The role of strategic groups in The role of strategic...

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The role of strategic groups in understanding strategic human resource management Judie M. Gannon Oxford School of Hospitality Management, Faculty of Business, Oxford Brookes University, Oxford, UK Liz Doherty Business School, Sheffield Hallam University, Sheffield, UK, and Angela Roper School of Hospitality & Tourism Management, University of Surrey, Guildford, UK Abstract Purpose – This article aims to explore how understanding the challenges faced by companies’ attempts to create competitive advantage through their human resources and HRM practices can be enhanced by insights into the concept of strategic groups within industries. Based within the international hotel industry, this study identifies how strategic groups emerge in the analysis of HRM practices and approaches. It sheds light on the value of strategic groups as a way of readdressing the focus on firm and industry level analyses. Design/methodology/approach – Senior human resource executives and their teams across eight international hotel companies (IHCs) were interviewed in corporate and regional headquarters, with observations and the collection of company documentation complementing the interviews. Findings – The findings demonstrate that strategic groups emerge from analysis of the HRM practices and strategies used to develop hotel general managers (HGMs) as strategic human resources in the international hotel industry. The value of understanding industry structures and dynamics and intermediary levels of analysis are apparent where specific industries place occupational constraints on their managerial resources and limit the range of strategies and expansion modes companies can adopt. Research limitations/implications – This study indicates that further research on strategic groups will enhance the theoretical understanding of strategic human resource management and specifically the forces that act to constrain the achievement of competitive advantage through human resources. A limitation of this study is the dependence on the human resource divisions’ perspectives on realising international expansion ambitions in the hotel industry. Practical implications – This study has implications for companies’ engagement with their executives’ perceptions of opportunities and threats, and suggests companies will struggle to achieve competitive advantage where such perceptions are consistent with their competitors. Originality/value – Developments in strategic human resource management have relied on the conceptual and theoretical developments in strategic management, however, an understanding of the impact of strategic groups and their shaping of SHRM has not been previously explored. Keywords Strategic groups, Strategic human resources, Strategic human resource management, International human resource management, Hotel and catering industry, International business Paper type Research paper The current issue and full text archive of this journal is available at www.emeraldinsight.com/0048-3486.htm The authors would like to express their thanks to the organisations who participated in the research and the reviewers and Editors who provided insightful and excellent feedback on early drafts. The role of strategic groups 513 Personnel Review Vol. 41 No. 4, 2012 pp. 513-546 q Emerald Group Publishing Limited 0048-3486 DOI 10.1108/00483481211229401

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The role of strategic groups inunderstanding strategic human

resource managementJudie M. Gannon

Oxford School of Hospitality Management, Faculty of Business,Oxford Brookes University, Oxford, UK

Liz DohertyBusiness School, Sheffield Hallam University, Sheffield, UK, and

Angela RoperSchool of Hospitality & TourismManagement, University of Surrey, Guildford, UK

Abstract

Purpose – This article aims to explore how understanding the challenges faced by companies’attempts to create competitive advantage through their human resources and HRM practices can beenhanced by insights into the concept of strategic groups within industries. Based within theinternational hotel industry, this study identifies how strategic groups emerge in the analysis of HRMpractices and approaches. It sheds light on the value of strategic groups as a way of readdressing thefocus on firm and industry level analyses.

Design/methodology/approach – Senior human resource executives and their teams across eightinternational hotel companies (IHCs) were interviewed in corporate and regional headquarters, withobservations and the collection of company documentation complementing the interviews.

Findings – The findings demonstrate that strategic groups emerge from analysis of the HRM practicesand strategies used to develop hotel general managers (HGMs) as strategic human resources in theinternational hotel industry. The value of understanding industry structures and dynamics andintermediary levels of analysis are apparent where specific industries place occupational constraints ontheir managerial resources and limit the range of strategies and expansion modes companies can adopt.

Research limitations/implications – This study indicates that further research on strategicgroups will enhance the theoretical understanding of strategic human resource management andspecifically the forces that act to constrain the achievement of competitive advantage through humanresources. A limitation of this study is the dependence on the human resource divisions’ perspectiveson realising international expansion ambitions in the hotel industry.

Practical implications – This study has implications for companies’ engagement with theirexecutives’ perceptions of opportunities and threats, and suggests companies will struggle to achievecompetitive advantage where such perceptions are consistent with their competitors.

Originality/value – Developments in strategic human resource management have relied on theconceptual and theoretical developments in strategic management, however, an understanding of theimpact of strategic groups and their shaping of SHRM has not been previously explored.

Keywords Strategic groups, Strategic human resources, Strategic human resource management,International human resource management, Hotel and catering industry, International business

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0048-3486.htm

The authors would like to express their thanks to the organisations who participated in theresearch and the reviewers and Editors who provided insightful and excellent feedback on earlydrafts.

