels,9/09/1996.
Crouch. C (1993) Industrial Relations and European State Traditions,Sage ,London.
Hyman.R(2001) Understanding European Trade Unionism Between Market,Class and Society, Sage, London.
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Cooke .N(2005) Excercising Power in Prisoners Dilemma: Transnational Collective Bargaining In an Era of Corporate Globalisation? Industrial Relations Journal, Vol36,No4,pp283-302.
Munck.R and Waterman.P (1999) Labour Worldwide in the Era of Globalisation: Alternative Union Models in the New World Order, Macmillan,London.
Waterman.P (2001) Globalization, Social Movements and the New Internationalisms. Continuum: London.
Thursday 10 April 2008
How Tacit Knowledge can be used to improve organisational performance.
stoik musah,
LBS,Leicester.
stoikmusah@gmail.com
This essay will describe how tacit knowledge management practice can be utilized in an organisation to improve its organisational, market and financial performance alongside how there is more competitive value to its practice as opposed to explicit knowledge. With emphasis ascertaining the application of the various model/framework to tacit knowledge management practice in the organisational context. With reference to the above, the way business and organisational activities are carried out is increasingly changing, as recent years has seen an unprecedented growth in the speed of product and service change as a result of the application of information (Gulati and Zajac 2000). This increasingly turbulent environment has forced organisation to become more interested in new ways of gaining and sustaining competitive standing in the product and service they offer. Firms tend to devise continual strategic change process to manage and mobilized its resources through time for a competitive response. In this situation, the capacity of a firm to identify and understand the nature of competitive force and how they change with time will contribute to its competitive standing (Hosley, Lau etal 1994).Similarly the increase efficiency resulting from the process cited above allows for firms to specialize in the value creation activities supported by their own distinctive competence and knowledge (Janillo 1988,Langlois and Robertson 1995,Park 1996).To effect this process organisation engage in backward integration of breakthrough innovation in its human capital resources for deeply held and highly personal form of knowledge emerging most often, from the creative power of the mind(Mascitelli 2000).It is believed that a firms capability of effectively utilizing this source of knowledge to provide insight for creating value for customers need will provide significant impact on its market and financial performance.
However this concept of value has been given different shades of meanings by authors as Hakasson and Snehota (1995),Norman and Ramirez(1993),Porolini(1999) and Porter(1985). The central core issue among these various literature studies on this subject is in the area of in-depth knowledge on the value system and activities provided by organisations resources and to what extent can these value activities be effectively utilized. As value activities are essentially based on knowledge –the value of determination and motivation from employees is also related to the level of codification of that knowledge .The aspect of how well known, the capabilities underlying the value activities is related to- how easily the underlying knowledge can be assessed and shared among employees. Although such original thinking may manifest itself in a variety of ways .This has caused both scholars and Human Resource Practitioners to dig deeply into the source of creativity and insight. The works of Mascitelli (2000) reveals evidence of studies that highly creative artists, scientist, mathematicians etc often displays exceptional intelligence most often when confronted with a task. Mascitelli(2000) provides a plausible explanation for exceptional intelligence as above with reference from the works of Polanyi (1996) on “Tacit Dimension”. Polanyi(1996) argues that the portion of individual knowledge that is readily accessable to us is only a small fraction of the totality of our knowledge.The writer asserts that, in a sense, the knowledge that we can express in speech and in writing is only the tip of the entire human intellectual framework. Beneath the surface of conscious thought lies a vast proportion of tacit knowledge derived from a lifetime of experience ,practice ,perception and learning .
To Polanyi(1996), the essential nature of tacit knowledge embodies a lifetime of experience, indwelling by the innovator ,with the particulars of his chosen field, such that it becomes an intrinsic part of his mental makeup. This particulars, impact a kind of vision of things not yet known. In a sense, tacit knowledge allow you to see solutions without the conscious ability to explain your vision to pursue your aspiration by your action. From the standpoint of the firm, tacit knowledge problem solving skill is evident and seen in the multidisciplinary problem solving skills of Senior Researchers and Project Team leaders to develop visions that transcends precise details and subjects, thereby enabling the fusion of multiple facets of scientific knowledge for practical purposes and work processes. In the same way Quinn(1992), in his work on “Managing Proffessional Intellects” posit that pure invention most often is in the area of specialty of such highly capable individual. This is because they are best able to recognize the interrelationships among technologies required for value creation and move in the direction to visualize and provide complete solution to it. This is contrary to the views of the relationship between action and tacit knowledge explored by Hedesstrom and Whitley(2000), who argues that tacit knowledge is merely difficult to explore by the knowledge bearing expert to provide solutions to managerial concerns. What they put forward as a basis for their argument was that tacit knowledge almost from its definition can not be codified, in essence: because of where it is –typically in the minds of individuals. To them tacit knowledge is the knowledge you never see. This claim emerge from a similar distinction made by Sutton(2000) in his work on” knowledge and Conscious Execution of Task”. Sutton distinguish between the human state in conscious execution of a task and the human state in unconscious execution of same task. To Sutton unconscious knowledge cannot be directly assessed. If this being the case, how do you trust judgement from such human mental state .To Sutton how does reason prevail to make sense out of such judgement. Clarification was given on the above assertion by Zander and Zander(1993)that they maybe, infact possibilities of directly accessing this unconscious knowledge when it is converted to other form,so as to utilize the specific action in it, which an organisation can benefit from under certain conditions i.e management routine practice, specific human interaction context, when the pace performance is slow and pace variations are tolerable by the individual and when a standardize controlled context for the performance is assured( Zander and Zander 1993 cited in Howells 1999).
Similarly other related ideas were drawn from the works of Collins and Kush(1998) who in Hedesstrom and Whitley sense argue that, since tacit knowledge is personalised, and it resides in the mind of an individual. Once it is processed in the mind of individuals it becomes information. When this information is articulated or communicated to others in the form of data via computer output or written words then the conversion process can occur as discussed in the works of Zander and Zander (1993).Under this circumstances, in the organisation context, informations that are express in the above form is said to appear in explicit form or source of explicit knowledge.In the organisation, explicit knowledge is technical and carefully codified in a hierarchy of database or manuals (Smith 2001).For example explicit knowledge implies factual statements about issues as material properties, technical information, and routine manual instructions. Unlike tacit knowledge, explicit knowledge has the potential to explain why things work. As a result of the ease to communicate and store explicit knowledge in the organisation, there is little chance of losing explicit knowledge stored in files, since it is available in organisational repositories. Such knowledge can be accessed and used easily by anyone in the organisation unlike tacit knowledge(Grant1996).In this regard Hall and Andrrani(2003) argued that explicit knowledge is internally safe. However, plausible as this seems, explicit knowledge management practice in the organisation amidst heavy market competition involves heavy investment in electronic systems (Eginton 1998; Sbarcea 1998).Alternatively if that being the case, a vast space is needed to keep documents. In this regard Boral(2002) argues that this involves excessive documentation. Far greater than this is that, there is a high risk of imitation –if competitors gain assess to these document; leading to the loss of actual competitive advantage. In this situation explicit knowledge is externally vulnerable(Hall and Andriaini 2003).At this end, if we contend that the knowledge base of an organisation between the two ends over emphasis one at the expense of the other – a paradox exist, which leads to the question of which among tacit and explicit knowledge there is more competitive value in facilitating its exploration and management in the organisation, amidst the accelerating dynamics of market environment. Following this reasoning several scholars argued that tacit knowledge occupies the centre stage in the development of more competitive value (Nonaka 1991).
These authors offer analogies between breakthrough innovation and artistic creation. They affirm that the relationship between these two forms of knowledge expression is truly intimate. But still innovators, often have a difficult time expressing in words a vision derived from years of experience and indwelling- which brings to the fore again, the distinction among the two knowledge forms. They(Innovators) often experience a compelling desire to express themselves to pursue a hidden truth that demands talents to be revealed .To this end creating value in future market may become increasingly dependent on the ability of innovators to exploit tacit knowledge as a medium for forming deep connection with customers needs. This is because, the merging of tacit knowledge logical insights with an emphatic understanding of human needs has the potential to capture market attention and inspire customer loyalty. In practice when this singular act is reinforced by appropriate managerial actions, the capacity of employees to merge multiple sources of tacit knowledge into a breakthrough product can represent a truly unique competitive advantage and value to the organisation (Mascitelli 2000).
Strategically from the standpoint of the firm , the tacit knowledge content in the heads of employees can be a powerful source of great insight to creativity. The ability of the organisation to nurture such knowledge source may be more important to longterm competitive value than the benefits of even the most successful business product line of the organisation. Recent literature studies has emphasise the importance of this form of knowledge assets(Quinn 1992;Burton 1995). Quinn (1992) posit that tacit knowledge intangibles as know how, design expertise, market insight e.t.c largely determine the value of most product .A good illustration of such knowledge base tangibles and its antecedent effect is the significant effect company loyalty card take part in , among major UK retailers operations today. Contrary to the popular belief that Tesco Plc competitive advantage in the UK is its economy of scale- is that the clubcard which conveys an array of material benefits across virtually every discipline of its business is Tescos most potent weapon in the UK retail industry(Financial Times 11/12/2006).With the loyalty card which was introduce by Tesco ,you can gain insight on a customers shopping habit and you can judge his/her social class. Brand managers can track who is buying their products or responding to promotion and in turn make better decision.
This was a strong concept generated by creative minds from the companys knowledge assets which was first treated with scepticism by other retailers when it was first introduced by this company. By the time other retailers realized that the loyalty card is the big brother of the shopping world –the company was far ahead of these retailers. Although the concept has being copied by other retailers-core capabilities as well spring of innovation as the above concept from employees, are so steeped in the tacit cultural social and intellectual environment of a firm that they cannot be discern by outsiders (Leonard Barton 1995).In his work on “The Wellspring of Knowledge” Leonard Barton (1995) quoted a company CEO of suggesting to take his rival competitors on a detail tour of his facility and give away nothing, this is because they cannot take the knowledge and insight home with them. Infact the major drawback for the case of explicit knowledge as a useful competitive knowledge tool is its vulnerability to being transferred easily. Unlike tacit knowledge that is difficult and costly to transfer, making it considerable less mobile than explicit knowledge, as a result firms can possess unique capabilities that are hard to copy and invisible to outside observers. This can be carried out by personalising or codifying this particular type of knowledge using information technology support tools depending on the balance of series of competitive strategic knowledge management options applied by organisation (Alavi and Leidner 1999).The application of the codification strategy allows knowledge to be distinct and independent of individuals. While knowledge management strategy as personalisation allows the channelling of individual strategies to the right place when it is needed. Knowledge management strategies involving codification can be well facilitated by technologies as database. For example Accenture Knowledge Space System Database -where descriptions of management consultant interventions and outcomes are described, alongside Xeros Eureka Database System –where the experiences of service engineers are captured is a good illustration of the above knowledge management strategy practice by organisations(Quin, Andersen etal 1996). Similarly the popular Mckinsley Institute Development Network Database which is utilized by its users and members to facilitate organisational learning still fall under this category.
