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IOSR Journal of Business and Management IOSRJBM eISSN 2278487X pISSN 23197668 Volume I 7 Issue 2Ver II Feb 2015 PP 1417 www iosrjournals org The Study Between Competence And Human Capital Towards A Competitive Advantage 1 2 Noercho1dah Ams El1yana Doctoral Student Faculty of Economic and Business Airlangga University Surabaya Indonesia 2Faculty of Economic and Business Airlangga University Surabaya Indonesia Abstract This article aims to determine the relationship between competence and human capital towards a competitive advantage The concept of human capital has been in line with the concept of competence to build human capacities that are beneficial for organization The concept of competence is directly related to the concept of individual performance while the concept of human capital related with the concept of the performance of all individuals that exist in the rm although the same development components such as knowledge skills and character By extending the concept of a resource that has value and rare can be used by firms to gain competitive advantage Keywords competence human capital competitive advantage I Introduction Market globalization and competencies push a big change in the lives of the people in the world so that the rm is required to apply the right strategy in order to successfully exploit business opportunities Kotler 1992 Development of competencybased human resources is conducted in order to deliver the results in accordance with the goals and objectives of the organization with the performance standards that have been determined The competency of the individual person must be able to support the implementation of the strategy of the organization and be able to support any changes to management Superior competence gives rms the ability to generate and act based on knowledge about the actions and reactions of competitors which will help to build competitive advantage Naver and Slater 1990 Touminen et al 1997 Drucker 1995 278 argued that human as a source of power which is necessary for the organization in the form of skills knowledge and abilities in working Identifying and assessing human capital is dif cult and c0mplexskills and abilities of a person can be measured through performance experience and quali cations Competitive advantage can be created through the effective management of human resources by taking into account the internal and external factors of the rm that will be faced Responding to the development of the external environment both economic development market technology social trends and social environment each rm is required to be able to adapt to the environment in order to survive the increasingly competitive business environment The premise that in order to achieve sustainable competitive advantage rm need to have both heterogeneity of resources and resource immobility form the basis of the resourcebased View of the rm Peteraf 1993 Conner 1991 Barney 1989 Dierickx and C001 1989 Extending on the 39unique39 concept resources Penrose 1959 resourcebased approach sees the rm as a collection of tangible and intangible resources that is used to gain competitive advantage Barney 1986 1989 1991 Rumelt 1984 Wernerfelt 1984 Conner 1991 Peteraf 1993Wernerfelt 1984 extending the View of the resources that lead to high returns over the long term Resources are de ned as attn39butes of a rm that enables it to implement strategies to achieve competitive advantage Barney 1991 Hitt and Ireland 1985 that includes physical human and organizational resources Regardless of whether the resources are referred to as strategic resources Barney 1986 invisible assets Itami 1987 a strategic asset Dierickx and C001 1989 core competencies Prahaladamp Hamel 1990 or intangible resources Hall 1992 the rm must continue to acquire or develop heterogeneous resources to generate economic bene ts Conner 1991 Barney 1989 Dierickx and C001 1989 Prahalad and Hamel 1990 combined the concept of 39unique39 resources presented by Penrose 1959 and tacit knowledge presented by Nelson and Winter 1982 emphasized that rm achieve competitive advantage by developing their core competencies A core competency is de ned as quotcollective learning in the organization especially how to coordinate diverse production skills and integrate multiple streams of technologiesquot DOI 109790487X17221417 wwwiosrjournalsorg 14 Page The Study Between Competence And Human Capital Towards A Competitive Advantage 11 Theoretical Study 11 Competence The competitive quality of a business organization is largely determined by the quality of its human resources Competent human resources is required by a business rm namely human resources which have speci c competencies include aspects of the knowledge skills attitudes and behaviors needed to support the successful implementation of the work Prahalad and Hamel 1989 suggested that a successful firm is a rm that focuses on improving competencies which are used in new and innovative ways to achieve the goals The main concern of the rm is using its resources in ways that are challenging and creative to build core competencies Teece et al 1997 saw the resource as rm speci c assets that are dif cult that if it might not be emulated where competence is resulted from the integration of speci c assets of the rmquot Competence is the ability and knowledge of the rm that became the basis of problems solving everyday Henderson and Cockburn 1994 Boyatzis 198220 stated that the competence of individuals in certain occupations based on the characteristics of the individual such as motive nature character skills and aspects related to social roles or science which resulted in an effective or superior performance in the works Spencer and Spencer 1993 911 stated that competence is the ability characteristic of employees to carry out tasks and work activities were revealed of motives trait selfconcept