Examining HR Architecture Snell & Lepak

Journal of Management 2002 28(4) 517–543

Examining the Human Resource Architecture:The Relationships Among Human Capital,

Employment, and HumanResource Configurations

David P. Lepak∗Department of Management and Organization, Robert H. Smith School of Business, University of Maryland,

3341 Van Munching Hall, College Park, MD 20742-1815, USA

Scott A. SnellDepartment of Management and Organization, Smeal College of Business Administration, The Pennsylvania

State University, 417 Beam B.A.B., University Park, PA 16802, USA

Received 8 May 2000; received in revised form 16 May 2001; accepted 14 August 2001

In this study we examined the characteristics of human capital as well as the human resource(HR) configurations used for employees in four different employment modes (knowledge-basedemployment, job-based employment, contract work, and alliance/partnership). Results from148 firms show that the strategic value and uniqueness of human capital differs across thesefour employment modes. In addition, each employment mode is associated with a particu-lar type of HR configuration (commitment-based, productivity-based, compliance-based, andcollaborative).© 2002 Elsevier Science Inc. All rights reserved.

Research in strategic human resource management (SHRM) has been central in shiftingour attention toward firm-level issues related to managing people. Rather than focusing onindividual jobs and the employees that occupy them, SHRM researchers have establisheda broader perspective that is oriented toward managing the workforce as a whole. Andinstead of focusing on particular human resource (HR) practices that are used independentlyor in isolation, SHRM researchers look more broadly at bundles of HR practices that areimplemented in combination.

∗ Corresponding author. Tel.:+1-301-405-8144; fax:+1-301-314-8787.E-mail address: [email protected] (D.P. Lepak).

0149-2063/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved.PII: S0149-2063(02)00142-3

518 D.P. Lepak, S.A. Snell / Journal of Management 2002 28(4) 517–543

In order to study strategic HR at an organizational level, however, researchers havetended to aggregate—both conceptually and empirically—all employees as though theywere managed with a single (or at least dominant) HR configuration. Snell and Dean, forexample, originally analyzed the HR practices of different employee groups in advancedmanufacturing environments, but later combined the data into a single profile (Snell & Dean,1992, 1994; Youndt, Snell, Dean & Lepak, 1996). Similarly, Huselid (1995)originallycollected separate HR data on exempt and non-exempt employees, but combined it usingweighted averages in order to portray one profile.

While such aggregation aids parsimony, we would argue that doing so masks potentiallyimportant aspects of how differentemployee groups are managed strategically. In one of theearliest papers on strategic HR,Miles and Snow (1984)noted that while certain HR practicesmight be centralized or standardized for all employees, others might be customized tomatch the specific requirements of particular employee groups. These differences are no lessimportant; they are, in fact, crucial aspects of a firm’s strategic approach to HR.Two streamsof research are particularly salient here. In the context of internal vs. external employment,Davis-Blake and Uzzi (1993),Matusik and Hill (1998),Mangum, Mayall and Nelson (1985),Osterman (1987), and others have found that firms use different modes of employment forstrategic reasons. Similarly, in the context of psychological contracts,Rousseau (1995),Tsui, Pearceand others have shown that firms establish different employment relationshipswith employees—and modify the scope of HR investments—depending on their expectedcontribution to the firm.

Building on this,Lepak and Snell (1999)argued that, “. . . it may be inappropriate tosimplify the nature of human capital investments and suggest that there exists a single opti-mal HR architecture for managing all employees” (p. 32). As different groups of employeespossess skills that vary in importance to a firm’s competitiveness, the HR practices used tomanage them are likely to vary (Jackson, Schuler & Rivero, 1989). Although we know thatdifferent employment modes exist, empirical examination of HR systems at this employ-ment group level of analysis remains limited. The purpose of this study is to address theseissues by focusing on HR systems used for employees in different employment modes.Following Lepak and Snell (1999), we frame our investigation by distinguishing amongfour types of employment: knowledge work, job-based employment, contract work, andalliance/partnerships. We then differentiate among these employment modes by examiningthe strategic value and uniqueness of human capital embodied within each as well as theHR configurations used to manage them.

Theory and Hypotheses

We begin our discussion by recognizing that firms rely upon a variety of differentmodes of employment.Osterman (1987), for example, examined differences amongindustrial, salaried, craft, and secondary employment subsystems in firms. More recently,researchers such asMatusik and Hill (1998), Rousseau (1995), Tsui et al. (1995)havestudied differences in employment relationships that range from long-term relationshipswith core employees to short-term exchanges with external workers and other forms ofcontract labor.

D.P. Lepak, S.A. Snell / Journal of Management 2002 28(4) 517–543 519

Related, there is a fair amount of research that focuses on the choice between internal-ization and externalization of employment. For example,Baron, Davis-Blake and Bielby(1986)found that choices about employment modes are frequently driven by differencesin employee skills (e.g., firm-specificity), occupational differentiation, technology, andthe like. Others have argued that differences represent, among other things, differencesin their human capital (i.e., knowledge, skills, and abilities that have economic valueto the firm) (Davis-Blake & Uzzi, 1993; Stewart, 1997). As noted by Mangum, Mayall,and Nelson,

Many employers carefully select a core group of employees, invest in them, and takeelaborate measures to reduce their turnover and maintain their attachment to the firm.Many of these same employers, however, also maintain a peripheral group of employeesfrom whom they prefer to remain relatively detached, even at the cost of high turnover,and to whom they make few commitments. (1985: 599)

In order to integrate this research and link it more broadly to strategy and HR,Lepak and Snell (1999)argued that differences in employment are likely to reflect dif-ferences in human capital that would then be accompanied by variations in the HR con-figurations used to manage employees.Lepak and Snell (1999)focused on the strategicvalue and uniqueness of human capital as principle drivers of employment modes and HRconfigurations. Thestrategic value of human capital refers to its potential to improve theefficiency and effectiveness of the firm, exploit market opportunities, and/or neutralize po-tential threats (Barney, 1991; Ulrich & Lake, 1991). Theorists such asBarney (1991)andQuinn (1992)suggest that as the strategic value of human capital increases, so too does thelikelihood that firms will employ it internally.

Theuniqueness of human capital, on the other hand, refers to the degree to which it israre, specialized and, in the extreme, firm-specific (Barney, 1991; Williamson, 1975). Hu-man capital that is not readily available in the labor market, and is not easily duplicated byother firms, provides a potential source of competitive advantage (Snell, Youndt & Wright,1996). Transaction-costs theory suggests that firm-specific human capital increases infor-mation asymmetry, thereby creating strong economic incentives to employ it internally (cf.,Williamson, 1975). Human capital theory (e.g.,Becker, 1964) posits that firms are morelikely to invest in education, training, and development for skills when they are not trans-ferable. Individuals are expected to make their own investments in generic (transferable)skills, or defray the firm’s costs through lower wages. Firms are viewed as being morelikely to acquire generic human capital externally by paying the market wage for labor(Schultz, 1961; Wallace & Fay, 1988).