By contrast the personalisation of tacit knowledge are often sparingly supported by technology because of the nature of its form –they have a greater emphasis on specific human interaction and relationship building(Connell,Klein etal 2003).The works of Alavi and Leidner (1999) on “Knowledge Management System Challenges” highlight clarifications on the above subject.They argued that for one persons personalised knowledge to be useful to another, such knowledge must be communicated in such a manner as to be interpretable and accessible. Since knowledge management is a systemically organized process of acquiring, organising and communicating tacit knowledge of employees for usage and accessability by other employees for effective work functions. Put differently this suggest that if a cognitive intellectual activity to tacit knowledge management practice is adopted, Brown(1998) argues that; then the issues facing those responsible for its management are less related to creation, innovation and value added but more concerned with capture and integration. Such a perspective is contrary to the definition of knowledge management from a systemic view and its transfer perspective. On the other hand if knowledge cannot be shared , it will inevitably have limited organisational value. However Daveport and Prusak (1998) considers issues as these cited by Brown(1998) can be redressed by attending to cultural issues eminent within the organisation .They emphasised that, this can be facilitated by making knowledge more visible in the organisation by developing and encouraging activities such as knowledge sharing. For instance Ernst and Young Incentives to stimulate knowledge sharing are used in routine work performance reviews. Employees who spend a lot of time helping each other and adding to the corporate knowledge base are openly rewarded and recognized (Wah 1997).Besides Merrill Lynch rewards its employees for sharing knowledge with others based on how much direct help they give colleagues. The degree of high quality person –to-person dialogue a partner has with others can represent as much as one quarter of his or her annual salary (Quinn,Anderson. etal 1996; Hansen, Nohria. etal 1999).In the same way Andersen worldwide shares its knowledge among its customers anywhere in the world through its ANET electronic system links of 82,000 people operating in 360 offices in 76 countries (Quinn.,Andersen,etal 1996). Similarly to add value in an organisational context , tacit knowledge utilization management process, involves stimulating creativity and innovation within people and intergroup function ( Harrison 2002).It involves putting knowledge source (people) in the right direction , developing their commitment to listening to the voice within , and providing data to demonstrate the improve result achieve( Harrison 2002).
However there are different and relative model framework to which tacit knowledge can be utilized to add value to the organisation. Perhaps the most revealing works on tacit knowledge was performed by Nonaka and Takeuchi (1995), and a similar work was also performed by Talcott Parsons (1951) in organizational learning systems model and general theory of social action. One peculiar aspect among these models is the emphasis on specific organisational factors which gave the models significance in their application. These factors- if when influenced by effective knowledge management practice in line with organisational human resource management practice in the work place, will help enhance the capability of the whole organisation to make significant progress. This factors are further categorised into factors within the individual(knowledge source) and situational factors outside the individual. Factors within the individual comprises of intangible resources as memory, communication, and motivational system while situational factors outside the individual consist of issues as leadership style and organisational culture, in other words factors which more or less describe the situation in which tacit knowledge is utilized(.Koshinen 2003). Memory system consist of ones experience, mental models and intuitive ability. It is believed that multi faceted experience of an individual increases his or her possibilities to solve problems arising in a task. That is, the capability of an individual to solve a problem is dependent on the richness of his or her existing knowledge structure(Lyles and Schwenk 1992; Bower and Hilgard 1981).The mental model on its part, provides the context to view and interprete new material information(Argyris 1989,Kim1994).Mental models can be developed in the workplace if there are constant provision for teamwork where participants engaged in cross fertilization of ideas. Similarly it is also important to know that the tacit knowledge resource of an organisation rest within the mental models of its personnel. From the aforementioned analysis discussed so far, what is critically important in the application of these factor is –if it is well identified by human resource practice in the workplace .This will be of valuable help to make a perfect fit to what is required from the work environment to bring about innovative ideas of value.
Intuition on its part is the end product of tacit knowledge acquisition (Reber 1989). It operate to assist an individual to make choices and to engage in a particular class of action –to have a sense of what is right and proper, and “to get a point” without really able to verbalize what it is that one has gotten (Reber 1989). For example innovators have rich intuitions about complex problems which they can not explain how they come about the situation in details (Stahle and Gronroos 1999;Cooper and Sawaf 1997).Individuals with deep insight as the above are common in most organisation. It is believed that records and experience will help to identify these individuals and engage them in organisational roles which will help them stimulate these qualities, particularly organisational roles in operational research and development. Similarly the practice of interaction through face to face communication allows organisation personnel to get to know each other through building and maintenance of strong social networks that generate trust and commitment. Put differently, through constant communication people learn to trust each other. Koskinen (2003) stress that they can depend on one another, regardless of the situation. This kind of relationship build organisation social capital, which provide the foundation for sharing tacit knowledge that creates the conditions necessary for high task performance. In the same way (Weick 1995) stress the need of close proximity to foster communication in his works on “Collective Mind in Organisation”. He posit that if people want to share meaning it needs to be carried out in a place they choose where they can talk about their shared experience in close proximity. Architectural design and physical building which regulate this social interaction should be removed. Furthermore factors such as commitment and trust are important functions and motivational components that affect the willingness and openness of people in harnessing tacit knowledge in an organisation (Senge 1990). Several literature studies of motivational theories abound in organisation behaviour study, where employees can be bounded to work task /duties by the organisation, and these are content theories, process theories, and equity theories(Pionton 2006).Within these theories, knowledge creation is anchored in the commitment of its holder and receiver. This implies that knowledge is related to human action stemming from individuals level of motivation to the task(Nonaka and Takeuchi 1995).
Furthermore the possibilities and willingness of people to share tacit knowledge in the organisation in a way which will be of valuable benefit to the organisation financial and market performance is for the organisation to provide them with an environment that allows learning and innovation to flourish (Drucker 1993). This is made possible when the organisation leadership style connotes support for emerging processes with collaborative altitudes and skill towards reinforcing reciprocal relationships that facilitates dialogue and learning(Nonaka 2000, Jones 1996). In the light of the above it is believed that the leadership that create new knowledge is largely a matter of giving the people creative freedom within a framework devise by the leader (Koskinen 2003).In addition the cultural web theory highlight in precise terminologies the underlying ways of life of people in an organisation, alongside the set of management practice and behaviours that both exemplify and reinforce these ways of life in the organisation(Denison 1990). For this reason organisational culture has a major role in facilitating how tacit knowledge in an organisation can be an added value to organisation overall performance. Within this concept emerge the organisations shared values and visions –which is vital for the organisation .This is because they provide the focus and energy for knowledge creation. On the basis of the above discussion, it can be asserted that organisational culture stabilizes a firms way of operation which inturn supports the initiative and effort of individuals in their work( Marijosola 1991).
Consequently as product and service becomes increasingly knowledge intensive, the means of making profits and competing in the marketplace is to become an effective learning organisation- profit and product remain the goal, but it is continous learning that enables growth (Owen 1991). To achieve and sustain competitive and added value requires organisations to learn better and faster amidst ever changing market environment. For this reason the knowledge base of a learning organisation should continuously engage in Tacit knowledge learning processes to acquire, capture and re use knowledge. This process of knowledge is integral to work activities to improve processes and results. Recognizing the dynamic nature of this phenomenon involves all those internal and external factors previously discussed, in the models to the application of tacit knowledge in the organisation .Accordingly, the intense competition in the corporate landscape and critical academic literature studies on this subject introduced in this essay cannot help, but reveal the increase attention paid to tacit knowledge in todays corporate world of business. Tacit knowledge makes work go smoothly, it increases the quality of the work and it often characterizes a master of his/her profession. For this reason, the critical task for Human resource development is to develop resourceful humans able to access and use the tacit knowledge learning resources around them. Together these factor create understanding on how the organisation knowledge management process in relation to tacit knowledge creation can be effectively utilized.
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Koshinen.K (2003) Evaluation of Tacit Knowledge Utilization in Work Units. A Journal of Knowledge Management.Vol 7, No5, pp 67-81.
Lawson.C and Lorenzi.E (1999) Collective Learning, Tacit Knowledge and Regional Innovative Capacity. Journal of Regional Studies, Vol33, o4, pp 40-54.
Lyles.M and Schwenk.C (1992)”Top Management, Strategy and Organizational Knowledge Structures”. Journal of Management Studies, Vol 29, No2.
Leonard- Barton.D(1995) Wellsprings of Knowledge. Harvard Business School Press.Boston.
Langlios.R and Robertson.P (1995) Firms, Markets and Economic Change: A Dynamic Theory of Business Institutions.Routledge, London.
Moller.K and Svan.S (2006) Role of Knowledge in Value Creation in Business Nets. Journal of Management Studies, July, Vol 43:5.
Mascitelli.R (2000) From Experience: Harnessing Tacit Knowledge to Achieve Breakthrough Innovation. Product Innovation Management Journal.Vol17, 179-193.
Nonaka.I, Konno.N etal (2000) “Emergence of Ba”, In: Nonaka.I and Takeuchi.N (Eds) Knowledge Emergence, Social, Technical and Evolutionary Dimensions of Knowledge Creation. Oxford University Press, London.
Nonaka.I and Takeuchi.H (1995) The knowledge Creating Company. Oxford University Press. New York.
Nonaka.I (1991) The Knowledge Creating Company. Harvard Business Review, Vol 69, No6, pp96-104.
Nonaka.I (1994) A Dynamic Theory of Organisational Knowledge Creation. Organisational Science Journal, Vol 5, pp14-37.
Norman.R and Ramirez.R (1993) “From Value Chain to Value Constellation: Designing Interactive Strategy”. Harvard Business Review, July –Aug, pp65-77.
Owens .H (1991) Riding the Tiger: Business in a Transforming World. Abbott Publishing, Potomac, MD.
Polanyi.M (1996) The Tacit Dimension. Doubleday Publishers.In: Mascitelli.R.(2000) From Experience: Harnessing Tacit Knowledge to Achieve Breakthrough Innovation. Product Innovation Management Journal,Vol 17,pp179-193.
Porter.M(1985) “Competitive Advantage: Creating and Sustaining Superior Performance”In: Pollini.C (1999) The Value Net: A Tool for Competitive Strategy. John Willey and Sons. Chichester.
Pionton.J (2006). Organisational Behaviour Module Handout. MA Personnell and Developement.2006 Session.Leicester Business School.
Quinn.J, Anderson.T etal (1996) “Managing Professional Intellect: Making the Most of the Best “. Harvard Business Review, March/April,pp71-80.
Quinn.J (1992) Intelligent Enterprise. The Free Press, New York.
Reber.A. (1989) “Implicit Learning and Tacit Learning”, Journal of Experimental Psychology: General, Vol 118 ,No3,pp219-35.
Shwandt.D and Marquardt.M (2000) Organisational Learning: From World class Theories to Global Best Practices, St Lucie Press, Boca Raton, FL.
Senge (1990) The Fifth Discipline, The Art and Practice of the Learning Organization, Doubleday, New York.
Stahle. P and Gronroos.M (1999) knowledge Management –Knowledge Capital as Competitive Advantage of a Firm.WSOY, Helsinki.