The role ofstrategic groups

513

Personnel ReviewVol. 41 No. 4, 2012

pp. 513-546q Emerald Group Publishing Limited

0048-3486DOI 10.1108/00483481211229401

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IntroductionMost developments in strategic human resource management (SHRM) andinternational human resource management (IHRM) have drawn heavily on thestrategic management literature (Becker and Huselid, 2006; Schuler and Jackson, 2007).Some of the earliest models associated with SHRM (such as Fombrun et al., 1984; Beeret al., 1984; Hendry and Pettigrew, 1986 and Guest’s (1989) model) provide insights intohow leading HRM thinkers have approached the strategic dimensions of HRM. Suchinsights have focused on the links or fit between strategy and HRM, environmentalanalyses as the basis for strategic management informing (and in some cases informedby) HRM, and borrowing concepts and theories with their origins in the strategicmanagement literature, such as organisational and product life cycles, and competitivestrategies (Schuler and Jackson, 1987; Sanz-Valle et al., 1999; Miles and Snow, 1984).Despite the advances made in both areas there has been minimal consideration of theways that strategic groups, not only industries and firms, influence HRM strategiesand practices in the pursuit of competitive advantage (Boxall, 2003). Strategic groupresearch identifies how groups of firms engage in similar strategies in order to competeeffectively within industries and shape industry structure and competition. Panagiotou(2006 p. 440) defines strategic groups as:

[. . .] those groups of firms within an industry, which are characterised by similarities in theirstructure and competitive beliefs as well as their tendency to follow similar strategies alongkey strategic dimensions in a specific operating environment.

The performance differences between strategic groups are the focus for much of thisresearch, but mobility between groups and the structural dimensions of industrieshave also received attention (Ferguson et al., 2000; Leask and Parker, 2006; Porter,1980; Reger and Huff, 1993). As such strategic group research has developed as acentral research theme in strategic management. One of the most notable aspects ofstrategic groups research is that it highlights and reinforces the importance ofparticular industry contexts. This is an important consideration for the development ofSHRM research as there is now growing recognition of the value of industry and sectorspecific SHRM research where the nuances and structural dimensions of industries areemphasized (Boselie et al., 2009; Paauwe, 2008; Paauwe and Boselie, 2008; Tyson andParry, 2008).

The aim of this study is to explore how the strategic group concept can informSHRM approaches. Specifically it sets out to identify how strategic groups can help usunderstand why companies struggle to achieve sustainable competitive advantage.This aim is achieved by initially investigating the strategic group literature andevaluating where it adds insight and value to the SHRM approaches literature.Thereafter the findings from an in-depth empirical study of the HRM practices andstrategies deployed across a global industry are used to highlight the role of strategicgroups in constraining companies’ capacities to differentiate their SHRM approachesand practices. Accordingly this article also satisfies the demand for more sector ledSHRM research (Paauwe, 2008; Paauwe and Boselie, 2008; Tyson and Parry, 2008).

This article unfolds as follows. Initially an evaluation of the strategic groupliterature is provided followed by an analysis of the contemporary debates in SHRM(Boxall and Purcell, 2000, 2003, 2008; Boselie et al., 2002, 2003). The limitations of theSHRM literature are reflected on in light of the strategic group literature and the

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potential contribution this field towards a more nuanced understanding of SIHRMapproaches and practices. The research design for the study is subsequently outlinedalongside an overview of the context of the research, the global hotel sector. Thequalitative data analysis is then considered with the HRM practices and approacheswhich are found to be common across the whole industry, similar across particularstrategic groups and distinctive to specific companies explored sequentially. Theimplications of these various layers of HRM practices and strategies, and specificallythe strategic group dimension, are then discussed in relation to the extant research. Ofspecific note is the way such findings reinforce the challenges companies face whenpursuing competitive advantage through human resources and how the national,industry and strategic group pressures for assimilation limit opportunities to developidiosyncratic and integrated HRM interventions and strategic human resources.

Literature review: building bridges between strategic groups and SHRMapproachesStrategic groupsThe strategic group concept emerged within strategic management as an attempt tobetter understand the competitive backdrop and demands faced by companiesoperating in an industry (McGee et al., 1995; Porter, 1980; Short et al., 2007). Strategicmanagement analysis has typically taken place at the level of the firm and theindustry, and has omitted the interface of firm and industry competitor behaviour.Originating from the broader field of industrial organization economics in the 1970s,strategic groups were identified as clusters of companies within industries (Porter,1980). Such divisions arise because industries are not collections of heterogeneouscompanies but subsets of firms separated by mobility barriers limiting movementbetween groups (Ferguson et al., 2000; McGee et al., 1995). Strategic group research hasfacilitated a better understanding of how group structure can shape rivalry andultimately performance, as well as group identities and reputations. It has alsoillustrated how strategic group reputations serve to reinforce mobility barriers to otherindustry competitors (Dranove et al., 1998; Ferguson et al., 2000; Leask and Parker,2006; Peteraf and Shanley, 1997). The analysis of the business environment as anobjective reality, achieved classically through cluster or factor analysis of companydata (Reger and Huff, 1993), drives most investigations in this area. However,Panagiotou (2006, p. 441) summarises the problems of this prescriptive approach asleading to:

[. . .] a preoccupation by managers that strategic management is all about prescribingstrategies for positioning a business in a particular industry structure, having first carried outa thorough economic analysis based on the implicit notion that industry structures arerelatively stable and easily identifiable.