While this distinction between “make and buy” is perhaps clearest for internal employ-ment,Matusik and Hill (1998)suggest that firms invest more in developing and improv-ing relationships with external workers in cases where their partnership focuses on cre-ating and transferring private knowledge. Development of unique human capital is oftenpath-dependent (Barney, 1991; Itami, 1987) and may require tacit knowledge that is createdin situ (Polyani, 1967; Williamson, 1975). Because of this, it likely needs to be developedand nurtured over time. If we juxtapose the dimensions of strategic value and uniqueness(seeFigure 1), we derive a model adapted fromLepak and Snell (1999)of the relationshipsbetween human capital characteristics and employment modes.


Figure 1. Human capital characteristics and employment modes (adapted fromLepak and Snell (1999)).

Human Capital and Employment

Knowledge-based employment. Lepak and Snell (1999)argued that human capital inquadrant 1 is most likely to be viewed as core to the firm. Because of their value, theseemployees are able to contribute to a firm’s strategic objectives. When human capital isboth valuable and unique, it represents the knowledge base around which firms are mostlikely to build their strategies (Snow & Snell, 1993; Stewart, 1997). These workers arethose most likely to represent a firm’s knowledge workers—those “people who use theirheads more than their hands to produce value” (Horibe, 1999, p. xi). In these instances,firms are likely to rely on a knowledge-based employment mode that focuses on internaldevelopment and long-term employee commitment for their core employees (cf.Lepak& Snell, 1999; Rousseau, 1995; Tsui et al., 1995). Lepak and Snell (1999)used the term“internal development” to describe this quadrant. While the term “internal” describes em-ployment, the term “development” connotes an orientation toward training, education, andother skill-enhancing activities. To keep employment modes and HR distinct for purposesof research, we use the term “knowledge-based employment” for this quadrant to reflectan employment mode that is structured around the skills and competencies of employeesrather than the execution of programmed tasks and job routines.

Job-based employment. Human capital that has strategic value but limited uniquenessfalls within the bottom right quadrant of the HR architecture. As with quadrant 1, the valueof human capital in quadrant 2 provides an incentive to employ these workers internally. Atthe same time, these workers’ skills are not particularly unique to the firm and thus, cannotserve as a differentiating source of competitiveness. In other words, workers within thisquadrant are able to make significant contributions to a firm while possessing skills that arewidely transferable. As with quadrant one, the notion of an acquisition approach suggested


by Lepak and Snell (1999)also confounds employment with HR. The term “acquisition”implies a focus on staffing (vs. development). We use the term job-based employment toreflect the fact that employees are hired to perform predetermined tasks.

Contract work. Quadrant 3 contains human capital that is neither of particularly highstrategic value to a firm nor unique. Workers in this category are prime candidates foroutsourcing. In scenarios where “one job-holder is pretty much as good as another” (Stewart,1997, p. 90) firms would be more likely to seek short-term contractual arrangements for theperformance of tasks with limited scope, purpose, or duration. At the extreme, if value-addedis low and skills are generic, employment decisions may reduce to calculations of costs (cf.Abraham & Taylor, 1996; Davis-Blake & Uzzi, 1993). In such cases, firms may reducetheir employment costs while increasing their flexibility by contracting for ancillary humancapital (Lepak & Snell, 1999).

Alliances/partnerships. Lepak and Snell (1999)proposed that firms would rely onalliances/partnerships for human capital that is unique but of insufficient strategic valueto employ internally. In alliances, external workers provide “non-resident knowledge-intensive services to client firms” (Sharma, 1997, p. 759). Frequently this occurs througha co-production process in which both parties contribute to some specific outcome (cf.Parkhe, 1993; Sharma, 1997). For example, research and development labs, legal consul-tants, accounting and information systems firms, investment bankers, and other externalagencies are often used by firms to provide long-term customized services (Sharma, 1997).Through partnerships, firms gain human capital without incurring the entire costs of internalemployment while gaining the ability to maintain an ongoing relationship that is necessaryfor application of unique and specialized skills.

Viewed in combination, we anticipate that employees will have significantly higher valuein knowledge-based and job-based employment modes than in alliances and contractualarrangements. Similarly, we expect employees will have significantly higher uniqueness inalliances and knowledge-based employment modes than in contract work and job-basedemployment.

Hypothesis 1: Human capital value will be higher within knowledge-based employmentand job-based employment than within contract work and alliances.

Hypothesis 2: Human capital uniqueness will be higher within alliances and knowledge-based employment than within contract work and job-based employment.

Employment and HR Configurations

If the characteristics of human capital vary across employment modes, there are likely tobe implications for the characteristics of HR configurations. In part, these differences arelikely to reflect the systems used to obtain, retain, and develop these employees but they arealso likely to reflect the nature of expectations and obligations underlying each employmentmode.Figure 1presents these differences for an HR architecture.


Knowledge-based employment and HR. If knowledge-based workers possess valuableand unique skills, firms would logically invest heavily in training and development, par-ticularly in areas related to firm-specific skills. But the implications for HR extend morebroadly. As the focus is on the development and utilization of proprietary knowledge, man-agers are likely to structure knowledge work to allow for flexibility, change, and adaptation.To maximize their contribution, firms are likely to empower these workers, encouragingparticipation in decision making and discretion on the job. And to protect their human capitalinvestments and encourage commitment to the firm’s long-term success, these employeeswould likely receive a considerable degree of employment security (Koch & McGrath,1996).

As the importance of an employee’s ability to learn and develop firm-specific competen-cies increases, staffing decisions are likely to focus on aptitude rather than achievement. Tofurther emphasize the importance of learning over time, performance appraisal systems arelikely to focus on development and feedback (Snell & Dean, 1992; Ulrich & Lake, 1991)and firms may implement knowledge-based pay programs that reward employees for accu-mulating multiple skills (cf.Delany & Huselid, 1996). To reinforce a long-term orientationand commitment to these employees firm’s may rely on stock options and other forms oflong-term compensation.

Job-based employment and HR. The human capital of job-based employees can beimportant for creating customer value. But because it is more transferable than that ofknowledge-workers, firms are not likely to make the same kind of human capital investments(Becker, 1964). The idiosyncratic characteristics of job-based workers are likely to bede-emphasized, and their participation is likely to be limited to the boundaries of their jobs.In these cases, managers are likely to rely on a productivity-based HR configuration; thatis, hiring employees, paying them a market-based wage, focusing on their job performance,and preparing for the possibility that they may leave (Becker, 1964; Flamholtz & Lacey,1981). The distinction between a commitment-based and a productivity-based HR systemrepresents the “make or buy” decision for human capital.