Sbarcea.K (1998) “Know What, Know How, Know Why: Implementing a Knowledge Management System- the Phillips Fox Experience” In: Jasimuddin.S, Klien.J etal (2005) The Paradox of Using Tacit and Explicit Knowledge: Strategies to Face Dilemmas. Management Decision Journal, Vol143, No1, pp102-112.
Smith.E (2001) The Role of Tacit Knowledge in the Workplace. Journal of Knowledge Management. Vol5-No4, 2001 pp311-321.
Sutton.D(2000) Knowledge and Conscious Execution of Task. European Journal of Information System10:80-88.
Wah. L (1999) Making knowledge sticks. Management Review, May, pp303-12.
Wah. L (1999) Behind the Buzz. Management Review. April, pp.17-26.
Weick. K (1995) Sense Making in Organisations, The British Psychological Society, Leicester.
Zander.U and Zander.I (1993) “ Innovation and Imitation of Multinational Companies: Preliminary Remarks on the Role of Tacitness” In: Howells (1999).Tacit Knowledge, Innovation, and Technology Transfer.Technol anal Strat Manage 8: 92-106.
BIBLIOGRAPHY.
Arauyo.L, Easterby Smith.M etal (1999) Organisational Learning and the Learning Organisation: Developments in Theory and Practice. Sage Publishers.London.
Bate .P (1999) Creating Training and Development Strategy. Institute of Personnell and Development. London.
Mayo.A (2004) Creating a Learning and Development Strategy: The Human Resource Business Partners Guide to Developing People.CIPD Publication. London.
Prahalad.H. (1994) Competing for the Future . Harvard Business School Publication. Boston.MA.
Stoik Musah writes from LBS.
stoik_joy@yahoo.com
LBS,Leicester.
stoikmusah@gmail.com
This essay will describe how tacit knowledge management practice can be utilized in an organisation to improve its organisational, market and financial performance alongside how there is more competitive value to its practice as opposed to explicit knowledge. With emphasis ascertaining the application of the various model/framework to tacit knowledge management practice in the organisational context. With reference to the above, the way business and organisational activities are carried out is increasingly changing, as recent years has seen an unprecedented growth in the speed of product and service change as a result of the application of information (Gulati and Zajac 2000). This increasingly turbulent environment has forced organisation to become more interested in new ways of gaining and sustaining competitive standing in the product and service they offer. Firms tend to devise continual strategic change process to manage and mobilized its resources through time for a competitive response. In this situation, the capacity of a firm to identify and understand the nature of competitive force and how they change with time will contribute to its competitive standing (Hosley, Lau etal 1994).Similarly the increase efficiency resulting from the process cited above allows for firms to specialize in the value creation activities supported by their own distinctive competence and knowledge (Janillo 1988,Langlois and Robertson 1995,Park 1996).To effect this process organisation engage in backward integration of breakthrough innovation in its human capital resources for deeply held and highly personal form of knowledge emerging most often, from the creative power of the mind(Mascitelli 2000).It is believed that a firms capability of effectively utilizing this source of knowledge to provide insight for creating value for customers need will provide significant impact on its market and financial performance.
However this concept of value has been given different shades of meanings by authors as Hakasson and Snehota (1995),Norman and Ramirez(1993),Porolini(1999) and Porter(1985). The central core issue among these various literature studies on this subject is in the area of in-depth knowledge on the value system and activities provided by organisations resources and to what extent can these value activities be effectively utilized. As value activities are essentially based on knowledge –the value of determination and motivation from employees is also related to the level of codification of that knowledge .The aspect of how well known, the capabilities underlying the value activities is related to- how easily the underlying knowledge can be assessed and shared among employees. Although such original thinking may manifest itself in a variety of ways .This has caused both scholars and Human Resource Practitioners to dig deeply into the source of creativity and insight. The works of Mascitelli (2000) reveals evidence of studies that highly creative artists, scientist, mathematicians etc often displays exceptional intelligence most often when confronted with a task. Mascitelli(2000) provides a plausible explanation for exceptional intelligence as above with reference from the works of Polanyi (1996) on “Tacit Dimension”. Polanyi(1996) argues that the portion of individual knowledge that is readily accessable to us is only a small fraction of the totality of our knowledge.The writer asserts that, in a sense, the knowledge that we can express in speech and in writing is only the tip of the entire human intellectual framework. Beneath the surface of conscious thought lies a vast proportion of tacit knowledge derived from a lifetime of experience ,practice ,perception and learning .
To Polanyi(1996), the essential nature of tacit knowledge embodies a lifetime of experience, indwelling by the innovator ,with the particulars of his chosen field, such that it becomes an intrinsic part of his mental makeup. This particulars, impact a kind of vision of things not yet known. In a sense, tacit knowledge allow you to see solutions without the conscious ability to explain your vision to pursue your aspiration by your action. From the standpoint of the firm, tacit knowledge problem solving skill is evident and seen in the multidisciplinary problem solving skills of Senior Researchers and Project Team leaders to develop visions that transcends precise details and subjects, thereby enabling the fusion of multiple facets of scientific knowledge for practical purposes and work processes. In the same way Quinn(1992), in his work on “Managing Proffessional Intellects” posit that pure invention most often is in the area of specialty of such highly capable individual. This is because they are best able to recognize the interrelationships among technologies required for value creation and move in the direction to visualize and provide complete solution to it. This is contrary to the views of the relationship between action and tacit knowledge explored by Hedesstrom and Whitley(2000), who argues that tacit knowledge is merely difficult to explore by the knowledge bearing expert to provide solutions to managerial concerns. What they put forward as a basis for their argument was that tacit knowledge almost from its definition can not be codified, in essence: because of where it is –typically in the minds of individuals. To them tacit knowledge is the knowledge you never see. This claim emerge from a similar distinction made by Sutton(2000) in his work on” knowledge and Conscious Execution of Task”. Sutton distinguish between the human state in conscious execution of a task and the human state in unconscious execution of same task. To Sutton unconscious knowledge cannot be directly assessed. If this being the case, how do you trust judgement from such human mental state .To Sutton how does reason prevail to make sense out of such judgement. Clarification was given on the above assertion by Zander and Zander(1993)that they maybe, infact possibilities of directly accessing this unconscious knowledge when it is converted to other form,so as to utilize the specific action in it, which an organisation can benefit from under certain conditions i.e management routine practice, specific human interaction context, when the pace performance is slow and pace variations are tolerable by the individual and when a standardize controlled context for the performance is assured( Zander and Zander 1993 cited in Howells 1999).
Similarly other related ideas were drawn from the works of Collins and Kush(1998) who in Hedesstrom and Whitley sense argue that, since tacit knowledge is personalised, and it resides in the mind of an individual. Once it is processed in the mind of individuals it becomes information. When this information is articulated or communicated to others in the form of data via computer output or written words then the conversion process can occur as discussed in the works of Zander and Zander (1993).Under this circumstances, in the organisation context, informations that are express in the above form is said to appear in explicit form or source of explicit knowledge.In the organisation, explicit knowledge is technical and carefully codified in a hierarchy of database or manuals (Smith 2001).For example explicit knowledge implies factual statements about issues as material properties, technical information, and routine manual instructions. Unlike tacit knowledge, explicit knowledge has the potential to explain why things work. As a result of the ease to communicate and store explicit knowledge in the organisation, there is little chance of losing explicit knowledge stored in files, since it is available in organisational repositories. Such knowledge can be accessed and used easily by anyone in the organisation unlike tacit knowledge(Grant1996).In this regard Hall and Andrrani(2003) argued that explicit knowledge is internally safe. However, plausible as this seems, explicit knowledge management practice in the organisation amidst heavy market competition involves heavy investment in electronic systems (Eginton 1998; Sbarcea 1998).Alternatively if that being the case, a vast space is needed to keep documents. In this regard Boral(2002) argues that this involves excessive documentation. Far greater than this is that, there is a high risk of imitation –if competitors gain assess to these document; leading to the loss of actual competitive advantage. In this situation explicit knowledge is externally vulnerable(Hall and Andriaini 2003).At this end, if we contend that the knowledge base of an organisation between the two ends over emphasis one at the expense of the other – a paradox exist, which leads to the question of which among tacit and explicit knowledge there is more competitive value in facilitating its exploration and management in the organisation, amidst the accelerating dynamics of market environment. Following this reasoning several scholars argued that tacit knowledge occupies the centre stage in the development of more competitive value (Nonaka 1991).
These authors offer analogies between breakthrough innovation and artistic creation. They affirm that the relationship between these two forms of knowledge expression is truly intimate. But still innovators, often have a difficult time expressing in words a vision derived from years of experience and indwelling- which brings to the fore again, the distinction among the two knowledge forms. They(Innovators) often experience a compelling desire to express themselves to pursue a hidden truth that demands talents to be revealed .To this end creating value in future market may become increasingly dependent on the ability of innovators to exploit tacit knowledge as a medium for forming deep connection with customers needs. This is because, the merging of tacit knowledge logical insights with an emphatic understanding of human needs has the potential to capture market attention and inspire customer loyalty. In practice when this singular act is reinforced by appropriate managerial actions, the capacity of employees to merge multiple sources of tacit knowledge into a breakthrough product can represent a truly unique competitive advantage and value to the organisation (Mascitelli 2000).
Strategically from the standpoint of the firm , the tacit knowledge content in the heads of employees can be a powerful source of great insight to creativity. The ability of the organisation to nurture such knowledge source may be more important to longterm competitive value than the benefits of even the most successful business product line of the organisation. Recent literature studies has emphasise the importance of this form of knowledge assets(Quinn 1992;Burton 1995). Quinn (1992) posit that tacit knowledge intangibles as know how, design expertise, market insight e.t.c largely determine the value of most product .A good illustration of such knowledge base tangibles and its antecedent effect is the significant effect company loyalty card take part in , among major UK retailers operations today. Contrary to the popular belief that Tesco Plc competitive advantage in the UK is its economy of scale- is that the clubcard which conveys an array of material benefits across virtually every discipline of its business is Tescos most potent weapon in the UK retail industry(Financial Times 11/12/2006).With the loyalty card which was introduce by Tesco ,you can gain insight on a customers shopping habit and you can judge his/her social class. Brand managers can track who is buying their products or responding to promotion and in turn make better decision.