More recently a cognitive approach to strategic group research has emerged based onthe argument that managers’ simplification of their complex competitive environmentsand perceptions of similarities and differences among their rivals will shape strategicdecision-making (Panagiotou, 2006, 2007; Reger and Huff, 1993). Such managerialinsights into competitive groupings offer clearer conceptions of the waydecision-makers perceive their own organisations and their rivals and therefore howthese determine and implement strategies. These arguments suggest that strategists’

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understand (and approach) their competitive environments in similar ways, and arerelated to the ideas of institutional assimilation and isomorphism (DiMaggio andPowell, 1983; Powell and DiMaggio, 1991). Therefore, the capacity of firms to pursuedistinctive practices for competitive advantage may be limited by constraints, such asorganisational inertia and forms of isomorphism (Reger and Huff, 1993; Boon et al.,2009). Strategic groups are then another important aspect of the structural dimensionswhich foster this organisational sluggishness. These are critical insights where thepursuit of competitive advantage through human resources, HRM practices andstrategies has gained substantial support in recent years (Becker and Huselid, 2006;Boxall, 2003). However, this quest for distinctive or idiosyncratic HRM practices andstrategies to attain competitive advantage needs to be resolved against the pressures toconform and achieve social legitimacy within sectors. The next section evaluates thecontemporary SHRM approaches and highlights where the strategic group literaturecontributes to their enhanced understanding.

The strategic HRM approachesThree main SHRM approaches have emerged as the keystone for understanding andachieving sustained corporate success through human resources (Purcell, 1999, 2001;Boxall and Purcell, 2003, 2008). While the opportunities for simultaneously enactingthese approaches are now well-rehearsed it is useful to revisit them briefly as part ofdeveloping the theoretical connection with the strategic group literature. The bestpractice SHRM approach encourages companies to adopt sophisticated or “highperformance” practices across their human resources in order to achieve competitiveadvantage (Pfeffer, 1998; Huselid, 1995). Considerable criticism of the best practiceSHRM approach occurs in relation to what actually represents “sophisticated” HRMpractices and the empirical basis on which these practices are suggested (Marchingtonand Grugulis, 2000; Boxall and Purcell, 2003, 2008). Furthermore, the conventional bestpractice SHRM approach suggests that these superior HRM practices should beadopted regardless of different industrial and national boundaries (Marchington andGrugulis, 2000; Boxall and Purcell, 2003, 2008). Recent evaluations of the “bestpractice” SHRM approach have emerged recognising that within industries there maybe certain HRM practices and approaches which are obligatory (Boxall and Purcell,2003, 2008). The “table stake” concept suggests there are established (HRM) practicesadopted by all businesses in an industry which serve to legitimise their position in thatindustry. This concept has thus been recognised as an adaptation of the “best practice”SHRM approach (Boon et al., 2009; Bjorkman, 2006; Boxall and Purcell, 2003; Paauweand Boselie, 2003). The “table stake” version of best practice SHRM approach is basedon the institutional assimilation literature where organisations struggle to distinguishthemselves from their industry associates while simultaneously achieving legitimacy(institutional fit) in their sector (DiMaggio and Powell, 1983; Powell and DiMaggio,1991; Oliver, 1997). Isomorphism is the process which constrains organisations’attempts to differentiate themselves within the same institutional context (DiMaggioand Powell, 1983). Isomorphism emerges in two broad variations; competitiveisomorphism where market pressures and performance targets are emphasised andinstitutional isomorphism where institutional factors associated with socio-cultural,technological and economic parameters are highlighted.

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The adoption of best practice SHRM approach across an international setting hasalso been roundly critiqued (Brewster, 1999, 2006; Sparrow et al., 2004) due to theingrained national institutional and cultural conventions, which are seen to regulatethe value of various high performance HRM practices in other countries (Brewster,1991, 2006; Sorge, 2004). However, this does not mean that across a country allindustries have the same HRM practices. Much of the IHRM literature could be seen asdisproportionately focused on the parent and host country cultures and systems inlight of the evidence on SHRM approaches and practices in hospitals, local governmentand hotels (Boselie et al., 2002, 2003). Such studies indicate that institutional andcompetitive isomorphisms differ across industry contexts creating distinct table stakeHRM practices in different industries within the same country (Boon et al., 2009;DiMaggio and Powell, 1983). Furthermore, such evidence recognizes that nationalinstitutional dimensions may have less of an impact than competitive institutionaldimensions on some industries and their resulting people management practices. Thislevel of industry interplay on the best practice approach is valuable but in light of thestrategic group insights it is clear that companies do not compete directly with everyother company in their industry. Instead they are likely to have particularly close rivalswhose practices, products, managers, innovations and initiatives will be of specificinterest to them (Panagiotou, 2006; Peteraf and Shanley, 1997). As such there may beanother layer of consistency and similarity in HRM practices due to the close rivalry ofstrategic groups, in addition to those identified by the “table stake” version of the bestpractice SHRM approach across an industry.