Rather than developing generic skills, firms are more likely to acquire individuals who al-ready possess the needed skills (cf.Koch & McGrath, 1996; Snell & Dean, 1992;Tsui et al., 1995). Given that these individuals may leave, managers are likely to standard-ized jobs to facilitate more rapid replacement. This does not mean that these employeesare “short-timers.” It simply means that since their human capital is transferable, firms arelikely to establish a shorter time horizon for ensuring their productivity. Rather than focus-ing on developmental performance appraisals, firms would more likely adopt a short-termorientation with a results oriented component (Snell, 1992; Snell & Youndt, 1995). Finally,compensation systems are also likely to be job-based (Mahoney, 1989) balancing marketwages with concerns over internal equity. If incentives are used, they are likely to focus onnear-term productivity targets.

Contractual work and HR. While organizations often seek at least limited continuityand loyalty from employees in a job-based employment mode, in contractual arrangementsfirms may simply focus on the economic aspects of the contract (Rousseau, 1995) andstrive to ensure worker compliance with preset rules, regulations, and/or procedures. To do


so, these economic exchanges would likely “contain explicit definitions for equivalence,a distinct timetable for the exchange, and terms which are discussible, negotiable, andenforceable” (Mahoney & Watson, 1993, p. 144). Much likeMahoney and Watson (1993)authoritarian model, firms would probably limit the discretion of these workers and con-centrate on enforcing rules and regulations, upholding specific provisions regarding workprotocols, and ensuring conformance to preset standards. Any training and performanceappraisal activities would likely be limited to ensuring compliance with company poli-cies, systems, procedures, and outcomes (cf.Mahoney, 1989; Rousseau & Parks, 1993).Given the transactional nature of the exchange and heavy emphasis on conformance, com-pensation would likely be based on an hourly wage and the accomplishment of specifictasks.

Alliances/partnerships and HR. HR in this quadrant is non-traditional but instrumentalfor integration and collaboration. At a general level, a collaborative HR configuration wouldbe orientated toward sharing information and developing trust between partners (Ring & Vande Ven, 1992). Given the need for joint production (a characteristic that distinguishes alliancepartners from contract work), managers would likely recruit/select alliance partners whocan integrate their knowledge and experience into the firm and work in a team environment(cf. Salas, Dickinson, Converse & Tannenbaum, 1992). Since the exchange of informationand joint outcomes of the collaboration are important, firms would likely invest heavilyin the relationship itself rather than developing the alliance partner’s human capital. Tosupport this, firms would likely arrange team building initiatives and evaluations wouldtend to emphasize developmental issues such as the extent of learning and the evolutionof the relationship (Matusik & Hill, 1998). Finally, firms are likely to establish collectiveincentives that encourage both parties to share and transfer information (cf.Davenport &Prusak, 1998; Quinn, Anderson & Finkelstein, 1996).

Based on these arguments, we anticipate that the HR configuration predicted to be usedfor each employment mode will be significantly greater than the other three HR configura-tions. For example, for knowledge workers, the commitment-based HR configuration willbe significantly greater than the productivity-, compliance-, and collaborative-based HRconfigurations.

Hypothesis 3: Within the knowledge-based employment mode the commitment-based HR configuration will be significantly greater than the other three HR confi-gurations.

Hypothesis 4: Within the job-based employment mode the productivity-based HRconfiguration will be significantly greater than the other three HR configurations.

Hypothesis 5: Within contractual work arrangements the compliance-based HRconfiguration will be significantly greater than the other three HR configurations.

Hypothesis 6: Within alliances the collaborative-based HR configuration will besignificantly greater than the other three HR configurations.


Methods

The primary unit of analysis in this study was the employment mode. Our data collectionprocedure involved asking participants to answer questions about one specific employmentmode within their firm rather than provide information for all four employment modes. Thisprocedure was designed to limit potential contrast errors respondents might have committedif they were asked to describe the HR systems for all four modes (cf.Salancik & Pfeffer,1978). It also helped us avoid violating the assumption of independence of the responses(cf. Rosenthal & Rosnow, 1991). As a result of this design, our analytic tests focus onexamining employment mode data from different firms rather than comparing the attributesof all four employment modes within each firm.

We identified a pool of 2375 firms from theDirectory of Corporate Affiliations to representa broad sample of organizations. We only selected firms for which public information wasavailable to enable the collection of archival variables. Holding companies and firms withless than 200 employees were excluded from the population to eliminate the possibility ofincluding very small firms that might not have formal HR procedures (Huselid & Becker,1996).

Senior Executives

The initial step for this study was to contact the senior executive (CEO or President) fromeach firm and ask for his or her participation. Each of the 2375 potential respondents in thepopulation was randomly assigned one of four employment modes and was sent a surveythat included the entire range of HR practices as well as the measures of human capital.They were instructed to indicate the extent to which their firm utilized each employmentmode, but then were asked to answer the HR and human capital questions only with regardto the employment mode they were assigned. After 3 weeks, a prompting letter and secondsurvey was mailed to those who had not yet responded. A total of 84 senior executivesparticipated in the study.

Senior HR Managers

Each senior executive was asked to identify a senior HR manager (i.e., vice presidentof human resources, etc.) within his or her firm. Seventy-four senior HR managers wereidentified. Given this limited number, we directly contacted the senior HR manager of eachfirm to participate in this study. We sent a questionnaire assessing the characteristics ofhuman capital and HR practices for a single employment mode (assigned randomly) tothe 1478 firms in theDirectory of Corporate Affiliations that had identified a senior HRmanager. After 3 weeks, a prompting letter and second survey was mailed to those who hadnot yet responded. A total of 102 senior HR managers participated in this study: 31 identifiedby the senior executives and 71 identified through theDirectory of Corporate Affiliations.

Line Managers

Each senior executive and senior HR manager was also asked to identify three linemanagers familiar with the other three employment modes that they did not emphasize. In


total, 114 line managers from 53 firms were identified. Each line manager was sent a surveyassessing the human capital and HR practices used within a single employment mode notassessed by the senior HR manager or senior manager. After 3 weeks a prompting letter andsecond survey was mailed to those who had not yet responded. A total of 48 line managersparticipated.