This was a strong concept generated by creative minds from the companys knowledge assets which was first treated with scepticism by other retailers when it was first introduced by this company. By the time other retailers realized that the loyalty card is the big brother of the shopping world –the company was far ahead of these retailers. Although the concept has being copied by other retailers-core capabilities as well spring of innovation as the above concept from employees, are so steeped in the tacit cultural social and intellectual environment of a firm that they cannot be discern by outsiders (Leonard Barton 1995).In his work on “The Wellspring of Knowledge” Leonard Barton (1995) quoted a company CEO of suggesting to take his rival competitors on a detail tour of his facility and give away nothing, this is because they cannot take the knowledge and insight home with them. Infact the major drawback for the case of explicit knowledge as a useful competitive knowledge tool is its vulnerability to being transferred easily. Unlike tacit knowledge that is difficult and costly to transfer, making it considerable less mobile than explicit knowledge, as a result firms can possess unique capabilities that are hard to copy and invisible to outside observers. This can be carried out by personalising or codifying this particular type of knowledge using information technology support tools depending on the balance of series of competitive strategic knowledge management options applied by organisation (Alavi and Leidner 1999).The application of the codification strategy allows knowledge to be distinct and independent of individuals. While knowledge management strategy as personalisation allows the channelling of individual strategies to the right place when it is needed. Knowledge management strategies involving codification can be well facilitated by technologies as database. For example Accenture Knowledge Space System Database -where descriptions of management consultant interventions and outcomes are described, alongside Xeros Eureka Database System –where the experiences of service engineers are captured is a good illustration of the above knowledge management strategy practice by organisations(Quin, Andersen etal 1996). Similarly the popular Mckinsley Institute Development Network Database which is utilized by its users and members to facilitate organisational learning still fall under this category.
By contrast the personalisation of tacit knowledge are often sparingly supported by technology because of the nature of its form –they have a greater emphasis on specific human interaction and relationship building(Connell,Klein etal 2003).The works of Alavi and Leidner (1999) on “Knowledge Management System Challenges” highlight clarifications on the above subject.They argued that for one persons personalised knowledge to be useful to another, such knowledge must be communicated in such a manner as to be interpretable and accessible. Since knowledge management is a systemically organized process of acquiring, organising and communicating tacit knowledge of employees for usage and accessability by other employees for effective work functions. Put differently this suggest that if a cognitive intellectual activity to tacit knowledge management practice is adopted, Brown(1998) argues that; then the issues facing those responsible for its management are less related to creation, innovation and value added but more concerned with capture and integration. Such a perspective is contrary to the definition of knowledge management from a systemic view and its transfer perspective. On the other hand if knowledge cannot be shared , it will inevitably have limited organisational value. However Daveport and Prusak (1998) considers issues as these cited by Brown(1998) can be redressed by attending to cultural issues eminent within the organisation .They emphasised that, this can be facilitated by making knowledge more visible in the organisation by developing and encouraging activities such as knowledge sharing. For instance Ernst and Young Incentives to stimulate knowledge sharing are used in routine work performance reviews. Employees who spend a lot of time helping each other and adding to the corporate knowledge base are openly rewarded and recognized (Wah 1997).Besides Merrill Lynch rewards its employees for sharing knowledge with others based on how much direct help they give colleagues. The degree of high quality person –to-person dialogue a partner has with others can represent as much as one quarter of his or her annual salary (Quinn,Anderson. etal 1996; Hansen, Nohria. etal 1999).In the same way Andersen worldwide shares its knowledge among its customers anywhere in the world through its ANET electronic system links of 82,000 people operating in 360 offices in 76 countries (Quinn.,Andersen,etal 1996). Similarly to add value in an organisational context , tacit knowledge utilization management process, involves stimulating creativity and innovation within people and intergroup function ( Harrison 2002).It involves putting knowledge source (people) in the right direction , developing their commitment to listening to the voice within , and providing data to demonstrate the improve result achieve( Harrison 2002).
However there are different and relative model framework to which tacit knowledge can be utilized to add value to the organisation. Perhaps the most revealing works on tacit knowledge was performed by Nonaka and Takeuchi (1995), and a similar work was also performed by Talcott Parsons (1951) in organizational learning systems model and general theory of social action. One peculiar aspect among these models is the emphasis on specific organisational factors which gave the models significance in their application. These factors- if when influenced by effective knowledge management practice in line with organisational human resource management practice in the work place, will help enhance the capability of the whole organisation to make significant progress. This factors are further categorised into factors within the individual(knowledge source) and situational factors outside the individual. Factors within the individual comprises of intangible resources as memory, communication, and motivational system while situational factors outside the individual consist of issues as leadership style and organisational culture, in other words factors which more or less describe the situation in which tacit knowledge is utilized(.Koshinen 2003). Memory system consist of ones experience, mental models and intuitive ability. It is believed that multi faceted experience of an individual increases his or her possibilities to solve problems arising in a task. That is, the capability of an individual to solve a problem is dependent on the richness of his or her existing knowledge structure(Lyles and Schwenk 1992; Bower and Hilgard 1981).The mental model on its part, provides the context to view and interprete new material information(Argyris 1989,Kim1994).Mental models can be developed in the workplace if there are constant provision for teamwork where participants engaged in cross fertilization of ideas. Similarly it is also important to know that the tacit knowledge resource of an organisation rest within the mental models of its personnel. From the aforementioned analysis discussed so far, what is critically important in the application of these factor is –if it is well identified by human resource practice in the workplace .This will be of valuable help to make a perfect fit to what is required from the work environment to bring about innovative ideas of value.
Intuition on its part is the end product of tacit knowledge acquisition (Reber 1989). It operate to assist an individual to make choices and to engage in a particular class of action –to have a sense of what is right and proper, and “to get a point” without really able to verbalize what it is that one has gotten (Reber 1989). For example innovators have rich intuitions about complex problems which they can not explain how they come about the situation in details (Stahle and Gronroos 1999;Cooper and Sawaf 1997).Individuals with deep insight as the above are common in most organisation. It is believed that records and experience will help to identify these individuals and engage them in organisational roles which will help them stimulate these qualities, particularly organisational roles in operational research and development. Similarly the practice of interaction through face to face communication allows organisation personnel to get to know each other through building and maintenance of strong social networks that generate trust and commitment. Put differently, through constant communication people learn to trust each other. Koskinen (2003) stress that they can depend on one another, regardless of the situation. This kind of relationship build organisation social capital, which provide the foundation for sharing tacit knowledge that creates the conditions necessary for high task performance. In the same way (Weick 1995) stress the need of close proximity to foster communication in his works on “Collective Mind in Organisation”. He posit that if people want to share meaning it needs to be carried out in a place they choose where they can talk about their shared experience in close proximity. Architectural design and physical building which regulate this social interaction should be removed. Furthermore factors such as commitment and trust are important functions and motivational components that affect the willingness and openness of people in harnessing tacit knowledge in an organisation (Senge 1990). Several literature studies of motivational theories abound in organisation behaviour study, where employees can be bounded to work task /duties by the organisation, and these are content theories, process theories, and equity theories(Pionton 2006).Within these theories, knowledge creation is anchored in the commitment of its holder and receiver. This implies that knowledge is related to human action stemming from individuals level of motivation to the task(Nonaka and Takeuchi 1995).
Furthermore the possibilities and willingness of people to share tacit knowledge in the organisation in a way which will be of valuable benefit to the organisation financial and market performance is for the organisation to provide them with an environment that allows learning and innovation to flourish (Drucker 1993). This is made possible when the organisation leadership style connotes support for emerging processes with collaborative altitudes and skill towards reinforcing reciprocal relationships that facilitates dialogue and learning(Nonaka 2000, Jones 1996). In the light of the above it is believed that the leadership that create new knowledge is largely a matter of giving the people creative freedom within a framework devise by the leader (Koskinen 2003).In addition the cultural web theory highlight in precise terminologies the underlying ways of life of people in an organisation, alongside the set of management practice and behaviours that both exemplify and reinforce these ways of life in the organisation(Denison 1990). For this reason organisational culture has a major role in facilitating how tacit knowledge in an organisation can be an added value to organisation overall performance. Within this concept emerge the organisations shared values and visions –which is vital for the organisation .This is because they provide the focus and energy for knowledge creation. On the basis of the above discussion, it can be asserted that organisational culture stabilizes a firms way of operation which inturn supports the initiative and effort of individuals in their work( Marijosola 1991).
Consequently as product and service becomes increasingly knowledge intensive, the means of making profits and competing in the marketplace is to become an effective learning organisation- profit and product remain the goal, but it is continous learning that enables growth (Owen 1991). To achieve and sustain competitive and added value requires organisations to learn better and faster amidst ever changing market environment. For this reason the knowledge base of a learning organisation should continuously engage in Tacit knowledge learning processes to acquire, capture and re use knowledge. This process of knowledge is integral to work activities to improve processes and results. Recognizing the dynamic nature of this phenomenon involves all those internal and external factors previously discussed, in the models to the application of tacit knowledge in the organisation .Accordingly, the intense competition in the corporate landscape and critical academic literature studies on this subject introduced in this essay cannot help, but reveal the increase attention paid to tacit knowledge in todays corporate world of business. Tacit knowledge makes work go smoothly, it increases the quality of the work and it often characterizes a master of his/her profession. For this reason, the critical task for Human resource development is to develop resourceful humans able to access and use the tacit knowledge learning resources around them. Together these factor create understanding on how the organisation knowledge management process in relation to tacit knowledge creation can be effectively utilized.
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BIBLIOGRAPHY.
Arauyo.L, Easterby Smith.M etal (1999) Organisational Learning and the Learning Organisation: Developments in Theory and Practice. Sage Publishers.London.
Bate .P (1999) Creating Training and Development Strategy. Institute of Personnell and Development. London.
Mayo.A (2004) Creating a Learning and Development Strategy: The Human Resource Business Partners Guide to Developing People.CIPD Publication. London.
Prahalad.H. (1994) Competing for the Future . Harvard Business School Publication. Boston.MA.
Stoik Musah writes from LBS.
stoik_joy@yahoo.com
Tuesday 1 April 2008
Why Organisations Engage in Corporate Social Responsibility.
Stoik Musah
LBS, Leicester,
shamsmusah@gmail.com
Responsibility results when an individual or organisation accepts a certain duty , and follows up by endorsing that duty with corresponding behaviours. In the case of social responsibility by an organisation the corresponding behaviour will be manifested in its corporate , legal, and economic systematic actions in recognition of a given societal responsibility and its attempt to meet that social need ( Oosterhout and Heugens 2006). This essay intends to explore why organisation might get involved in Corporate Social Activity- and even seek to demonstrate the extent organisation legitimize their CSR potentials in the eyes of critical outside audience by adopting formal CSR ethical programmes and policies to influence CSR practice.
Much academic work conducted ( Carroll 2000, Bovens 1998, Goodin 1986, Lantos 2001) in this subject area, would agree that the corporate social responsibility concept is about the societal duty of business organisations in general. Carroll (2000) define corporate social responsibility as the economic , legal,ethical and discretionary expectations that society has of an organisation at any point in time. In a more broader terminology of the concept, the Worldbank(2004) define corporate social responsibility as the commitment of business to contribute to sustainable economic development – working with employees, their families, the local community and society at large to improve the quality of life, in ways that are good for business and good for development. Overall the basic idea of the literature studies in the concept is that corporate social responsibility is rooted in the recognition that businesses are an integral part of the society, and it would seem common sensical they have the potential to make a positive contribution to social goals and aspirations (Jones, Comfort etal 2005).