The “best-fit” SHRM approach suggests a firm’s market position and strategiesdrive and shape its HRM policies and practices. Within the “best fit” SHRM approach arange of theories have emerged from those that more simplistically link specificstrategy choices to HRM practices and policies (Delery and Doty, 1996; Miles andSnow, 1984; Schuler and Jackson, 1987) to more complex models (Fombrun et al., 1984;Hendry and Pettigrew, 1986) which envision a range of corporate characteristics(strategies, positions, portfolio characteristics) determining people managementpractices. Within the IHRM area, much of the research has also focused on theinfluential nature of national differences as well as strategic models (Perlmutter, 1969;Bartlett and Ghoshal, 1989, 2000; Edwards et al., 1996). For example: the models ofinternational orientation (Perlmutter, 1969; Heenan and Perlmutter, 1979); productlife-cycle phases (Adler and Ghadar, 1990); and international responsiveness versusintegration (Bartlett and Ghoshal, 1989, 2000; Edwards et al., 1996) are all based onstrategic choice arguments derived from the strategic management field. The mainthrust of the strategic dimension to IHRM has revolved around the question of whetherHRM practices are determined by corporate or business strategies and customised orstandardised across national boundaries with many authors providing detailedanalyses of the contingency of specific factors (Boselie et al., 2002, 2003; Coller andMarginson, 1998; Easterby-Smith et al., 1995; Ferner, 1994, 1997; Ferner andQuintanilla, 1998; Hannon et al., 1995; Newman and Nollen, 1996; Rosenzweig andNohria, 1994; Rosenzweig, 2006; Thompson et al., 1998).

The weaknesses of the “best fit” SHRM approach are its distorted attention on theexternal context as determining strategies and practices based on market positioning,cultural and institutional factors; and its inability to secure competitive advantagewhere several companies within the same sector pursue similar strategies and market

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positions (Boxall and Purcell, 2003, 2008; Kamoche, 2001; Wright and Snell, 1998). Suchcriticisms are similar to those voiced by contemporary strategic managementresearchers on the objective and prescriptive versions of strategic management beingthe primary influence on strategic thinking and decision-making at the expense ofmanagers’ and executives perceptions of positions and rivalries (Reger and Huff, 1993).Indeed Panagiotou’s (2006, 2007) research on executives’ perceptions, as opposed to theeconomic analysis of the competitive terrains, competitor strategies and industrydynamics shaping strategic groups, highlights that executives whose firms belong tothe same strategic groups react to events and market factors in similar ways. Thissuggests, that not only are companies constrained by the suggested strategies andmarket positions they develop, but that there are limitations to the options they cantake to distinguish themselves because of the added level of similarity strategic groupscreate.

Finally, the resource based view (RBV) SHRM approach has been proffered as analternative to the best practice and best-fit approaches due its internal focus based oncreating competitive advantage through the leverage of valuable, rare, inimitable,non-substitutable and rent achieving (human) resources (Morris et al., 2006; Wrightet al., 1994, 2004). The empirical research supporting the RBV SHRM approach (Boxalland Steeneveld, 1999; Leonard-Barton, 1995; Marchington et al., 2003) clearlyhighlights that human resources can fulfil the criteria of resources which delivercompetitive advantage. The most valuable human resources are those identified as the“strategic human resources” or “rainmakers” who fulfil the RBV criteria of addingexponential supplementary value to companies. By developing HRM practices, whichare idiosyncratic and interdependent, the RBV approach argues that companies cancapitalise on their proprietary knowledge and transfer it creatively and effectivelyacross its workforce. Several authors (Bonache and Fernandez, 1999; Harvey et al.,1999, 2000; Taylor et al., 1996) have adopted this approach and identified thatcapitalising on internal resources to achieve competitive advantage is quite differentfrom the best-fit SHRM approach because it surmounts the external views of thebest-fit approach. This view is neatly outlined in the frustrations of Cappelli and Singh(1992 in Wright et al., 2004 p. 11):

[. . .] many within strategy have implicitly assumed that it is easier to rearrangecomplementary assets/resources given a choice of strategy than it is to rearrange strategygiven a set of assets/resources, even though the empirical research seems to imply theopposite.

The RBV SHRM approach offers specific insights into the value of internal resources insecuring successful international operations (Bonache and Fernandez, 1999; Harveyet al., 2000). Specifically particular groups of human resources are seen to have anhonoured position within companies where they transfer tacit knowledge to newmarkets and provide sustainable competitive advantage (Prahalad and Hamel, 1990;Scullion and Starkey, 2000). Taylor et al.’s (1996) study used the RBV approach toidentify the critical role of HRM competence within international firms, the part seniormanagement play in identifying the company’s potential to develop HRM competenceand the different groups of human resources who constitute firm strategic humanresources. However, the weaknesses of this SHRM approach are its omission to clearlydepict the interplay between internal resources and environmental factors, and therecurring evidence that firms struggle with the challenges of their competitive sector to

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achieve distinctiveness and success through their human resources and HRM practices(Boxall and Purcell, 2003, 2008). Once again the strategic groups literature providesspecific insights here in querying whether the pursuit of competitive advantagethrough the leveraging of the firm’s distinctive resources is restrained by the influenceof their closest strategic group (Panagiotou, 2006, 2007).

Clearly each of the SHRM approaches (table stake best practice, best-fit and RBV)have some resonance and these perspectives are summarised in Table I in terms oftheir initial focus and the levels of context where their attention is directed. There is anoverall tendency across the SHRM literature for tensions, contradictions and imbalance(Boselie et al., 2009) as evidenced in the overly prescriptive best practice approach, thehighly contingent best fit approach (focusing on specific market or national contextfactors) and the RBV’s spotlight on the internal resources of the organisation.Individual adoption of these approaches is unlikely to provide a meaningful depictionof how companies might pursue competitive advantage via their human resources orHRM practices. Instead it is argued that companies can use a combined andsimultaneous version of the three SHRM approaches in an attempt to balance theexternal and internal perspectives adopted by the best-fit and RBV approaches, whilealso recognising the important influence industry isomorphism (table stakes) has onthe creation of a set of HRM practices (Boxall and Purcell, 2003, 2008).