Instrumentation and Variables

Employment mode. At the beginning of each questionnaire participants were provideddescriptions of the four employment modes of interest in the study. (1) Knowledge-basedemployment—relationships in which firms develop and maintain a long-term commitmentto full-time employees over time (e.g., loan officers in banks, R&D in pharmaceuticalfirms, etc.). (2) Job-based employment—relationships in which employees are hired ona full-time basis to contribute immediately to the firm by performing a specific set oftasks (e.g., accountants, sales representatives, assembly line workers, etc.). (3) Contractwork—relationships in which external individuals are contracted to perform tasks withlimited scope, purpose, or duration (e.g., outsourced workers, temporary workers, etc.). (4)Alliance/partnership—relationships in which firms establish ongoing, mutual partnershipswith independent/autonomous to jointly perform some tasks or projects (e.g., consultants,joint venture partners, key subcontractors, etc.).

After describing the four employment modes, we instructed each participant that theirsurvey would focus only on one of the four, and we told them which mode this wouldbe (i.e., knowledge-work, job-based employment, contract work, or alliance). To makecertain that respondents understood and were visualizing a particular subset of jobs, weasked them to record on their survey which jobs their firm typically employed in theemployment mode their survey emphasized.Table 1displays a sample of the jobs iden-tified by respondents. What is interesting is that some jobs are listed in multiple modes.We believe that this reflects that firms allocate the same jobs in different ways. Somefirms may internalize a subset of jobs while other firms may use external labor for thesame jobs.

Table 1Sample of jobs identified for each employment mode

Alliances/partnerships: actuarial consulting,architectural services, consultants, executivedevelopment trainers, human resourceconsultants, benefits administration, managementconsultants, organizational development, softwareengineers, psychologists

Knowledge-based employment: analysts, artists,strategic planning, middle management, designengineers, mechanical engineers, functionalmanagers, exempt engineers, salespersons,professional employees, research anddevelopment employees, research scientists

Contract work: administrative positions, technicaljobs, assemblers, low level clerical, programmers,consultants, drafting support, janitorial,maintenance, general labor, support staff,temporary workers

Job-based employment: accountants, administrativepositions, engineers, salespersons, graphicdesigners, customer service agents, drivers/deliveryrepresentatives, account managers, human resourceprofessionals, lawyers, trainers


Human capital characteristics. The strategic value of human capital was measuredwith a 12-item index grounded in theoretical work byPorter (1985), Quinn (1992), Snellet al. (1996), andUlrich and Lake (1991). As noted above, human capital is valuable to theextent that it contributes to a firm’s competitive advantage or core competence by improvingefficiency and effectiveness, exploiting opportunities, or neutralizing threats (Barney, 1991;Porter, 1985). The uniqueness of human capital was assessed with a 10-item index groundedin theoretical work byBarney (1991), Snell et al. (1996), andWilliamson (1975)and wasintended to capture the extent to which a particular form of human capital is idiosyncratic toa particular firm. These two indices were measured on a 5-point Likert scale (1= stronglydisagree, 5= strongly agree) and consist of the mean value for the multiple items comprisingeach index. The items are listed inAppendices A and B.

HR configurations. All respondents were asked to assess the degree of reliance onHR practices related to job design, recruitment and selection, training and development,performance appraisal, and compensation for the employment mode indicated on theirsurvey. Following the procedures used byMacDuffie (1995)andYoundt et al. (1996), eachconfiguration was operationalized as an additive index of HR practices. Operationally, theHR configurations increase in value by “increasing the number of practices they employwithin the system or by using the practices in an HR system in a more comprehensiveand widespread approach” (Youndt, Snell, Dean & Lepak, p. 849). The HR practices werecombined to form a commitment-based, a productivity-based, a compliance-based, and acollaborative HR configuration. These indices were calculated based on a 5-point Likertscale (1= strongly disagree, 5= strongly agree). For each case, all four HR indices werecalculated by taking the mean value of the items in each configuration. The specific practicesthat comprise each configuration are presented inTable 2.

This approach departs from previous approaches to operationalize HR configurations inthat it allows for the possibility that firm’s might resemble more than one HR configuration inhow they manage a particular employment mode. By testing for differences across employ-ment modes, our approach is conceptually similar to testing for adherence to an ideal profileor profile deviation for each HR configuration. The greater the mean on each index, the moresimilar it is to the HR configuration. The primary difference is that a score is calculated foreach of the HR configurations for each case rather than forcing cases to resemble only onesuch as with a cluster analysis or profile deviation approach. Thus, our approach allows forvariability in the degree to which firms adhere to one or multiple HR configurations.

In addition, our approach allows for equifinality within the HR configurations (Becker& Huselid, 1998; Delery & Doty, 1996). As noted byBecker and Huselid (1998)“sincethe typical index is a summation of individual elements of the HRM system, it implies thatwithin the broad middle range of the index there are multiple ways to increase its value”(p. 64). And while we anticipate that an extensive use of the HR practices comprisingeach configuration reflects a greater adherence to that particular configuration, we have noconceptual rationale to expect that any individual HR practice is more or less importantthan the others in the configuration.

Potential confounds and control variables. In an effort to enhance the statistical ac-curacy of our analytic procedures we controlled for organizational, industrial, and labor


Table 2HR configurations

Commitment Productivity Compliance Collaboration

These employees perform jobs that. . .

. . . allow them to routinely make changesin the way they perform their jobs

X

. . . are designed around their individualskills

X

. . . are extremely simple X

. . . are standardized throughout industry X Reversecoded

. . . are well-defined X

. . . empower them to make decisions X

. . . have a high degree of job security X

. . . include a wide variety of tasks X Reversecoded

. . . involve job rotation X

. . . require them to participate in cross-functional teams and networks

X

The recruitment/selection process for theseemployees. . .. . . assesses their industry knowledge andexperience

X

. . . emphasizes promotion from within X

. . . emphasizes their ability to collaborateand work in teams

X

. . . focuses on selecting the best all aroundcandidate, regardless of the specific job

X

. . . focuses on their ability to contribute toour strategic objectives

X

. . . involves screening many job candidates X

. . . is comprehensive (uses interviews,tests, etc.)

X

. . . places priority on their potential tolearn (e.g., aptitude)

X

. . . uses many different recruiting sources(agencies, universities, etc.)

X

Our training activities for these employees. . .

. . . are comprehensive X

. . . are continuous X

. . . emphasize improving current jobperformance

X

. . . emphasize on the job experiences X

. . . focus on compliance with rules,regulations, and procedures

X

. . . focus on team building andinterpersonal relations

X

. . . require extensive investments oftime/money

X

. . . seek to increase short-termproductivity

Reversecoded

X


Table 2 (Continued )

Commitment Productivity Compliance Collaboration

. . . strive to develop firm-specific skills/knowledge

X

Performance appraisals for these employees. . . are based on input from multiplesources (peers, subordinates, etc.)