From the above definitions, it can be very well imagined that the notion of corporate social responsibility in the academic field of business and society is a vague term which can mean anything to anybody. The CSR concept literature studies not only seek to define CSR in these vague terms but also stretch to develop the framework to understand more systematically , the complex network of factors that lead companies to engage in CSR initiatives. For instance there is an increasing public demand on business leaders to include social issues as part of their strategies in the present day social and political business climate (Lantos 2001). Managers continually meet demands from various stakeholder groups to devote resources to CSR. Such pressures emanates from constituencies as employees, consumers, communities and environment( McWilliams and Siegel 2001). Employees pressures includes the increasing public recognition of certain employee rights in the workplace , including non-discrimination in hiring, firing and promotion. Similarly consumer pressure includes production of safe products and greater amount of consumers information. While community and environmental pressure encompass investing in pollution abatement equipment and ensuring that the business operations do not threaten the safety of local community etc. With reference to the above highlighted stakeholder groups, the pressures from internal actors as employees was highlighted in the works of Aguilera, Rupp etal (2005) analysis on examining how employees might push corporations to engage in CSR initiatives. Their findings suggests that CSR perception shapes employees altitudes and behaviours towards their firms. Infact the perceived fairness of any working environment do impact employee well being (i.e job satisfaction , stress and emotion) as well as other internal organisational considerations as absenteeism, and employee commitment (Collquit 2001). In effect where fairness is perceived , employees are happy and hardworking.
Equally pressures from external actors as consumers and community usually exercise their CSR demands using voice and social movement strategies, such as impose sanctions and demonstration as in the case of the anti-genetically engineered food and crops campaigns in the E.U, the anti-Nike activist demonstration in the US or the anti-Shell activist demonstration in Ogoni, Nigeria (Paine and Moidoveanu 1999). Smith(2002) observed that these organisations are sceptical on the possibility that product boycott announcements is associated with significant negative stock market reaction, and this affect investors belief on sales both directly and indirectly, through harm to the firm and brands reputation.
For example , the criticism of Shell-BP by environmentalist on the companys operation in Ogoni-Akwa Ibom State, Nigeria, and the company apparent failure to use its influence to prevent the death penalty sentence passed by the Nigerian authorities on Ken Saro-Wiwa and others protesting Shells environmental damage to Ogoniland has resulted in the widespread negative publicity of the British company in that country(Aguilera, Rupp, Williams etal 2005).For this reason a critical consideration of CSR by many firm is the reputational risk, heightened by criticism of corporate practice as the above (Shell Nigeria experience),particularly by NGOs- as a result the business case for CSR is much stronger. This consideration has forced companys to realise that being socially responsible is not only the right thing to do, it can also distinguish a company from its industry peers. In this case - in a highly competitive market, CSR might provide a valuable basis for differentiation; this is seen as more firms now include environmental claims within their advertising instruments (Drumwright 2000).
On the contrary, the subject academic debate entails those critics who question the greater attention of the concept application of shareholders fund to the CSR community initiatives, without regard for the likely effect on companys profits and organisations future opportunities for research, innovation and expansion. Kapstein(2001) in his work on “ False Notion of Corporate Social Responsibility” reiterated the ideas of the neo-classic economist Milton Friedman(1962) that business only social responsibility is to use its resources to engage in activities designed to increase its profit, so long as it engage in open and free competition without deception or fraud. Friedman (1962) concept of business and societal relationship was strictly centred on the latter producing the needed goods and services at prices the former can afford. Friedman reasoned that a departure from this business role amount to spending some one else money, and placing the firm at a competitive disadvantage. He question whether managers were competent to engage in social issues, and saw no reason this group of individuals should carry out the role of government in the society.
However the accuracy of the ideas in Friedman economic model in separating business and society in the present day economics of business is widely contested, since the strategic decisions of large organisation inevitably involves social as well as economic consequences (Mintzberg 2002), invariably there is no such thing in the agenda of most organisation as purely economic strategic decision any more. Yet many managers still find some element of Friedman ideas appealing. This is seen in most organisations action programme on CSR initiatives, that is- there is often little real substance to what some firms claim to do. Klein (2000) argued that in some instances, the amount spent promoting a firm CSR achievement is often more than the amount spent on the CSR activity itself. Furthermore if eventually organisations decide to commit to such initiative, the expenditure is often viewed as investment which will yield financial return in the near future (McWilliams and Siegel 2001).These long term benefit might not immediately show up on a firms financial statements, but this bank of goodwill on the part of the organisation can be of future benefit when the organisation come under public criticism or other image/reputational risk.
To illustrate this point, Ford Motors spent millions of dollars on an advertising campaign to convince parents that most 4-8years old children should rise in booster seats, which raise children in auto seats, so that adult seat belt fits better. The company gave away 1million such seats (Kiley 2001). The goodwill generated among customers, government regulators and consumer advocates from such effort might likely justify the investment someday. For this reason strategic CSR initiative as the above can result in those helped feeling grateful and indebted to the organisation and would reciprocate in various ways, by giving it their business , recommending it to others, asking government regulators to stay at bay and so on (Brenkert 1996).This makes good business sense as it is in line with Friedman(1962) organisation profit maximization concept -for owners of capital, by promoting societal CSR initiative.
Furthermore, far greater than the longterm financial security and profit maximization CSR provides for the firm are organisational considerations at the operational level. For instance business imperatives like cost and efficient work process seems to be the key drivers of CSR initiatives, that is- CSR initiative as environmental issues (energy savings, reduced CO2 emission etc) designed to reduce CO2 emission and global warming is also seen to businesses as an avenue to reduce cost (i.e the cost of maintaining fleet of delivery trucks). In a similar way, social issues focusing on good working environment and conditions, health and safety at work discussed previously all help to promote stability, security and efficiency within the workforce (Jones and Comfort 2005).
Another organisational motive in line with the above illustration result from the natural resource based view and dynamic capabilities application theory of a firm (Barney 1991). This theory maintains that the ability of a firm to perform better than its competitors depends on the interplay of human, organisational and physical resource over time. The rationale behind this theory entails that; resources, most likely - that will lead to competitive advantage are those that meet four criteria-VRIO(Value, Rare, Inimitable and Organisation). Based on this perspective some authors ( Petrick and Quinn2001) identified social resources which can be a source of competitive advantage such as the process of developing proper relationships with primary stakeholders as employees, customers, suppliers and communities using CSR initiatives.
In addition to the above in the CSR debate, there emerge alternative theoretical framework in the practice of legitimizing and economising the concept theories in the eyes of critical outside audiences. For this reason, the adoption of formal programmes of ethics is hard to deny that organisations increasingly try to influence ethical CSR practice within industries using formal CSR ethical programmes and policies (Weaver, Trevino etal 1999). Today the adoption of formal programme of ethics is popular in the contemporary business world, ie The DowJones Sustainable Index(ISO9000 and ISO9001), The Influential KLD Research and Analytics Inc(Domini 400 Social Index, DSI), Quality and Environmental Standards(ISO14000 and ISO14001) and others. Such programme involves the adoption of ethical codes to set organisational norms and guide concrete behaviour in CSR organisational practice. This involves formalised procedures for auditing and evaluating ethical standard (Godfrey 2005). Godfrey (2005) in his works on “The Relationship Between Corporate Philanthropy and Shareholders Wealth” posit that in most organisation, formal ethics programme described as the above is often adopted as some kind of risk management tool. The writer argues that-again, this make good business sense for managers on the consideration that – by improving the ethical climate of the organisation, managers may seek to avoid excessive costs associated with risks like employee theft, fraud and bribery. Likewise this ethics programmes often serve as small investment in preventive measures, which are deliberately made in order to avoid much greater liabilities in the court room (Trevino, Weaver etal 1999).
In addition to the aforementioned ethical considerations an organisation may adopt an ethics programme when powerful stakeholders like financiers threaten to discontinue their support to the organisation if it would not do so (Frooman 1999). Another plausible account of this demonstration may result from the coercive demands of institutional actors like the state or the profession (Professional Institutes or Chambers of Commerce) or from the examplinary behaviour of high status peers in the industry (Haveman 1993). By this, the organisation without such programmes, who look up to the state and these high status companies are likely to imitate these successful companies- again with coercive institutional pressure from the state, ethical falsibility on the part of organisations is most likely expected. This demonstrates that ethical considerations are mere ceremonial qualities by industry actors to legitimize their CSR potentials in the eyes of critical outside audience.
Overall, given this broad analysis explored on business and its relationship with the society, and considering the diverse links of CSR that cuts across a broad range of activities carried out by organisations - previously know under diffused labels as corporate philanthropy, corporate community involvement, ethics, sustainability management, cause related marketing as well as stakeholder integration, it is hard to deny that there has being nothing appealing to organisations on the notion of CSR (Oosterhout and Heugens 2006). For this reason if management leadership is interested in moving the CSR agenda forward, it will require management awareness in these subject areas, to help inform better judgement of the main issues on the concept to facilitate drastic organisational change initiative. In consequence, management must understand that- at the moment CSR drives companies, to achieve competitive advantage. They should understand that it is their behaviour that serves as a model and message – sender to all, in the course of driving this change programme forward, therefore their commitment is the key to reinforcing these values, alongside the commitment from other top management, ie marketing unit as well as the support of the board of directors(Lantos 2001). Similarly to implement this change programme,it is the role of management to innovate and communicate a few simple shared values and visions that form a common ground upon which CSR activities can stand, by proclaiming these values continuously and demonstrating devotion to it through (i)actions (ii)encouraging employees to invent and innovate new CSR ideas that conform to these values and visions and (iii) rewarding every attempt to advance these values and visions(Lantos 2001). Moreover, measurable and achievable goals should be set in each of the CSR activities, including expected benefits to every stakeholder.
Consequently, wide academic research studies exist to unearth the greater sentiment that continues to underpin business thinking why organisations get involve in CSR. However the previous discussion reveals the analogy that organisation, is extremely liberal in giving is misleading. Although it is expected of business to be liberal in their contribution to societal good - in the real world of business this is not so, what is commonsensical to remain competitive is how you make do with the resources and opportunities available to you, and not what would be the ideal practice in your actions. This is because businesses are formed for limited economic purpose and competitive market resources are so efficiently applied to business initiatives, that it would be impossible to attain fairness in CSR initiatives without making some other persons (shareholders) worse off. Nevertheless the verdict today is that CSR is increasingly expected from organisation by the society, and this can be rewarding for both societal stakeholders and the firm if a clear, strategic and measurable CSR agenda is put in place by the organisation as spelt out previously in the role of management leadership in moving the CSR agenda forward.
REFERENCE.
*Aguilera.R, Rupp.D, Williams.C etal (2005) Putting the Back in Corporate Social Responsibility: A Multi-Level Theory of Social Change in Organisations. An Academy of Management Review,Vol 16,pp 691-71.
Ambrose .M, Seabright.M and Schminke.M (2002) Sabotage in the Workplace: The Role of Organisational Injustice. A Journal of Organisational Behaviour and Human Decision Processes, Vol89, pp47-965.
Barney.D (1991) Firm Resources and Sustained Competitive Advantage. A journal of Management, Vol17,pp 99-120.
Beardwell. I, Holden.L, and Claydon.T (2004) Human Resource Management: A contemporary Approach. 4th Edition; Harlow: Prentice Hall Financial Times.