Even where such a combined and simultaneous model of SHRM has been advocated(Boxall and Purcell, 2003, 2008) there appears insufficient understanding of, andinsight into, the industry or sectoral level of analysis (Boselie et al., 2009; Boxall, 2003;Paauwe, 2008; Paauwe and Boselie, 2008). By exploring SHRM practices andapproaches across an industry, rather than across specific national or companycontexts, a better understanding of the internal and external challenges faced bycompeting organisations to achieving distinctive HRM strategies and practicesbecomes manifest. Alongside this evaluation of the SHRM approaches, the strategicgroups literature highlights that these clusters of close rivals may compound the

SIHRM approaches Primary focus Level

Resource based view (RBV)Competitive advantage achieved through developing resourceswhich are Valuable, Rare, Inimitable, Non-substitutable andRent achieving

Internal Company/firm

Best fitBased on crafting HRM practices tied to strategic managementmodels – typically through strategic analyses tools of marketposition

External Competitivemarket

Based on aligning HRM practices to different international anddomestic cultural and institutional contexts and companydemand for standardisation

National contextsand competitivemarket

Best practiceOriginally identified as sophisticated practices capable ofachieving competitive advantage

External Industry

Now associated with HRM practices which are “table stakes”essential for operating with social legitimacy within an industry

Table I.The initial focus ofSIHRM approaches

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challenges firms already face in realising differentiation through their humanresources and HRM practices. Indeed where industry analyses highlight theimportance of conformance of industry members, to particular HRM practices andsystems, strategic groups suggest another layer of orthodoxy among closest rivalswhich limit the pursuit of distinctive competitive advantage by firms.

Research designAnalysis of strategic groups requires an industry focus and this research wasundertaken within the context of the international hotel sector. This sector has beenidentified as international by nature (Litteljohn, 2003; Litteljohn et al., 2007) withcompanies achieving growth through a range of market entry modes, typicallyengaging with different equity partners (Whitla et al., 2007). Managing portfolios ofhotels with diverse ownership arrangements (such as the asset light options ofmanagement contracts, franchises and part equity agreements) has created challengesfor international hotel companies (IHCs) (Beals, 2006; Eyster, 1997; Gannon et al., 2010;Guilding, 2006). Traditionally hotel general managers (HGMs) have been seen asstrategic human resources (Boxall and Steeneveld, 1999; Marchington et al., 2003)responsible for creating profitable hotel units through their leadership and operationalexpertise in the hotel industry (Forte, 1986; Kriegl, 2000; Ladkin and Juwaheer, 2000).However, the asset light market entry modes developed more recently as a result ofIHC portfolio expansion have resulted in managers and executives experiencingdifferent challenges and requiring enhanced skills sets. At the heart of this study wasthe aim to explore how IHCs have developed IHRM strategies and practices to managetheir international managerial resources within the broader context of the sector’scompetitive forces, growing industry concentration and in the presence of strategicgroups (Curry et al., 2001; Litteljohn, 1999; Roper, 1995).

Any attempt to capture people management strategies and practices across anindustry, as well as at the firm level, involves the adoption of a comprehensive sampleof organisations. This study used an industry definition of global operations based oncompanies operating hotels across five out of the six economically viable continents, asa purposive sample technique (Saunders et al., 2000). This research stage comprisedsubstantial secondary data collection on the broader international hotel industry withinformation on service levels, ownership modes, brands, portfolios and geographicalpenetration and the information is captured in Table II. Only nine companies met theseglobal criteria and eight of these nine companies granted access to their senior humanresource executives (typically Vice Presidents of Human Resources) andadministrative teams, and HR systems and materials. The fieldwork interviews tookplace at the European corporate headquarters, regional offices and in hotel units for theeight companies. Interviews with the senior HR executives for each of the eightcompanies form the main part of the data. These interviews lasted around four hourson average. In addition, time was also spent with administrative teams, readingdocumentation and observing meetings. A checklist was developed to complement theinterview questions and data, and to systemise the collection of companydocumentation, observations and interactions with the administrative teams(Robson, 2002). Documentation included HRM policies, performance appraisal forms,training manuals, organisational charts, company communications, job descriptions,succession plans and demonstrations and hard copies of HR databases. The interview

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(continued

)

Table II.Profiles of global hotel

companies in sample

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521

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Table II.

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transcripts, fieldwork notes and documentation allowed cases to be written for eachcompany which were sense-checked by industry informants and against the researchteam’s notes and observations.

Access was granted to the eight companies on the basis of offering confidentiality toparticipants and organisations. Each company was protected through the allocation ofpseudonyms and all data and notes collected removed company names and trademarksto provide confidentiality. This is in keeping with the widely acknowledged difficultiesof gaining access within this industry (Litteljohn et al., 2007; Ropeter and Kleiner,1997).

The cases built on the interview transcripts, observations and companydocumentation data meant that qualitative analysis was achieved through the toolsand computer aided techniques recommended by key authors (Miles and Huberman,1994; Silverman, 1997, 1999). The process of initial coding identified HRM practices,management criteria and company strategies and characteristics. Descriptive codingwas then used to highlight specific activities and relationships between HRMpractices and approaches, and company characteristics. Further interpretive codingand analytic coding were highlighted through the themes presented by therespondents and the theoretical relationships arising from the data and initialcoding (Silverman, 1997, 1999). Of particular importance were the themes of similarand distinctive HRM practices deployed by the companies, strategic groups andacross the sample.