X

. . . are based on objective, quantifiable results X

. . . are based on team performance X

. . . assess compliance with presetbehaviors, procedures, and standards

X

. . . assess quality of output X

. . . assess quantity of output X

. . . emphasize employee learning X

. . . focus on their ability to work with others X

. . . focus on their contribution to ourstrategic objectives

X

. . . include developmental feedback X

. . . measure productivity and efficiency X

Compensation/rewards for these employees. . . are based on hourly pay X. . . are based on straight salary X. . . are based on the market wage (going rate) X. . . are designed to ensure equity with peers X. . . focus primarily on their short-termperformance

Reversecoded

X

. . . have a group-based incentivecomponent (gainsharing, etc.)

X

. . . have an individual incentive/bonuscomponent

X

. . . include an extensive benefits package X

. . . include employee stock ownershipprograms (ESOP, etc.)

X

. . . place a premium on their industryexperience

X

. . . provide incentives for new ideas X

. . . value seniority X

market effects during all statistical analyses. Our organizational variables focus on firmsize, unionization, firm performance, and extent of diversification. Firm size was assessedby the natural logarithmic transformation of the number of full-time employees in the orga-nization (Kimberly, 1976). Unionization was assessed by a single item (i.e., approximatelywhat percentage of your firm’s employees are unionized?). Return on investment (ROI) wascollected from theCompuStat database and was included to control for firm performanceand was measured as the average of the four fiscal quarters preceding data collection. Extentof diversification represents the number of industries (four-digit SIC codes) within whicheach firm operates.


The industry in which firms operate may influence how firm’s utilize the four employmentmodes. For instance, industries facing growth opportunities may be more likely to outsourcefor labor as a short-term solution to deal with increased labor demand. And while our samplesize precludes the possibility of controlling for each specific industry, we draw fromDessand Beard (1984)and control for industry munificence, dynamism, and complexity. Data forthese industry measures were obtained fromManufacturing USA, Industry U.S. and TradeOutlook, andWard’s Business Directory of U.S. Private and Public Companies. Industrymunificence, a measure of the amount of resources available to firms, was measured asthe regression slope coefficient divided by mean sales value when regressing time againstindustry sales for the past 5 years (1994–1998). Industry dynamism, a measure of theamount of change in each industry, was assessed using the same regression model and wasmeasured as the standard error of the regression slope coefficient divided by the mean salesvalue. Industry complexity focuses the degree of market concentration in each industry. Thisvariable was assessed using the MINL formula (Schmalensee, 1977) of sales concentrationthat reflects the relative organizational density within an industry.

Our labor market data were collected from theBureau of Labor Statistics database forthe 1-year period preceding the data collection for the state in which each firm was located.Unemployment was measured as the average unemployment rate for the year precedingdata collection. Net change in the unemployment was measured as the difference in theunemployment rate from 1997–1998. Percent change in unemployment from 1997–1998was measured to control for the relative magnitude of any changes in unemployment. Un-employment volatility, a measure of the stability or change in unemployment, was measuredas the standard deviation of the unemployment rate for the 12 months prior to the collectionof the survey data.

Results

Response Statistics

Of the 234 usable returned questionnaires, five indicated their firm does not rely onthe employment mode their questionnaire emphasized (a 1 on a 1–5 scale). These fiverespondents were removed from the sample leaving 229 usable surveys. In 23 instancestwo individuals from the same firm completed surveys focusing on identical employmentmodes. Because the level of analysis for this study rests at the employment mode level,we aggregated their perceptual responses to the employment level. In total, this sampleconsists of 206 cases from 148 firms (6.5%) of which 43 focus on alliances, 48 focuson knowledge-based employment, 50 focus on contract work, and 65 focus on job-basedemployment. These participating firms represent 86 different industries (four-digit SIC) andaverage 9836 full-time employees.

Across respondents, the reported mean use for each employment mode was 3.21 foralliances, 3.56 for knowledge-based employment, 3.02 for contract work, and 4.44 forjob-based employment. Those respondents focusing on the alliance mode reported a meanof 3.45, those focusing on knowledge-based employment reported a mean of 3.82, thosefocusing on contract work a mean of 3.22, and those focusing on job-based employment a


mean of 4.40. Considering that the means tended to be slightly higher for those completinga survey on a particular employment mode than the average for the entire sample, it ispossible that potential respondents who were not utilizing the employment mode sent totheir firm removed themselves from the sample.

We performed several tests for non-response bias. First, crosstab analysis was used toassess the possibility of non-response bias for industry differences at the four-digit SICcode level as well as for the level of diversification. The Pearson chi-square statistic wasnot significant at the .05 level for either industry membership or diversification. Using aone-way analysis of variance (ANOVA), no significant differences were found at the .05level between responding and non-responding firms in terms of firm size. Similarly, usinga one-way ANOVA, no significant differences were found with regard to ROI, return onassets, and firm sales between participating firms and a randomly selected sample of 250non-responding firms.

Following the procedures outlined byHuselid (1995)andKoch and McGrath (1996)wealso formally tested for sample selection bias in a series of regression analyses (for furtherdiscussion of this technique seeBerk, 1983andHeckman, 1979). Specifically, we generatedan inverse Mills ratio that captures the probability of responding to the survey as a function ofthree variables—diversification, firm size, and industry membership. Once calculated, thisratio was included in a regression analysis examining the relationships among human capitalcharacteristics, employment, and the HR configurations. The results remained consistentwhen the Mills ratio is included in the regression equations. Thus, including this correctionfor selectivity bias does not change any conclusions that stem from the results of this study.

Descriptive Statistics

Table 1shows the means, standard deviations, correlations, alphas, as well as interrateragreements (rwg), and intraclass correlation coefficients (ICC(1)) for the 23 firms in whichidentical surveys were completed. The alphas generally indicate consistency and the in-terrater agreement (rwg) statistics met or exceeded .88. Therwg statistics demonstrate thatdifferent raters within the same firm agree in their assessment of the characteristics of hu-man capital in different employment modes as well as how they are managed. We used therwg statistic as a check on the agreement of multiple raters within firms to assess the valid-ity of aggregating for those cases in which multiple respondents completed from the samefirm completed identical surveys (cf.Kozlowski & Hattrup, 1992). In contrast to assessingagreement in ratings, ICC(1) present information regarding the reliability of multiple raters.The ICCs range from−.20 to .46.

The disparity between these two measures has been addressed elsewhere (Gerhart, Wright,McMahan & Snell, 2000; Huselid & Becker, 2000; Klein & Kozlowski, 2000) and may beparticularly obvious in this sample. In our study, the HR configuration means reflect theextent to which firms adhere to a particular HR configuration, though the exact pattern of theindividual HR practices used may vary. For the ICC to be meaningful there is an assumptionthat differences in ratings between firms for a particular employment mode are meaningfuland greater than the variance among raters within firms for the same employment mode(cf. Bliese, 1998, Lahey, Downey & Saal, 1983). As noted byLahey et al. (1983), however,“ICC values cannot be significant unless the target main-effect is significant (i.e., there


are differences between the targets being rated)” (p. 588). Kozlowski and Hattrup echothis point, “consistency indexes lack power when variance among judges across targets isrestricted—a situation that occurs when agreement among judges across a set of commontargets is high” (p. 163).