Bovens.M (1998) The Quest for Responsibility: Accountability and Citizenship in Complex Organisations. Cambridge University Press.
Brenkert.G (1996) “Private Corporations and Public Welfare”. In: Larmer.R (eds) Ethics in the Workplace: Selected Readings in Business Ethics. West Publishing Company, Minneapolis, USA.
Brooks.I (1999) Organisational Behaviour, Financial Times Management, London.
Buchanan.D and Huczynski.A (2004) Organisational Behaviour, Financial Times Management, London.
*Carrol. A and Buchholtz. A (2003) Business and Society: Ethics and Stakeholder Management. Thomson. Ohio.
Colquitt.J(2001) On the Dimensionality of Organisational Justice: A Construct Validation of a Measure. Journal of Applied Psychology,Vol86,pp425-445.
*Carroll.A (2000) The Four Faces of Corporate Citizenship. Academy of Management Journal, Vol4, pp497-508.
Drumwright.M (2000) Socially Responsible Organisational Buying: Environmental Concern as a Non-Economic Buying Criterion, Journal of Marketing ,Vol58,pp1-19.
*Elkington.J (1999) “Cannibals With Forks”. In: Aguilera.R, Rupp.D etal (eds) Putting the Back in Corporate Social Responsibility: A Multi-Level Theory of Social Change in Organisations. An Academy of Management Review, Vol16, pp691-71.
*Friedman.M (1962) “Capitalism and Freedom”. In: Kapstein.E (eds) The Corporate Ethics Crusade, Foreign Affairs, Vol80, No5, pp105-119.
Frooman.J (1999) Stakeholder Influence Strategies. The Academy of Management Review,Vol 24,No2,pp191-205.
Godfrey.P (2005) The Relationship Between Corporate Philanthropy and Shareholder Wealth: A Risk Management Perspective. The Academy of Management Review,Vol 30,No40,pp777-798.
Goodin.R (1986) Responsibilities. The Philosophical Quarterly,Vol36,No142,pp50-56.
Hillman.A and Keim.G (2001) “Shareholder Value, Stakeholder Management, and Social Issues: Whats the Bottomline”. In: Garriga.E and Mele.D (eds) Corporate Social
Responsibility Theories: Mapping the Territory. A Journal of Business Ethics, Vol53, pp51-71.
Haveman.H (1993) Follow the Leader: Mimetic Isomorphism and Entry Into New Markets. Administrative Science Quarterly, Vol38, pp593-627.
Jones.P, Comfort.D, etal (2005) Corporate Social Responsibility: A Case Study of the UKs Leading Food Retailers. British Food Journal, Vol107, No6, 423-435.
Kiley.D (2001) Ford To Replace Up To 13Million Tires. USA Today, 22 May 2001.
*Klien. K (2000) Perils of Corporate Philantropy. In: Lantos.G (2003) Corporate Socialism Masquerades as CSR: The Difference Between Being Ethical, Altruistic and Strategic in Business. Strategic Direction,Vol 19,No6,pp31-35.
Kapstein.E (2001) The Corporate Ethics Crusade. Foreign Affairs, Vol80,No5,pp105-119.
Kozinets.R and Handelman.J (2004) Adversaries of Consumption: Consumer Movements, Activism and Ideology. Journal of Consumer Research,Vol31, pp691-704.
*Lantos.G (2001) The Boundaries of Strategic Corporate Social Responsibility. Stonehill College Publication, MA.
McWilliams.A and Siegel.D (2001) Corporate Social Responsibilty: A Theory of the Firms Perspective. Academy of Management Journal,Vol21,pp117-127.
Mintzberg.H (2002) Beyond Selfishness. MIT Sloan Management Review.pp67-74.
McWilliams and Siegel (2001) Corporate Social Responsibility: A Theory of the Firm Perspective.In: Lantos.G(eds) The Boundaries of Strategic Corporate Social Responsibilty. Stonehill College Publication,MA.
Oosterhout.J and Heugens.P (2006) Much Ado About Nothing: A Conceptual Critique of CSR. Erasmus Research Institute Publication, Erasmus School of Economics,Netherland.
Paine.L and Moidoveanu (1999) Royal Dutch/ Shell in Nigeria: Case Study. Harvard Business School Publication,Vol9,pp399-426.
Petrick .J and Quinn.J (2001) The Challenge of Leadership Accountability For Integrity Capacity as a Strategic Asset, In: Garriga.E and Mele.D (eds) Corporate Social Responsibility Theories: Mapping the Territory. A Journal of Business Ethics,Vol53,pp51-71.
Robbins.S (1996) Organisational Behaviour. 7th Edition, Prentice Hall.
Rollinson.D and Broadfield.A (2002) Organisational Behaviour and Analysis: An Integrated Approach, 2nd Edition; Harlow: Financial Times Prentice Hall.
Smith.C (2002) Corporate Social Responsibility: Not Whether But How? Centre of Marketing Working Paper,London Business School Publication.No3-701.
Trevino.L ,Weaver.G etal (1999) Managing Ethics and Legal Compliance: What Works and What Hurts. Carlifornia Management Review,Vol41,No2,pp131-151.
The Economist (1990) Boycotting Corporate America, In: Aguilera.R, Rupp.D, etal (2005) Putting The Back in Corporate Social Responsibility: A Multi-level Theory of Social Change in Organisations. An Academy of Management Review.Vol 16,pp691-71.
Thompson.P and Mchugh.D (2002) Work Organisations: A Critical Introduction. 3rd Edition,Basingstoke: Palgrave.
Weaver.G, Trevinol.L etal (1999) Integrated and Decoupled Corporate Social Performance: Management Commitments, External Pressures and Corporate Ethics Practices. The Academy of Management Journal,Vol42,No5,pp539-552.
LBS, Leicester,
shamsmusah@gmail.com
Responsibility results when an individual or organisation accepts a certain duty , and follows up by endorsing that duty with corresponding behaviours. In the case of social responsibility by an organisation the corresponding behaviour will be manifested in its corporate , legal, and economic systematic actions in recognition of a given societal responsibility and its attempt to meet that social need ( Oosterhout and Heugens 2006). This essay intends to explore why organisation might get involved in Corporate Social Activity- and even seek to demonstrate the extent organisation legitimize their CSR potentials in the eyes of critical outside audience by adopting formal CSR ethical programmes and policies to influence CSR practice.
Much academic work conducted ( Carroll 2000, Bovens 1998, Goodin 1986, Lantos 2001) in this subject area, would agree that the corporate social responsibility concept is about the societal duty of business organisations in general. Carroll (2000) define corporate social responsibility as the economic , legal,ethical and discretionary expectations that society has of an organisation at any point in time. In a more broader terminology of the concept, the Worldbank(2004) define corporate social responsibility as the commitment of business to contribute to sustainable economic development – working with employees, their families, the local community and society at large to improve the quality of life, in ways that are good for business and good for development. Overall the basic idea of the literature studies in the concept is that corporate social responsibility is rooted in the recognition that businesses are an integral part of the society, and it would seem common sensical they have the potential to make a positive contribution to social goals and aspirations (Jones, Comfort etal 2005).
From the above definitions, it can be very well imagined that the notion of corporate social responsibility in the academic field of business and society is a vague term which can mean anything to anybody. The CSR concept literature studies not only seek to define CSR in these vague terms but also stretch to develop the framework to understand more systematically , the complex network of factors that lead companies to engage in CSR initiatives. For instance there is an increasing public demand on business leaders to include social issues as part of their strategies in the present day social and political business climate (Lantos 2001). Managers continually meet demands from various stakeholder groups to devote resources to CSR. Such pressures emanates from constituencies as employees, consumers, communities and environment( McWilliams and Siegel 2001). Employees pressures includes the increasing public recognition of certain employee rights in the workplace , including non-discrimination in hiring, firing and promotion. Similarly consumer pressure includes production of safe products and greater amount of consumers information. While community and environmental pressure encompass investing in pollution abatement equipment and ensuring that the business operations do not threaten the safety of local community etc. With reference to the above highlighted stakeholder groups, the pressures from internal actors as employees was highlighted in the works of Aguilera, Rupp etal (2005) analysis on examining how employees might push corporations to engage in CSR initiatives. Their findings suggests that CSR perception shapes employees altitudes and behaviours towards their firms. Infact the perceived fairness of any working environment do impact employee well being (i.e job satisfaction , stress and emotion) as well as other internal organisational considerations as absenteeism, and employee commitment (Collquit 2001). In effect where fairness is perceived , employees are happy and hardworking.
Equally pressures from external actors as consumers and community usually exercise their CSR demands using voice and social movement strategies, such as impose sanctions and demonstration as in the case of the anti-genetically engineered food and crops campaigns in the E.U, the anti-Nike activist demonstration in the US or the anti-Shell activist demonstration in Ogoni, Nigeria (Paine and Moidoveanu 1999). Smith(2002) observed that these organisations are sceptical on the possibility that product boycott announcements is associated with significant negative stock market reaction, and this affect investors belief on sales both directly and indirectly, through harm to the firm and brands reputation.
For example , the criticism of Shell-BP by environmentalist on the companys operation in Ogoni-Akwa Ibom State, Nigeria, and the company apparent failure to use its influence to prevent the death penalty sentence passed by the Nigerian authorities on Ken Saro-Wiwa and others protesting Shells environmental damage to Ogoniland has resulted in the widespread negative publicity of the British company in that country(Aguilera, Rupp, Williams etal 2005).For this reason a critical consideration of CSR by many firm is the reputational risk, heightened by criticism of corporate practice as the above (Shell Nigeria experience),particularly by NGOs- as a result the business case for CSR is much stronger. This consideration has forced companys to realise that being socially responsible is not only the right thing to do, it can also distinguish a company from its industry peers. In this case - in a highly competitive market, CSR might provide a valuable basis for differentiation; this is seen as more firms now include environmental claims within their advertising instruments (Drumwright 2000).
On the contrary, the subject academic debate entails those critics who question the greater attention of the concept application of shareholders fund to the CSR community initiatives, without regard for the likely effect on companys profits and organisations future opportunities for research, innovation and expansion. Kapstein(2001) in his work on “ False Notion of Corporate Social Responsibility” reiterated the ideas of the neo-classic economist Milton Friedman(1962) that business only social responsibility is to use its resources to engage in activities designed to increase its profit, so long as it engage in open and free competition without deception or fraud. Friedman (1962) concept of business and societal relationship was strictly centred on the latter producing the needed goods and services at prices the former can afford. Friedman reasoned that a departure from this business role amount to spending some one else money, and placing the firm at a competitive disadvantage. He question whether managers were competent to engage in social issues, and saw no reason this group of individuals should carry out the role of government in the society.
