Distinct perspectives on HR strategy and implementation aspects have emerged, namely, the universal, contingency, and configurational perspectives. First, the universal perspective holds the view that the adoption of "best HR practice" will inevitably result in improved organizational performance. Therefore, this perspective does not require the purposeful integration between organizational strategy and HR plans, policies, and practices.76 Second, the contingency perspective suggests that the potency and effectiveness of HR aspects hinge upon corporate strategy in that a firm adopting HR elements that are fitting for its competitive strategies will be more effective. Organizational performance should thus be positively impacted when HR activities mutually reinforce the firm's choice of strategy.77 Third, the configurational perspective embraces the view that a fit between HR activities and organizational strategy is vital. Thus, HR practices become a key factor in the attainment of organizational goals and performance.78 The configurational view assumes that HR practices must be characterized by their consistency with external, organizational, and strategic conditions (i.e., vertical fit) and internally consistent (i.e., horizontal fit). This dual form of integration has a synergistic effect for the firm.79 Hitherto, there is limited evidence regarding the role, relevance, and effectiveness of these three perspectives. Nonetheless, some evidence has been reported on the synergistic benefits from an alignment of HR policies and practices with one another and with the overall organizational strategy.80 It has been reported that growth and profitability are ultimately the result of alignment between people, customers, strategy, and processes. More specifically, firms that consistently land on their feet during turbulent times are managed by people who keep everyone focused and centered on a few key business objectives. They do so in a way that creates a self-aligning and self-sustaining culture that distributes leadership and energy throughout their firms and unleashes a kind of organizational power and focus on "alignment."81

HR scholars have examined and questioned the basis of some of the universal claims made about a possible correlation between the implementation of HR strategies and improved organizational performance. There is concern about the prescriptive nature of HR interventions applicable to firms, irrespective of context and priorities, with the expectation of similar level responses and results.82 There is still an ongoing debate among and between HR scholars and professionals as to what exactly constitutes "best practice."83 In other words, what established HR methods and techniques will most likely produce superior organizational results? It has been suggested that organizational activities and practices that are designed to empower and develop the employee in addition to positively affect the bottom line of the firm are considered "best practice."84


Organizational culture has traditionally been considered a form of organizational capital.8 5 Researchers agree that the concept of corporate culture is difficult to imitate or duplicate86 due to its inherent tastiness, complexity, and specificity.87 Barney characterizes organizational culture as valuable, rare, and imperfectly imitable, thereby possessing high potential for creating sustainable competitive advantage for a firm.88 It may be deduced that organizational culture can have a direct impact on achieving higher levels of firm performance.89 Organizational culture is seen as an intangible component of a firm/0 encompassing social phenomena, including beliefs, values, behaviors, and assumptions, which become entrenched within organizational members.8 1 These social phenomena constituting organizational culture shape the way a firm conducts its business, how the firm interacts with the external environment, and how a firm deals with its internal processes.92

There is some debate within the management literature arguing that HR practices do not directly impact organizational performance.93 There are assertions that there is a missing link between the two variables leading to the emergence of a "black box," which explains an interest in the study of organizational culture. It has been noted that organizational culture is entrenched in the everyday working lives of cultural members94 and manifested in the behavior of a firm's employees.85 The organizational culture of a firm is believed to have a significant impact on employees' job attitudes as well as their efficiency and productivity levels.96 A firm's culture also has the capacity to help it execute its plans and meet its strategic goals.97

Barney, who championed the development of the RBV of the firm, argues that certain firm-specific resources and capabilities can lead to sustainable competitive advantages and, thus, increase organizational performance. He affirms that a firm's culture can in fact be one of these resources. If a firm's culture meets the four criteria of being valuable, rare, imperfectly imitable, and nonsubstitutable, then it has an enhanced opportunity to be a source of sustained competitive advantage.98 An appropriate HR system has the capacity to create and foster capabilities that themselves become sources of competitive advantages.89 For example, Nordstrom, an upscale department store in the United States, attributes its successes to its culture with a focus on customer service, thereby generating a source of sustainable competitive advantage for the firm and its stakeholders. Another prominent example is Southwest Airlines, which is one of the few U.S. airlines that have maintained profitability in an industry notorious for financial losses. Southwest Airlines stresses the importance of a strong work environment focusing on all its stakeholders, including employees. In the words of its current CEO Gary Kelly, "People aren't an expense—our People are our heart and soul."

Finally, it has been stated that a firm's culture and its HR systems can be a valuable resource for the firm.100 Thus, they play a significant role in the overall performance and business success of the entire organization.101 Although it has been stated that HR practices affect organizational culture, which in turn, impact a firm's performance, we need to be careful as to the exact nature of possible claims of correlations and relationships between organizational variables. Most likely, there are a number of other internal and external variables that explain possible links between HR systems and firm performance. What is certain, though, is that organizational culture shapes the work environment in which performance occurs, and it is this performance that drives the firm's bottom line.

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