In our study, there is no reason to expect variation across firms in their use of HR practiceswithin a particular employment mode. In fact, the hypotheses imply that there would belittle variation between firms on the same employment modes. And while this scenariolends support to the framework being tested (i.e., consistency in assessment of HR foreach employment mode across firms) these exact same numbers offer a misleading validityassessment. Rather than capturing how much the raters within a firm agree, the ICC statisticsmight capture the similarity in the perceptions of the HR practices used across firms for aparticular employment mode.

As an additional check on the validity of the HR configurations, we asked five expertraters (tenure track professors in HR management) to assess the consistency of each practicewith each of the HR configurations. The raters displayed 100% agreement with the practicescomprising the commitment and collaborative HR configurations, 75% agreement for theproductivity configuration, and 86% agreement for the compliance configuration. Thet-testsfor these expert ratings indicated that the mean for the practices included in each HRconfiguration were significantly greater than the mean for the practices not included in eachconfiguration—commitment (t = 9.90, p < .001), productivity (t = 11.21, p < .001),collaboration (t = 6.90,p < .01), and compliance (t = 11.33,p < .001).

Hypothesis Testing

We first performed multivariate analysis of covariance (MANCOVA) to test for over-all differences across employment modes for human capital and HR configurations whilecontrolling for the potential impact of extraneous variables. The results indicate there aresignificant differences for human capital (Wilks’s lambda= .54;F = 22.55,p < .001) aswell as the HR configurations (Wilks’s lambda= .35; F = 20.17, p < .001) across thefour employment modes.

Human Capital and Employment

To test Hypotheses 1 and 2 we followed the procedures ofTsui, Pearce, Porter and Tripoli(1997) and performed ANOVA and analysis of covariance (ANCOVA) to examine theordering of the means of human capital value and uniqueness across the four employmentmodes. We performedt-tests to compare the level of value and uniqueness between thespecific employment modes. The results of these analyses are presented inTables 3 and 4.

The ANCOVA results indicate that the means are significantly different for value (F =42.39,p < .001) and uniqueness (F = 18.77,p < .001). Specifically, across employmentmodes human capital value is highest for knowledge-based and job-based employment, nexthighest for alliances, and lowest for contract work. The findings indicate that human capitaluniqueness is highest for knowledge-based employment, next highest for alliances andjob-based employment, and lowest for contract work. The uniqueness of knowledge-basedemployees is significantly higher than the uniqueness of contract workers and job-based

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employees. Similarly, the uniqueness of alliance workers is greater than the uniqueness ofcontract workers. Counter to our hypothesis, the uniqueness of alliance workers is less thanknowledge-based employees and is not significantly different from job-based employees.These results provide support for Hypothesis 1 and mixed support for Hypothesis 2.

Employment and the HR Configurations

To test Hypotheses 3–6 we used ANOVA and ANCOVA. The results of these analysesindicate that the explanatory effect of employment remained significant for the commitment-based (F = 66.38, p < .001), productivity-based (F = 22.00, p < .001), compliance-based (F = 17.98, p < .001), and collaborative-based (F = 12.87, p < .001) HRconfigurations after considering the control variables.

Specifically, the results indicate that the commitment-based HR configuration is signifi-cantly greater for knowledge-based employment than for the other three employment modes.Similarly, the compliance-based HR configuration is significantly greater for contractualwork than for the other three employment modes. While the productivity-based HR con-figuration is greatest for the job-based employment mode there is no significant differencebetween job-based and knowledge-based employment for this HR configuration. In addi-tion, although the collaborative HR configuration is significantly greater for alliances thanfor contract work, it is not used significantly more than for knowledge-based or job-basedemployment.

While these results provide general insights into the pattern of HR configuration use,the most stringent test of our hypotheses involved a more fine-grained analysis to comparethe four HR configurationswithin each employment mode sub-sample. To examine thesewithin employment mode differences in the use of the HR configurations we performedpaired comparisons within each employment mode sub-sample. These results are presentedin Table 5.

Within the knowledge-based employment mode, the commitment-based HR configu-ration is significantly greater than the compliance-based HR configuration (t = 8.89,

Table 5Paired comparison of HR configurations within employment modes

Knowledge-basedemployment(n = 48), t-test

Job-basedemployment(n = 65), t-test

Contractual workarrangements(n = 50), t-test

n = 43,t-test

Commitment vs. productivity .11 −4.97d −9.53d −2.24b

Commitment vs. compliance 8.89d 3.96d −10.44d 1.13a

Commitment vs. collaborative −.25 1.41 −7.72d −7.65d

Productivity vs. compliance 12.93d 9.50d −3.25c 3.14c

Productivity vs. collaborative −.30 4.89d .72 −5.49d

Collaborative vs. compliance 8.63d 2.63c −3.27c 7.02d

a p < .10.b p < .05.c p < .01.d p < .001.


p < .001). However, there is no statistically significant difference between commitmentand the productivity-based (t = .11, n.s.) or collaborative-based (t = −.25, n.s.) configu-rations. These results provide mixed support for Hypothesis 3, suggesting that firms use allthree of these HR configurations to manage knowledge workers.

Within the job-based employment mode, the results indicate that the productivity-basedHR configuration is significantly greater than the commitment-based (t = −4.97, p <

.001), compliance-based (t = 9.50 p < .001), and collaborative-based (t = 4.89, p <

.001) HR configurations. The results indicate that the compliance HR configuration issignificantly greater than the productivity-based (t = −3.25,p < .01), collaborative-based(t = −3.27,p < .001), and commitment-based (t = −9.53,p < .001) HR configurationsfor contract work. The results indicate that the collaborative HR configuration is significantlygreater than the commitment-based (t = −7.65,p < .001), productivity-based (t = −5.49,p < .001), and compliance-based (t = 7.02, p < .001) HR configurations for alliancepartners. These results provide support for Hypotheses 4, 5, and 6.

Additional Analysis

Forty-one firms in the sample provide data on multiple employment modes within theirfirm. As an additional check we tested whether human capital and the HR configurationsdiffer across employment modes within these firms. The ANCOVA results indicate that thereare significant differences in the human capital and HR configurations across employmentmodes while there are no significant differences when firm (rather than employment mode)is the differentiating variable. These analyses suggest that, within firms, there are differencesacross employment modes with regard to human capital and the HR configurations.