However the accuracy of the ideas in Friedman economic model in separating business and society in the present day economics of business is widely contested, since the strategic decisions of large organisation inevitably involves social as well as economic consequences (Mintzberg 2002), invariably there is no such thing in the agenda of most organisation as purely economic strategic decision any more. Yet many managers still find some element of Friedman ideas appealing. This is seen in most organisations action programme on CSR initiatives, that is- there is often little real substance to what some firms claim to do. Klein (2000) argued that in some instances, the amount spent promoting a firm CSR achievement is often more than the amount spent on the CSR activity itself. Furthermore if eventually organisations decide to commit to such initiative, the expenditure is often viewed as investment which will yield financial return in the near future (McWilliams and Siegel 2001).These long term benefit might not immediately show up on a firms financial statements, but this bank of goodwill on the part of the organisation can be of future benefit when the organisation come under public criticism or other image/reputational risk.
To illustrate this point, Ford Motors spent millions of dollars on an advertising campaign to convince parents that most 4-8years old children should rise in booster seats, which raise children in auto seats, so that adult seat belt fits better. The company gave away 1million such seats (Kiley 2001). The goodwill generated among customers, government regulators and consumer advocates from such effort might likely justify the investment someday. For this reason strategic CSR initiative as the above can result in those helped feeling grateful and indebted to the organisation and would reciprocate in various ways, by giving it their business , recommending it to others, asking government regulators to stay at bay and so on (Brenkert 1996).This makes good business sense as it is in line with Friedman(1962) organisation profit maximization concept -for owners of capital, by promoting societal CSR initiative.
Furthermore, far greater than the longterm financial security and profit maximization CSR provides for the firm are organisational considerations at the operational level. For instance business imperatives like cost and efficient work process seems to be the key drivers of CSR initiatives, that is- CSR initiative as environmental issues (energy savings, reduced CO2 emission etc) designed to reduce CO2 emission and global warming is also seen to businesses as an avenue to reduce cost (i.e the cost of maintaining fleet of delivery trucks). In a similar way, social issues focusing on good working environment and conditions, health and safety at work discussed previously all help to promote stability, security and efficiency within the workforce (Jones and Comfort 2005).
Another organisational motive in line with the above illustration result from the natural resource based view and dynamic capabilities application theory of a firm (Barney 1991). This theory maintains that the ability of a firm to perform better than its competitors depends on the interplay of human, organisational and physical resource over time. The rationale behind this theory entails that; resources, most likely - that will lead to competitive advantage are those that meet four criteria-VRIO(Value, Rare, Inimitable and Organisation). Based on this perspective some authors ( Petrick and Quinn2001) identified social resources which can be a source of competitive advantage such as the process of developing proper relationships with primary stakeholders as employees, customers, suppliers and communities using CSR initiatives.
In addition to the above in the CSR debate, there emerge alternative theoretical framework in the practice of legitimizing and economising the concept theories in the eyes of critical outside audiences. For this reason, the adoption of formal programmes of ethics is hard to deny that organisations increasingly try to influence ethical CSR practice within industries using formal CSR ethical programmes and policies (Weaver, Trevino etal 1999). Today the adoption of formal programme of ethics is popular in the contemporary business world, ie The DowJones Sustainable Index(ISO9000 and ISO9001), The Influential KLD Research and Analytics Inc(Domini 400 Social Index, DSI), Quality and Environmental Standards(ISO14000 and ISO14001) and others. Such programme involves the adoption of ethical codes to set organisational norms and guide concrete behaviour in CSR organisational practice. This involves formalised procedures for auditing and evaluating ethical standard (Godfrey 2005). Godfrey (2005) in his works on “The Relationship Between Corporate Philanthropy and Shareholders Wealth” posit that in most organisation, formal ethics programme described as the above is often adopted as some kind of risk management tool. The writer argues that-again, this make good business sense for managers on the consideration that – by improving the ethical climate of the organisation, managers may seek to avoid excessive costs associated with risks like employee theft, fraud and bribery. Likewise this ethics programmes often serve as small investment in preventive measures, which are deliberately made in order to avoid much greater liabilities in the court room (Trevino, Weaver etal 1999).
In addition to the aforementioned ethical considerations an organisation may adopt an ethics programme when powerful stakeholders like financiers threaten to discontinue their support to the organisation if it would not do so (Frooman 1999). Another plausible account of this demonstration may result from the coercive demands of institutional actors like the state or the profession (Professional Institutes or Chambers of Commerce) or from the examplinary behaviour of high status peers in the industry (Haveman 1993). By this, the organisation without such programmes, who look up to the state and these high status companies are likely to imitate these successful companies- again with coercive institutional pressure from the state, ethical falsibility on the part of organisations is most likely expected. This demonstrates that ethical considerations are mere ceremonial qualities by industry actors to legitimize their CSR potentials in the eyes of critical outside audience.
Overall, given this broad analysis explored on business and its relationship with the society, and considering the diverse links of CSR that cuts across a broad range of activities carried out by organisations - previously know under diffused labels as corporate philanthropy, corporate community involvement, ethics, sustainability management, cause related marketing as well as stakeholder integration, it is hard to deny that there has being nothing appealing to organisations on the notion of CSR (Oosterhout and Heugens 2006). For this reason if management leadership is interested in moving the CSR agenda forward, it will require management awareness in these subject areas, to help inform better judgement of the main issues on the concept to facilitate drastic organisational change initiative. In consequence, management must understand that- at the moment CSR drives companies, to achieve competitive advantage. They should understand that it is their behaviour that serves as a model and message – sender to all, in the course of driving this change programme forward, therefore their commitment is the key to reinforcing these values, alongside the commitment from other top management, ie marketing unit as well as the support of the board of directors(Lantos 2001). Similarly to implement this change programme,it is the role of management to innovate and communicate a few simple shared values and visions that form a common ground upon which CSR activities can stand, by proclaiming these values continuously and demonstrating devotion to it through (i)actions (ii)encouraging employees to invent and innovate new CSR ideas that conform to these values and visions and (iii) rewarding every attempt to advance these values and visions(Lantos 2001). Moreover, measurable and achievable goals should be set in each of the CSR activities, including expected benefits to every stakeholder.
Consequently, wide academic research studies exist to unearth the greater sentiment that continues to underpin business thinking why organisations get involve in CSR. However the previous discussion reveals the analogy that organisation, is extremely liberal in giving is misleading. Although it is expected of business to be liberal in their contribution to societal good - in the real world of business this is not so, what is commonsensical to remain competitive is how you make do with the resources and opportunities available to you, and not what would be the ideal practice in your actions. This is because businesses are formed for limited economic purpose and competitive market resources are so efficiently applied to business initiatives, that it would be impossible to attain fairness in CSR initiatives without making some other persons (shareholders) worse off. Nevertheless the verdict today is that CSR is increasingly expected from organisation by the society, and this can be rewarding for both societal stakeholders and the firm if a clear, strategic and measurable CSR agenda is put in place by the organisation as spelt out previously in the role of management leadership in moving the CSR agenda forward.
REFERENCE.
*Aguilera.R, Rupp.D, Williams.C etal (2005) Putting the Back in Corporate Social Responsibility: A Multi-Level Theory of Social Change in Organisations. An Academy of Management Review,Vol 16,pp 691-71.
Ambrose .M, Seabright.M and Schminke.M (2002) Sabotage in the Workplace: The Role of Organisational Injustice. A Journal of Organisational Behaviour and Human Decision Processes, Vol89, pp47-965.
Barney.D (1991) Firm Resources and Sustained Competitive Advantage. A journal of Management, Vol17,pp 99-120.
Beardwell. I, Holden.L, and Claydon.T (2004) Human Resource Management: A contemporary Approach. 4th Edition; Harlow: Prentice Hall Financial Times.
Bovens.M (1998) The Quest for Responsibility: Accountability and Citizenship in Complex Organisations. Cambridge University Press.
Brenkert.G (1996) “Private Corporations and Public Welfare”. In: Larmer.R (eds) Ethics in the Workplace: Selected Readings in Business Ethics. West Publishing Company, Minneapolis, USA.
Brooks.I (1999) Organisational Behaviour, Financial Times Management, London.
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Evaluating The Extent to Which People and Performance AMO Model has Contributed to the Strategic Human Resource Debate.
Stoik Musah,
LBS.Leicester,
shamsmusah@gmail.com
Strategic HRM system can be seen as an investment. This focuses on developing and maintaining a firm’s strategic infrastructure (Becker et al. 1997). The role of HRM can help the organisation achieve competitive advantage through their people. This is an advantage the organisation has that leads to superior performance relative to current and potential competitors. This therefore produces a significant relationship between HR systems and performance, where HR systems contribute to organisational performance. The ‘bundles’ of integrated HR practices are at the centre of High Performance Work Practices (HPWP). These practices include comprehensive employee recruitment and selection, incentive compensation and performance management, employee involvement and training. These practices will result in improving the knowledge, skills and abilities of the firms’ current and potential employees. This will lead to enhance employee motivation consequently a strategy to retain high quality workforce (Huselid, 1995). The best practice model emphasises the importance of horizontal alignment and vital role of managers in recognising the commitment of their employees which in return will lead to enhance performance, however, best practice approach tends to neglect the external environment on factors that can hinder or enhance organisational performance. The configurational approach has had a major influence on organisational performance as the approach firstly tends to look at the needs of the business and then designs its HR on a continuum to help deliver the business strategy, therefore, enhancing organisational performance.
Barney (1991) Resource Based View claims that HR can be the source of sustained competitive advantage; however, there are four criteria that have to be met. Firstly, the HR system has to add value to the firm production process; therefore, the level of individual performance has to be taken into consideration. Secondly, the skill the firm seeks has to be rare, this will help the firm maintain competitive advantage as this will cause the skills difficult to imitate and reproduce my competitors which is the third criteria of non imitability. Hence, investing in firm specific human capital will decrease this. Lastly, the firm specific skill should not be substitutable by other methods such as technology if it is to maintain a competitive advantage and continuously lead to high level of performance. Wright and McMahan (1992) claim that although these criteria are important in sustaining competitive advantage. The crucial factor is the actual creation of firm specific competitive advantage and then look at how the firm can capitalise on this to potential source of profitability.
High Performance Work Practices have to be tailored to meet an individual organisations specific context to produce high levels of performance. Therefore, in order for these practices to have an impact on organisational performance there needs to horizontal and vertical alignment where HRM systems support the business priorities (Golding, 2007). Support for this comes from Appelbaum (2000) AMO theory of performance. This theory states that performance is the function of employee ability, motivation and opportunity. The theory claims that people will perform well when they are able to do so (because they have the necessary knowledge and skills to the job), they have the motivation to do so (they will do the job because they want to) and finally, there will be enhance performance if their work environment provides the necessary support (for example through functioning technology).