ResultsAcross the sample of eight IHCs evidence of common HRM interventions deployedincluded: a reliance on strong internal labour markets for unit management positions;training programmes with universal components; the use of performance appraisal asa mechanism for monitoring and evaluating human resources talent, the deployment ofspecific contractual agreements and conventions; the recurrent use of corporatecommunications channels; and specific HRM responses to cultural and internationalchallenges. The shared aims of these practices indicated that the IHCs were adoptingthe table stake version of the best practice SHRM approach across their internationalportfolios (Boxall and Purcell, 2003, 2008; Boselie et al., 2003, 2009).

The next stage of data examination involved the identification of company specificHRM practices based on the best fit and RBV SHRM approaches. However, subsequentanalysis of the qualitative data began to identify another layer of similar HRMinterventions centred on the appearance of strategic groups within the sample. Thereappeared to be similarities between the companies based on strategic variables such asparent company ownership, the scope of the hotels organisations’ activities (levels ofinternationalisation, geographical coverage, and market segments); resourcecommitments (including size, brands and market entry modes); and centric andtransnational orientations. As a result the sample was demarcated into three strategicgroups. These are labelled the Multi-branders, Mixed Portfolio Purchasers andPrestige Operators. Table III summarises the strategic similarities and differencesbetween the three groups and their IHC members.

Patterns of HRM interventions across the three strategic groups are apparent fromthe data supplied by the executives, their teams and the documentation. These patternsfocus around six areas:

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(1) the levels where HRM is focused;

(2) different views about management skills and transferability across brands;

(3) how international and domestic operations function;

(4) extent of owner influence and cultural differences;

(5) how and where managerial talent is found; and

(6) where specific career interventions emerge.

Similarities Differences

Strategic Group 1 – The Multi-branders (two companies)FranchiseKing andEuromultigrow

Parent companies – related horizontallydiversifiedLarge size – 2,000 þ hotelsHigh levels of internationalisation butstrong domestic base (French and USA)Multiple brands (luxury to budget)Difficulties aligning parent company, brandnames and operationsHybrid strategiesRange of market entry modesEthnocentric orientationGlobal organisation

National cultural origins

Mid-market brand dominates inone company while distinctbrands used for different marketsegments by other

One company uses morefranchising

Strategic Group 2 – The Mixed Portfolio Purchasers (two companies)Britbuyer andUSmixedeconomy

Similar size (between 400 and 1,000 hotels)Mid-position in internationalisation indexStrong domestic presence and distinctiveinternational operationsRange of market entry modesAcquisitive growth of European prestigebrandsBrands offered at similar market levelsChallenges of aligning disparate domesticand international portfolios, corporatestrategies and new acquisitionsEthnocentric orientation but with somegeocentric aspirationsMultinational organisation

Diversification of parentcompanies is different

One company has moreownership/partial ownership ofhotels

One company has much smallerbudget brand domestic interests

Strategic Group 3 – The Prestige Operators (four companies)Anglo-AmericanPremiumContractmanInternationalEuroallianceGlobalalliance

Parent companies – related diversifiedSimilar size (between 50 and 202 hotels)Similar levels of low internationalisationFocus on luxury, first class hotel market(resort and business)Strategies broadly differentiation andfocused differentiationGrowth primarily through managementcontractingBroadly geocentric but with some aspects ofethnocentrismTransnational organisation

Two companies have separatedomestic operations

Two companies have grownthrough strategic partnerships

One company uses a broaderrange of market entry modes

Table III.International hotelcompany strategicgroups

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Table IV captures some of the comments from interviews across these six levels andthe three strategic groups. The HRM interventions and features developed by the threestrategic groups are outlined in Table V along with the strategic variables whichdistinguish the groups.

Strategic group 1: Multi-brandersThe sheer size and scale of their multi-branded operations indicated parallels betweenthe HRM approaches taken by the Multi-branders (see comments in Tables IV and V).Both companies boasted a critical mass of hotels in key countries or regions of theworld resulting in more localised recruitment and development approaches. Forexample, they operated “UK only” management training schemes and then specificrecruitment initiatives tailored to educational systems, notably the French training andGerman apprenticeship schemes. The size of these two companies also meant theyallowed their distinct brands to develop individually which had apparently resulted insome specific brand HRM practices. Both companies recognised there were fewopportunities for managers to transfer between the different brands leading tobottlenecks in internal labour markets, where some brands grew more quickly andoffered extensive transfer and promotion possibilities.

The Multi-branders had attempted to deal with these issues in slightly differentways, though both now had structures, enabling moves between managerial levelsacross brands to achieve some overall parity across their company. In one company(Euromultigrow) there was a guide to the different positions within each brand toencourage internal brand transfers of human resources. This guide was based onextensive negotiations with managers across the company’s brands, although parentcountry nationals (PCNs) dominated among these managers and the company’sUniversity was responsible for the roll-out training for this guide.