Discussion

In general, this study provides support for the notion that different employment modesare associated with variations in human capital value and uniqueness. From our study wecan conclude that the strategic value of human capital is reflected in choices about whetherto use internal vs. external employment modes. Consistent with the extant literatures instrategy and economics, assets that are internalized tend to have a high degree of strategicvalue. While this finding is consistent with our hypotheses, what is particularly interestingis that the reported value of contract workers is significantly less than alliance partners.Evidently, when deciding whether to utilize short-term contractual arrangements or ongoingpartnerships with external providers, organizations consider the strategic value of the humancapital to be used in these arrangements.

It is evident that the uniqueness of human capital differentiates the likelihood of em-ploying workers in relational vs. transactional employment modes. The results indicate thatknowledge-based employees tend to have the highest level of uniqueness, alliances andjob-based employees have the next highest, and contract workers have the lowest level ofuniqueness. Interestingly, workers in alliances have a significantly lower level of uniquenesswhen compared to knowledge workers while they do not differ significantly from job-basedworkers. It may be the case that firms demarcate between core (knowledge-based) and


peripheral (contract) labor and those employee groups that fall in between are allocatedto alliances or job-based employment modes based on their strategic value. Whether in-tended or emergent, there appears to be a clear pattern in the resource allocations and HRconfigurations used for different kinds of workers.

The qualitative responses provided inTable 1suggest several noteworthy points as well.First, there is variation regarding the jobs identified for each mode. For example, within theknowledge-based employment mode the jobs range from engineers to research scientistsand professionals employees. Second, in some cases the same job was listed in differentemployment modes. For example, HR professionals were identified as being in job-based,knowledge-based, and alliances. Taken together, we believe that these differences highlightan important issue central to an HR architectural perspective—the decisions about employ-ment are not fixed for a particular job. The issue is which factors lead to this decision.Though the title of the job may be the same, the role of the individualvis-à-vis the firm’scompetitive position may differ widely from firm to firm. We would encourage additionalresearch that examines the influence of the job performed relative to the characteristics ofhuman capital (value and uniqueness) to perform the job in explaining employment choices.

These findings may be encouraging for advocates of the resource-based view of the firm(e.g.,Barney, 1991, Quinn, 1992; Wernerfelt, 1984) who suggest that firms should moveaway from relying solely on transactional or financial criteria and consider more strategicor resource-based factors when making sourcing decisions. Related, these results may alsoaddress the concerns of critics who argue that outsourcing and relying on contract labormay deplete the core skills that drive organizational success (e.g.,Bettis, Bradley & Hamel,1992). Rather than turning over their entire workforce to contractors, our findings suggestthat firms primarily rely on contract work to meet fairly generic needs or access widelyavailable skills. At the same time, firms are taking steps to ensure they identify and retainthose workers who are most critical to their competitiveness.

In addition to the characteristics of human capital, the findings suggest a pattern thatpairs HR configurations with employment modes in distinct ways. As hypothesized, thecommitment-based HR configuration is significantly greater for knowledge-based employ-ees than for workers within the other three employment modes. In addition, the compliance-based HR configuration is used most extensively for employees in a contract mode. Thesefindings parallel the work ofArthur (1992)and others who describe two potentially opposingapproaches to HR: one based on commitment, and one based on control/compliance.

The pattern across employment modes for the productivity and collaborative HR config-urations are more complicated. Though the productivity-based HR configuration is used forjob-based workers, this HR configuration is used for knowledge-workers as well. A similarpattern exists for the collaborative HR configuration; that is, the collaborative HR config-uration is used equally for alliance partners and knowledge workers as well as job-basedemployees.

Considered in combination with the within employment mode analyses, what is particu-larly interesting is that much of the variance associated with the HR configurations relatesto the management of knowledge-based employees. While the commitment-based HR con-figuration tends to be limited to knowledge-workers, within this employment mode, theresults indicate that there is no significant difference regarding the use of the commitment-,productivity-, and collaborative-based HR configurations. In contrast, within alliances,


contract work, and the job-based employment mode, the hypotheses related to the HRconfigurations received support. Evidently, firms vary most in how they manage theirknowledge-based employees.

These results may indicate that some managers do not provide the discretion and latitudethat typically accompanies knowledge work but focus instead on maximizing their produc-tivity via a productivity-based HR configuration. One explanation may be that managers donot have the necessary resources to invest in developing knowledge-based employees. Inparticularly dynamic environments, firms may not believe they will be able to fully recouphuman capital investments even in their core workers. In these cases, it seems logical thatmanagers would strive to ensure immediate contribution through a HR configuration thatemphasizes productivity for all valued workers and not just those in a job-based employmentmode.

There may also be inertial pressures that encourage managers to use a productivityapproach (or limit their freedom to adopt a commitment-based approach). As noted bySnell and Dean (1994), “Theorists have long pointed out that, once in place, administra-tive systems, such as compensation systems, are notoriously intractable (e.g.,Gerhart &Milkovich, 1990)” (p. 1118). These possibilities are speculative, but might lend supportto those scholars who note the slow diffusion of high-performance work practices acrossfirms (e.g.,Osterman, 1994; Pfeffer, 1994; Pil & McDuffie, 1996). An important avenuefor future research would be to explore the factors that serve as barriers to the adoption ofa commitment-based HR configuration.

In addition to the productivity-based approach, some firms used a collaborative HR con-figuration for knowledge workers as well as job-based employees. This particular find-ing might highlight the importance of collaboration and teamwork among individualswho are valuable to a firm’s core competencies. It also raises the possibility that val-ued workers are the “other side” of the collaboration necessary for an effective alliance/partnership.

A more operational explanation may lie in how we measured the collaborative HR con-figuration. We focused on collaborative activities to reflect the knowledge sharing andinformation exchange necessary for alliances articulated byLepak and Snell (1999). It maybe that firms believe they can garner substantial benefits by implementing a team-basedapproach for their internal workers as well as those within alliances, a possibility thatwould enhance the relationship between knowledge-based and job-based employment andthe collaborative HR configuration in our analyses. Indeed, during the past decade therehave been a number of academics and practitioners (e.g.,Pfeffer, 1994) that have sug-gested that team-based production and organization may be an appropriate method to in-crease a firm’s effectiveness.Osterman (1994), for example, found that self-managed teamswere the one aspect of innovative work systems that were the most diffused throughoutindustry.

At a broader level, these findings may be particularly informative for the current debatein the SHRM literature concerning whether adopting a best practice or a contingent ap-proach to HR is more appropriate (Becker & Gerhart, 1996). On the one hand, these resultsoffer strong support for a contingent perspective, suggesting that the use of different HRconfigurations is associated with the mode of employment for human capital. These resultsdo not, however, preclude the possibility of best practices existing within firms. As noted


above, the commitment-based perspective described here is similar to the high-involvementor high-performance work systems proposed by such theorists asArthur (1992), Huselid(1995)andPfeffer (1994)and consists of many of the “best practices” in the current SHRMliterature. Yet, while our findings indicate that the commitment-based HR configuration isused within firms, the scope of its use is limited to knowledge-based employees.