It is therefore important for HR to be ‘fitted’ to business strategy. This can be done in a number of ways take for example the influence HRM practices have on employee skills through the acquisition and retention of the firm capital. Recruitment strategies often include an attempt to sell the organisation as an attractive place to work as this will reach out to a pool of applicants. However, in order to be effective this has to be paired with reliable and valid selection processes to capture high quality staff into the organisation, therefore, increasing the chances of higher profitability and other high performances such as high standard of customer service. Formal and informal training is also necessary in order to further develop the workforce such as coaching, mentoring, on the job experience, management develop can all aid personal as well as business growth. However, these types of training programmes can only be implemented by Walton (1999) refer to as Strategic HRD where there is a supportive learning culture. This will means that HRD will have to take on a more influential role by helping individuals to develop and innovate through activities such as team working. Yet, in order to successfully tap into the tacit knowledge of individual employees there has to be trusting relationships within the organisation, as knowledge is not only a competitive resource for the organisation but also for the individual. By converting tacit knowledge into explicit, this can lead to threats of unemployment for the individual concerned. If anything the firm needs to make sure that strategies are implemented to retain these high quality individuals within the firm as they have the skills and knowledge for innovation which could lead to high levels of performance as well as sustaining competitive advantage in the long term.
Yet it can be argued for these employees to want to share their knowledge as well as continuously performing to high standards, these individual employees need to have some kind of motivation. Employers need to find ways to motivate staff not only to work harder but also smarter. This can be assessed through forms of performance appraisal which will direct employers to evaluate how well individuals or groups are performing. These appraisals can be linked in with incentive compensation schemes that can be aligned to the interest of the employee such as ESOP. Another common form of financial incentive from the best practice model is contingent pay, when an organisation is performing well employees are rewarded accordingly. However, there have been cases where senior managers of poor performing organisations have been rewarded with large pay-off, therefore, eliminating the purpose of the scheme (Golding, 2007). High performance is often initiated when employees work together in teams as they can share high ideas and this can lead to innovation. But tension may arise which has to be managed effectively when trying to implement these schemes within the organisation, as those who traditionally earned good bonuses on an individual systems of performance related pay, do not welcome team based production systems (Appelbaum, 2000).
It is often difficult to see how organisations operating in highly competitive markets, with tight financial control and margins would be able to invest in HR practices that promote best practice model. This can be overcome by implementing non financial strategies such as matching individual skills and potential to the skills that are required by the job. That way even the firms that have limited resources are able to increase high levels of employee satisfaction and commitment which will naturally lead to lower levels of turnover and high levels of performance from these individuals. This is also supported by the balance score card (Kaplan and Norton, 1996) which also contributes to the development of SHRM. The strategy involved is establishing goals and measuring cause and effect relationships as well as the shared understanding between different areas of the business. However, the balanced scorecard has been criticised as it does not have a direct link to productivity therefore, require the acknowledgement of the multidimensional nature of the organisational performance.
Although there has been is a link between SHRM and performance, there is a question of the validity of the research methods that has been used to gather the data such as questionnaires and self reports. This can lead to high levels of subjectivity. Also Wall & Wood found that in 25 of research studies, 21 of the studies had used single respondents as the sole source of data. This again is highly subjective and does not really get a holistic representation of the influence SHRM has on performance. Wall & Wood (2005) argue that in the relationship between SHRM and organisational performance should depend on using large scale, long term research in partnership between research, practitioner and government communities. There is also a lack of empirical evidence for many organisations to implement high commitment model and best practice, as this can be problematic due to the short-termist driven economy, where most organisations are just looking to increase return on shareholders value. Therefore, long term performance is not the focal point for many organisation, only looking to increase performance in the short term, hence integrated SHRM is of little value to these organisations.
In conclusion, SHRM can be seen as an investment and can help the organisation achieve a competitive advantage against current and potential competitors. This superior performance indicates that there is a significant relationship between HR systems and performance, with bundles of integrated HR being at the centre of High Performance Work Practices. These practices must have an impact on organisational performance through horizontal and vertical alignment. However, in order to be highly effective AMO theory of performance needs to be applied within practices, where the employee ability, motivation and opportunity for performance are taken into consideration. This can be achieved through bundles of HR such as training and development, recruitment and selection, reward and recognition. Although these factors play a crucial part on high performance it is also important to ensure that there is a supportive organisational culture and all key stakeholders are involved. The RBV claims that there are four criteria have to be met in order for HR to have a sustainable competitive advantage: HR systems have to be valuable, non imitable, non substitutable as well as be rare to ensure that high performance is maintained and to ensure sustainable competitive advantage.
LBS.Leicester,
shamsmusah@gmail.com
Strategic HRM system can be seen as an investment. This focuses on developing and maintaining a firm’s strategic infrastructure (Becker et al. 1997). The role of HRM can help the organisation achieve competitive advantage through their people. This is an advantage the organisation has that leads to superior performance relative to current and potential competitors. This therefore produces a significant relationship between HR systems and performance, where HR systems contribute to organisational performance. The ‘bundles’ of integrated HR practices are at the centre of High Performance Work Practices (HPWP). These practices include comprehensive employee recruitment and selection, incentive compensation and performance management, employee involvement and training. These practices will result in improving the knowledge, skills and abilities of the firms’ current and potential employees. This will lead to enhance employee motivation consequently a strategy to retain high quality workforce (Huselid, 1995). The best practice model emphasises the importance of horizontal alignment and vital role of managers in recognising the commitment of their employees which in return will lead to enhance performance, however, best practice approach tends to neglect the external environment on factors that can hinder or enhance organisational performance. The configurational approach has had a major influence on organisational performance as the approach firstly tends to look at the needs of the business and then designs its HR on a continuum to help deliver the business strategy, therefore, enhancing organisational performance.
Barney (1991) Resource Based View claims that HR can be the source of sustained competitive advantage; however, there are four criteria that have to be met. Firstly, the HR system has to add value to the firm production process; therefore, the level of individual performance has to be taken into consideration. Secondly, the skill the firm seeks has to be rare, this will help the firm maintain competitive advantage as this will cause the skills difficult to imitate and reproduce my competitors which is the third criteria of non imitability. Hence, investing in firm specific human capital will decrease this. Lastly, the firm specific skill should not be substitutable by other methods such as technology if it is to maintain a competitive advantage and continuously lead to high level of performance. Wright and McMahan (1992) claim that although these criteria are important in sustaining competitive advantage. The crucial factor is the actual creation of firm specific competitive advantage and then look at how the firm can capitalise on this to potential source of profitability.
High Performance Work Practices have to be tailored to meet an individual organisations specific context to produce high levels of performance. Therefore, in order for these practices to have an impact on organisational performance there needs to horizontal and vertical alignment where HRM systems support the business priorities (Golding, 2007). Support for this comes from Appelbaum (2000) AMO theory of performance. This theory states that performance is the function of employee ability, motivation and opportunity. The theory claims that people will perform well when they are able to do so (because they have the necessary knowledge and skills to the job), they have the motivation to do so (they will do the job because they want to) and finally, there will be enhance performance if their work environment provides the necessary support (for example through functioning technology).
It is therefore important for HR to be ‘fitted’ to business strategy. This can be done in a number of ways take for example the influence HRM practices have on employee skills through the acquisition and retention of the firm capital. Recruitment strategies often include an attempt to sell the organisation as an attractive place to work as this will reach out to a pool of applicants. However, in order to be effective this has to be paired with reliable and valid selection processes to capture high quality staff into the organisation, therefore, increasing the chances of higher profitability and other high performances such as high standard of customer service. Formal and informal training is also necessary in order to further develop the workforce such as coaching, mentoring, on the job experience, management develop can all aid personal as well as business growth. However, these types of training programmes can only be implemented by Walton (1999) refer to as Strategic HRD where there is a supportive learning culture. This will means that HRD will have to take on a more influential role by helping individuals to develop and innovate through activities such as team working. Yet, in order to successfully tap into the tacit knowledge of individual employees there has to be trusting relationships within the organisation, as knowledge is not only a competitive resource for the organisation but also for the individual. By converting tacit knowledge into explicit, this can lead to threats of unemployment for the individual concerned. If anything the firm needs to make sure that strategies are implemented to retain these high quality individuals within the firm as they have the skills and knowledge for innovation which could lead to high levels of performance as well as sustaining competitive advantage in the long term.
Yet it can be argued for these employees to want to share their knowledge as well as continuously performing to high standards, these individual employees need to have some kind of motivation. Employers need to find ways to motivate staff not only to work harder but also smarter. This can be assessed through forms of performance appraisal which will direct employers to evaluate how well individuals or groups are performing. These appraisals can be linked in with incentive compensation schemes that can be aligned to the interest of the employee such as ESOP. Another common form of financial incentive from the best practice model is contingent pay, when an organisation is performing well employees are rewarded accordingly. However, there have been cases where senior managers of poor performing organisations have been rewarded with large pay-off, therefore, eliminating the purpose of the scheme (Golding, 2007). High performance is often initiated when employees work together in teams as they can share high ideas and this can lead to innovation. But tension may arise which has to be managed effectively when trying to implement these schemes within the organisation, as those who traditionally earned good bonuses on an individual systems of performance related pay, do not welcome team based production systems (Appelbaum, 2000).
It is often difficult to see how organisations operating in highly competitive markets, with tight financial control and margins would be able to invest in HR practices that promote best practice model. This can be overcome by implementing non financial strategies such as matching individual skills and potential to the skills that are required by the job. That way even the firms that have limited resources are able to increase high levels of employee satisfaction and commitment which will naturally lead to lower levels of turnover and high levels of performance from these individuals. This is also supported by the balance score card (Kaplan and Norton, 1996) which also contributes to the development of SHRM. The strategy involved is establishing goals and measuring cause and effect relationships as well as the shared understanding between different areas of the business. However, the balanced scorecard has been criticised as it does not have a direct link to productivity therefore, require the acknowledgement of the multidimensional nature of the organisational performance.
Although there has been is a link between SHRM and performance, there is a question of the validity of the research methods that has been used to gather the data such as questionnaires and self reports. This can lead to high levels of subjectivity. Also Wall & Wood found that in 25 of research studies, 21 of the studies had used single respondents as the sole source of data. This again is highly subjective and does not really get a holistic representation of the influence SHRM has on performance. Wall & Wood (2005) argue that in the relationship between SHRM and organisational performance should depend on using large scale, long term research in partnership between research, practitioner and government communities. There is also a lack of empirical evidence for many organisations to implement high commitment model and best practice, as this can be problematic due to the short-termist driven economy, where most organisations are just looking to increase return on shareholders value. Therefore, long term performance is not the focal point for many organisation, only looking to increase performance in the short term, hence integrated SHRM is of little value to these organisations.
In conclusion, SHRM can be seen as an investment and can help the organisation achieve a competitive advantage against current and potential competitors. This superior performance indicates that there is a significant relationship between HR systems and performance, with bundles of integrated HR being at the centre of High Performance Work Practices. These practices must have an impact on organisational performance through horizontal and vertical alignment. However, in order to be highly effective AMO theory of performance needs to be applied within practices, where the employee ability, motivation and opportunity for performance are taken into consideration. This can be achieved through bundles of HR such as training and development, recruitment and selection, reward and recognition. Although these factors play a crucial part on high performance it is also important to ensure that there is a supportive organisational culture and all key stakeholders are involved. The RBV claims that there are four criteria have to be met in order for HR to have a sustainable competitive advantage: HR systems have to be valuable, non imitable, non substitutable as well as be rare to ensure that high performance is maintained and to ensure sustainable competitive advantage.
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