knowledge and skills Competence belongs to a concept class that emphasizes fundamental ef ciency gains at the rm level and covers the skills knowledge and capabilities Teece Pisano and Shuen 1997 For example competence can reduce costs through a better design product and process increased utilization the input is reduced the increase in more ef cient production and services Competence differentiation grouped into three Bray et al 1974 Boyatzis 1982 Kotter 1982 Luthans et al 1988 Howard and Bray 1988 Campbell et al 1970 Spencer and Spencer 1993 Goleman 1998 Goleman et al 2002 they are Cognitive competencies such as the willingness to think and the ability to think of something new Emotional intelligence competencies including selfawareness and selfmanagement competencies such as emotional selfawareness and emotional selfcontrol and Social intelligence competencies including social awareness and relationship management competencies such as empathy and teamwork Abraham Carmeli 2003 argued that emotional intelligence adds a positive working attitude emotional competencies social and cognitive intelligence to predict the effectiveness of the management and leadership Boyatzis and Saatcioglu 2008 emotional competencies social and cognitive intelligence to predict the effectiveness of the professional management and leadership roles in various sectors of society Boyatzis 2008 12 Human Capital The concept of human capital appears due to the shift in the role of human resources The concept of human capital that human are not only resource but are capital which resulted in the return and any expenditure made in order to develop the quality and quantity of capital is an investment activity Becker 1993 The concept of human capital are an important thing is needed at the present time based on The strong competitive pressures of financial and non nancial advantages Recognition of business and political leadership on human capital to increase the performance There was a rapid changes that marked by the processes and new technologies that will not last long if the competitor is able to adopt the same technology To grow and adapt organizational leadership must recognize the value and contribution of man The concept of human capital has become an important concept in the application of the concept of management talent that aims to attract retain develop and maintain human beings who are in the organization In the opinion of Stephens 2010 management talent as an effort to build a quotbridgequot for organization that can help to realize the longterm growth plan and also help achieve success winning the competition in the global business world The concept of human capital that considers employees as the company39s assets will be able to walk in the same direction and complement each other with the concept of management talent Bontis etal 1999 de ned human capital as the human factor in the organization which includes intelligence skills and human expertise that gives a distinctive character to the organization This de nition shows that the de nition of human capital is more than just a property or asset because human capital is the human factor that can shape the character of the organization DOI 109790487X17221417 wwwiosrjournalsorg 15 IPage The Study Between Competence And Human Capital Towards A Competitive Advantage Barney 1991 stated quothuman capital includes training experience judgment intelligence relationships and insight of individual managers and workers in a companyquot Human capital is often referred toin the literature as an important source of resourcebased and clearly has been accepted as a resource that can lead to competitive advantage Barney 1986 1991 Barney and Wright 1998 DierickX and C001 1989 Penrose 19551959 Wemerfelt 1984 Resourcebased view of strategic management believes that superior rm performance can be attributed to a business with superior sources These sources must be valuable and rare Barney 1991 they must be hard to be duplicated or replaced by another company Barney 1991 Peteraf 1993The rm must manage adjust and put them on market for the product can create value Mahoney 1995 Sirmon Hitt Ireland and 2007 Lepak and Snell 1999 argued that quotValue of human capital is inherently depend on the potential to contribute to competitive advantage or core competency of the companyquot Valueof human capital has been touted by many researchers Carmeli and Tishler 2004 Dencker Gruber and Shah 2009 Hatch and Dyer 2004 Hitt Bierman Uhlenbruck amp Shimizu 2006 Pennings Kyungmook amp van Witteloostuijn 1998 and has been frequently cited as a source of competitive advantage Barney 1986 1991 Dierickx and C001 1989 Penrose 1955 Wemerfelt 1984 Human capital development is a tool for the organization to develop skill and competency Human capital has been considered as a whole the absolute value Subramaniam and Youndt 2005 or as a variable with two dimensions value and uniqueness of knowledge Lepak and Snell 1999 13 Competitive Advantage Firm resource covers all assets capabilities organizational processes rm attributes information knowledge and so on which are controlled by a rm which enables the rm to execute a strategy to improve the ef ciency and effectiveness Daft 1983 In traditional strategic analysis rm resource is the power that can be used to formulate and implement strategies Learned Christensen Andrews and Guth 1969 Porter 1981 Barney 1986 1991 and other researchers Amit and Schoemaker 1993 Collis and Montgomery 1995 Peteraf 1993 and then develop speci c criteria for 39strategic39 resource which allows the rm to grow a strategy that helps to produce and maintain a competitive advantage To gain competitive advantage companies must have the resources that have the valuable and rare attributes Porter 1985 stated that activities in the rm is a potential source of competitive advantage Peteraf and Barney 2003 stated that competitive advantage acquired by the rm