Franchiseking had developed a competency-based HRM system designed toidentify common areas of expertise across its brands and as one HR executiveidentified all managers with line responsibilities had to attend and use this framework.The competencies were developed in accordance with a HRM consultant firm and usedexisting and future “high potential” managers across the company’s portfolio toidentify appropriate behaviours of successful managers. Competencies were heavilyinfluenced by the company’s existing management team comprising mainly PCNs. Thecompany then ran a series of training sessions for its senior managers so thecompetencies formed the basis for all selection, performance appraisal, promotion andtraining decisions and activities. These attempts to closely manage their largeportfolios of standardised brands across geographically disparate locations meant theMulti-branders adopted an ethnocentric orientation to internationalisation with PCNsdominant in subsidiary management positions, which runs somewhat counter to theircritical mass of units and attempts to localise too.

The Multi-branders commented less extensively, compared with the members of theother two strategic groups, on the level of interference from property owners wheremanagement contracts were used. They argued this was probably because their highlystandardised brands, even at full-service levels, meant owners knew what to expect,and they did not attempt to interfere in the day-to-day management of hotels. Theselection of managers for managed properties was also less troublesome for theMulti-branders. In most cases executives could appoint whomever they wanted and

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)

Table IV.Responses from HRexecutives from thestrategic groups

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usi

nes

s;m

ark

etin

gan

dsa

les,

man

agin

gh

um

anre

sou

rces

,fi

nan

cial

man

agem

ent,

crea

tiv

ed

ecis

ion

–m

akin

gan

dle

ader

ship

.T

hes

en

eed

tob

ed

isp

lay

edac

ross

cult

ure

sac

ross

pro

per

ties

tom

ake

itas

aG

M.”

Vic

eP

resi

den

tH

RC

ontr

actm

anIn

tern

atio

nal

(continued

)

Table IV.

The role ofstrategic groups

527

Page 16: The role of strategic groups in The role of strategic ...bayanbox.ir/view/986578877085326193/The-role-of-strategic-groups-in.pdf · The role of strategic groups in understanding strategic

Mu

ltib

ran

der

sM

ixed

Por

tfol

ioP

urc

has

ers

Pre

stig

eO

per

ator

s

How

inte

rnat

ion

alan

dd

omes

tic

oper

atio

ns

fun

ctio

n“M

ost

ofth

ese

pot

enti

alG

Ms

do

ten

dst

ill

tob

eth

esa

me

nat

ion

alit

yas

the

com

pan

y,b

ut

Id

on’t

kn

oww

hy

.W

ed

on’t

nec

essa

rily

wan

tth

at,

atal

l.”H

RV

ice

Pre

sid

ent

for

Eu

rom

ult

igro

w

“All

GM

sar

ein

form

edth

atth

eb

est

way

tore

adan

db

ecom

efa

mil

iar

wit

hth

e(c

omp

eten

cy)

gu

ide

isto

read

the

En

gli

shv

ersi

onfi

rst

–th

isis

the

auth

orit

ativ

ev

ersi

on.”

Cor

por

ate

Tra

inin

gan

dD

evel

opm

ent

Dir

ecto

rF

ran

chis

eKin

g

“For

anin

tern

atio

nal

GM

you

nee

dla

ng

uag

esan

din

tern

atio

nal

exp

erie

nce

–th

atis

wh

yso

me

man

ager

sfr

omb

ran

ds

bac

kh

ome

don

’tm

ake

it.”

Vic

eP

resi

den

tH

RU

Sm

ixed

econ

omy

“Ou

rd

omes

tic

bra

nd

man

ager

sar

en’t

our

inte

rnat

ion

alm

ang

ers.

Th

ere

isn

otr

ansf

er,

wel

lok

Ica

nth

ink

ofon

eor

two.

You

nee

din

tern

atio

nal

exp

erie

nce

wh

ich

crea

tes

ab

itof

aca

tch

22–

bec

ause

itis

the

old

thin

gof

‘you

can

’tg

etth

ejo

bw

ith

out

the

exp

erie

nce

and

you

can

’tg

etth

eex

per

ien

cew

ith

out

the

job

’.”B

ritb

uy

erH

RE

AM

Ed

irec

tor

“Wh

yth

efo

ur

dif

fere

nt

par

tsof

the

wor

ld?

Wel

lea

chon

eh

asso

me

stre

ng

ths.

Im

ean

that

Sta

tes

you

tak

em

ark

etin

gan

dv

ery

dif

fere

nt

hu

man

reso

urc

es.

Asi

ay

oust

ill

hav

eth

elu

xu

ryof

bei

ng

able

toh

ave

alo

tof

emp

loy

ees

and

afa

rb

igg

erb

ud

get

bec

ause

cost

sar

elo

wer

.Ja

pan

bec

ause

the

way

,th

em

enta

lity

ofth

eJa

pan

ese

mar

ket

and

cust

omer

isd

iffe

ren

t,an

dE

uro

pe

tod

osa

me

thin

gb

ut

wit

ha

ver

yti

gh

tb

ud

get

bec

ause

cost

sar

eso

hig

h.”

Vic

eP

resi

den

tH

RE

AM

EC

ontr

actm

anIn

tern

atio

nal

“Afu

ture

GM

mu

sth

ave

wor

ked

outs

ide

his

orh

erh

ome

cou

ntr

yb

efor

eth

eyca

nb

ep

rom

oted

toth

isle

vel

.It

isim

por

tan

tfo

rm

anag

ers

toh

ave

lan

gu

age

skil

lsn

oton

lyto

hel

pth

emop

erat

ein

par

ticu

lar

loca

tion

sb

ut

also

bec

ause

ther

ear

efa

rm

ore

care

erop

por

tun

itie

sfo

rth

ose

ind

ivid

ual

sw

ho

can

dem

onst

rate

lan

gu

age

pro

fici

ency

.T

ran

sfer

sar

eth

enan

imp

orta

nt

asp

ect

ofd

evel

opin

ga

care

er.”