Future Directions and Limitations

While the results of this study provide insights into the management of different employeegroups, there may be a substantial disconnect between what firms should do and what theyactually do. This points to a limitation of this study; that is, these findings are descriptiveand, as a result, we cannot make any inferences regarding performance implications. Whilea greater fit among human capital, employment, and HR would logically be associatedwith enhanced performance, research is needed that examines whether the use of a singleHR configuration for all employment modes or the use of distinct HR configurations foreach employment mode results in higher firm performance. Related, we would encourageresearch that explores whether the performance of firms that vary from a particular idealHR architecture differ systematically from those firms that are more closely aligned withtheir ideal architecture (cf.Delery & Doty, 1996).

In addition, while we focused on examining HR subsystems within distinct employmentmodes we did not focus on an overarching HR philosophy or logic that may operate atthe firm-level. It may be the case that some firms, regardless of employment mode, tendto adopt a distinct philosophy regarding how they manage their employees. For instance,one firm may place great emphasis on developing all of their workers internally while otherfirms may tend to adopt a “buy” HR strategy. In short, different firms (even within thesame industry) might have vastly different HR architectures (cf.Becker & Gerhart, 1996).As our study focuses on differences between employment modes, research that adopts afirm-level of analysis and examines within firm variation in the use of employment and HRconfigurations as well as the influence of a firm-level HR philosophy in how workers indifferent employment modes are managed would prove beneficial.

Though the results of this study indicate that there are significant differences across em-ployment modes for human capital and HR, we do not know how these findings compare tomore traditional categorizations of employees such as exempt vs. non-exempt or managerialvs. hourly workers (e.g.,Jackson et al., 1989). Future research that examines the relativeexplanatory power of this perspective compared to more traditional categorizations wouldprovide an additional test of the usefulness of the framework provided byLepak and Snell(1999).

An additional limitation is that this study is cross-sectional and gaining a clearer under-standing of the relationships among human capital, employment, and HR configurationswill require a longitudinal analysis. Though we examined these relationships in terms ofvalue and uniqueness determining the choice of employment mode, a choice which in turnleads to a particular HR configuration, the opposite is possible as well. Indeed, the HRconfigurations used to manage employees may influence the relative value and uniquenessof their human capital. It may also be the case that what is considered valuable and uniqueat one point in time may become less valuable and generic at another point in time (Lepak


& Snell, 1999). As a result, the notion of reciprocal causality may be a more accurate de-piction of the relationships among the architectural components. To untangle these issues,future research might look at these relationships over time to more completely examine thetemporal and causal relationship among these variables.

There may be some potential concerns with the use of perceptual measures in this study.Recognizing this, we used multiple respondents for each firm when possible and focusedon top managers that are likely to be informed regarding the characteristics of humancapital as well as the HR practices used to manage employees in different employmentmodes. Future research might strive to conduct more intensive examinations within firmsto develop more objective measures of value, uniqueness, employment modes, and the HRpractices used by firms that demonstrate superior levels of agreement and reliability acrossraters.

Finally, although our HR configurations are based on the arguments ofLepak and Snell(1999), these configurations are not mutually exclusive. This was done to reflect the idea thatbundles of different HR practices may be used for different purposes (cf.Becker & Huselid,1998) or for different groups of employees. One implication of our operationalization isthat it is conceptually possible that more than one configuration could be used for anemployment mode or components of multiple configurations could be used simultaneously.For example, a firm might use a commitment-based approach independently or in concertwith a collaborative approach for a particular group of employees. We echo the concerns ofDelery (1998), Gerhart et al. (2000), Huselid and Becker (2000)andWright and Sherman(1999), and encourage research that further explores the underlying dimensions of HRconfigurations.

Conclusion

At the outset of this study, we sought to examine how different HR configurations are usedfor different groups of employees. We have demonstrated that different HR configurationstend to be used to manage workers in different modes of employment. A direct implicationof this study for SHRM researchers is that it may be too simplistic to presume that a singleoptimal set of HR practices is ideal, or utilized, in all situations. Rather, it appears that themost likely form of HR investment varies for different types of human capital. Clearly moreresearch is needed, but the findings of this study highlight the importance of addressing anemployment level of analysis as a means to understanding how firms strategically managedifferent employee groups.

Acknowledgments

This research was supported by grants from the Society for Human Resource Management(SHRM) Foundation and the Institute for the Study of Organizational Effectiveness (ISOE),The Pennsylvania State University. The interpretations, conclusions, and recommendations,however, are those of the author(s), and do not necessarily represent those of the Foundations.We would like to thank David Day, Karen Jansen, Chuck Snow, Paul Tesluk, and Jim Thomasfor their helpful comments in developing this manuscript.


Appendix A. Questionnaire Items for Human Capital Value

Individuals in [insert employment mode] have skills that. . .

. . . are instrumental for creating innovations.

. . . create customer value.

. . . help minimize costs of production, service, or delivery.

. . . enable our firm to provide exceptional customer service.

. . . contribute to the development of new market/product/service opportunities.

. . . develop products/services that are considered the best in our industry.

. . . directly affect organizational efficiency and productivity.

. . . enable our firm to respond to new or changing customer demands.

. . . allow our firm to offer low prices.

. . . directly affect customer satisfaction.

. . . are needed to maintain high quality products/services.

. . . are instrumental for making process improvements.

Appendix B. Questionnaire Items for Human Capital Uniqueness

Individuals in [insert employment mode] have skills that. . .

. . . are not widely available in the labor market.

. . . would be very difficult to replace.

. . . are not available to our competitors.

. . . are widely considered the best in our industry.

. . . are developed through on the job experiences.

. . . are difficult for our competitors to buy away from us.

. . . are unique to our organization.

. . . are difficult for our competitors to imitate or duplicate.

. . . are customized to our particular needs.

. . . distinguish us from our competition.

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David P. Lepak is Assistant Professor of Human Resource Management at the Universityof Maryland at College Park. He received his Ph.D. degree from the Pennsylvania StateUniversity. His research and teaching interests focus on the strategic management of humancapital, managing the contingency workforce for competitive advantage, and virtual HR.

Scott A. Snell is Professor of Human Resource Studies at Cornell University. He receivedhis MBA and Ph.D. degrees from Michigan State University. His research and teachinginterests focus on developing and deploying a firm’s intellectual capital. He has publisheda number of articles in professional journals and is the author of two books.

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Examining HR Architecture Snell & Lepak