through creating greater economic value than its competitors Barney 1991 stated that the rm that owns and utilize the valuable and rare resources and capabilities will achieve a competitive advantage Valuable Rare Reeouree Evapabilit 399 eump e ve Advantage Performance Figure 1 Conceptual model of Barney 1991 The researchers say that the economic value is generally made with the products and or services to the bene t of the larger one with the same cost as compared to competitors ie differentiationbased competitive advantage or the same bene ts at a lower cost compared to competitors ie ef ciencybased competitive advantage Because of the superior bene ts tend to increase customer loyalty and quality of perception Zou Fang and Zhao 2003 14 Relationship of competencies human capital and competitive advantage Development of competencybased human resources conducted in order to provide the results in accordance with the goals and objectives of the organization with the stated performance standards Competence regarding the authority of each individual to perform a task or take a decision in accordance with his role in the organization which are relevant to the skills knowledge and capabilities Competence of individual employees should be able to support the implementation of the strategy of the organization and be able to support any changes to management Conceptualization of competence and human capital are de ned as a combination of knowledge and skills of the work of people in a rm Nahapiet and Ghoshal 1998 Subramaniam and Youndt 2005 Lepak and Snell 1999 Wright and McMahan 2011 The concept of human capital in line with the concept of competence ie each of them aims to build human capacity that is bene cial to the organization The difference is the concept of competence is directly linked with the concept of individual performance and every component that form competence Knowledge skills and character is a component that directly contribute to the performance of DOI 109790487X17221417 wwwiosrjournalsorg 16 Page The Study Between Competence And Human Capital Towards A Competitive Advantage the individual While the concept of human capital human resources development focused on developing a total capacity of individuals whose direction is explicitly linked to the performance of individuals in the rm although the same development components namely knowledge skills and character Atri Sengupta DN Venkatesh Arun K Sinha 2013 stated the existing the model of competencies and offer a comprehensive performance related competence models to maintain a competitive advantage Strategic human resource management or human capital gains competitive advantage through one of the most important assets RichardW 2001 111 Conclusion Human resource management based on competence is one of business management strategy application in order to create a competitive advantage Business organization views human resources as human capital are strategic asset because its have advantages than the assets of another rm such as physical capital and organizational capital to drive the existence of the organization in competitive business environment The rm with the valuable and rare human capital will produce greater competitive advantage have compared toits competitors Barney 1991 Competitive advantage result from rm is a consequence of its speci c resources and competencies References 1 BeckerGSl993 Human Capital A Theoretical and Empirical Analysiswith Special Reference to Education 3rd Edition The University Of Chicago Press Chicago 2 Barney J B 1991 Firm Resources and Sustained Competitive Advantage Journal of Management 17 99120 Boyatziz2008 A 20Year View Of Trying To Develop Emotional Social And Cognitive Intelligence Competencies In Graduate Management Education Journal Of Management Development 27 1 512 Competencies In The 215t Century Journal Of Management Development27 I 92108 3 Carmeli Abraham 2003 The Relationship Between Emotional Intelligence and Work Attitudes Behavior and Outcomes Journal of Managerial Psychology188 788813 4 Cunningham I 2002Developing Human and Social Capital in Organizations Industrial and Commercial Training 344 89 94 5 Doug Lennick and Fred Kiel 2005 Moral Intelligence Enhancing Business Performance and Leadership Success Library of Congress Number 2004117574 ISBN 0131490508 6 Emmerling J b 2012 Emotional and Social Intelligence Competencies Cross Cultural Implications Cross Cultural Management19 1 418 7 Goleman D1996Emotiona1 Intelligence New YorkBantam Books 8 Henderson R and I Cockburnl994 Measuring Competence Exploring Firm Effects in Phramaceutical ResearchStrategic Management Journal 1 52 63 84 9 Hawkins DI Best RJ amp Coney KA 1998Consumer Behavior Building Marketing Strategy McGrawHill 10 Muhammad AslamMemon Riaz Ahmed Mangiand ChandanLalRohra 2009 Human Capital a Source of Competitive Advantage Ideas for Strategic Leadership Australian Journal of Basic and Applied Sciences 34 41824189 11 MarchTapscott D 1996Digita1 Economy Promise and Peril in The Age of Networked Intelligence New York McGraw Hill 12 Newbert L Scott2008 Value Rareness Competitive Advantage And Performance A Conceptual Leve1 Empirical Investigation Of The ResourceBased View Of The Firm Strategic Management Journal 29 745 768 13 Schmidt J And Kei1T 2013 What Makes A Resource Valuable Identifying The Drivers Of Firm Idiosyncratic Resource Value Academy of Management Review 3 82 206228 14 Ross J eta1 1997Inte11ectua1 capital Navigating the New Business Landscape New York MacMillan 15 Schultz Theodore W 1961Investment in Human Capital The American Economics Review 51 16 Stephens N 2010 Talent Management Ensuring Your People Give Youthe Competitive Edge Strategic 267 3 5 17 Teece DT G Pisano and A Shuen 1997Dynamic Capability and Strategic Management Strategic Management Jouma1187 509533 DOI 109790487X17221417 wwwiosrjournalsorg 17 Page
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