An

glo

-Am

eric

anP

rem

ium

Vic

eP

resi

den

tof

HR

s(continued

)

Table IV.

PR41,4

528

Page 17: The role of strategic groups in The role of strategic ...bayanbox.ir/view/986578877085326193/The-role-of-strategic-groups-in.pdf · The role of strategic groups in understanding strategic

Mu

ltib

ran

der

sM

ixed

Por

tfol

ioP

urc

has

ers

Pre

stig

eO

per

ator

s

Ex

ten

tof

own

erin

flu

ence

and

cult

ura

ld

iffe

ren

ces

“Wel

lm

ost

ofth

eti

me,

itd

epen

ds

onth

eca

seof

cou

rse,

mos

tof

the

tim

e,th

esh

areh

old

erof

the

hot

elw

ill

be

anin

ves

tor

bu

th

ew

ill

not

be

anop

erat

ion

alac

tor.

He

isin

tere

sted

inth

eb

otto

mli

ne,

not

wh

atg

oes

onin

sid

eth

eh

otel

.”H

RV

ice

Pre

sid

ent

for

Eu

rom

ult

igro

w

“Ow

ner

inte

rfer

ence

dep

end

son

our

bra

nd

s,th

em

ore

excl

usi

ve

the

bra

nd

the

mor

ein

flu

ence

bu

tm

ain

lyw

ep

rop

ose

peo

ple

-‘t

his

can

did

ate

has

our

firm

sup

por

t’.

Ob

vio

usl

yth

eq

ual

ity

ofth

ere

lati

onsh

ipw

ith

the

own

eris

ver

yim

por

tan

tan

dy

oum

ust

resp

ect

thei

rw

ish

esp

erta

inin

gto

GM

sb

ut

itd

oesn

’tca

use

us

mu

chtr

oub

lere

ally

.”V

ice

Pre

sid

ent

for

HR

Fra

nch

iseK

ing

“We

hav

eow

ner

s,fo

rex

amp

le,...

bu

tw

eh

ave

own

ers

wh

oar

ev

ery

,ver

ycl

ear

abou

tth

ep

eop

lew

ho

we

are

lik

ely

,or

mor

eof

ten

than

not

,w

eca

n’t

emp

loy

.U

sual

lyit

’sin

term

sof

nat

ion

alit

ies

and

colo

urs

,ra

cean

dse

xu

alp

refe

ren

ces

they

don

’tli

ke.

Itis

thei

rh

otel

and

ifth

eysa

y‘I

don

’tw

ant

som

ebod

yw

ith

red

hai

r’th

eny

oud

on’t

pu

tso

meb

ody

wit

hre

dh

air

in,

it’s

assi

mp

leas

that

.”B

ritb

uy

erH

RE

AM

Ed

irec

tor

“Th

efr

equ

ency

ofm

oves

our

man

ager

sm

ake

are

also

dri

ven

by

how

tig

htl

yan

own

erw

ants

toh

ang

onto

them

.S

ow

e’re

con

stra

ined

by

har

dsh

ipfa

ctor

s,an

dow

ner

’sp

red

ilec

tion

san

dp

refe

ren

ces.

”R

egio

nal

HR

dir

ecto

rU

Sm

ixed

econ

omy

“Usu

ally

own

ers

inte

rvie

wth

eth

ree

can

did

ates

we

pu

tfo

rwar

dfo

rea

chG

Mp

osit

ion

and

inv

aria

bly

,w

ell

they

sele

ctth

eca

nd

idat

ep

refe

rred

by

the

com

pan

y,t

hou

gh

Vic

eP

resi

den

tsof

ten

hav

eto

use

som

ep

ower

sof

per

suas

ion

.”A

ng

lo-A

mer

ican

Pre

miu

mV

ice

Pre

sid

ent

ofH

Rs

“We

hav

eto

kn

owou

row

ner

sre

ally

wel

lto

giv

eth

emth

eG

Ms

they

wan

tan

dn

eed

.T

hat

’sa

tou

gh

call

wh

eny

ou’r

eg

row

ing

som

uch

.”V

ice

Pre

sid

ent

HR

Con

trac

tman

Inte

rnat

ion

al

“Som

eow

ner

sar

ere

ally

dif

ficu

ltan

dh

ave

tob

em

anag

edca

refu

lly

.T

hat

’sw

her

eou

rR

egio

nal

gu

ys

com

ein

.Oth

ers

are

gre

atan

dth

eyar

eou

rb

usi

nes

sp

artn

ers,

wit

hu

sfo

rth

elo

ng

hau

l.“

HR

Vic

eP

resi

den

tE

uro

alli

ance

“Ow

ner

sd

oh

ave

alo

tof

infl

uen

ceb

ecau

seif

we

giv

eth

emso

meb

ody

and

they

say

‘we

don

’tth

ink

this

gu

y’s

any

goo

d’,

wel

l!A

lth

oug

hw

eco

uld

forc

eth

emon

them

itis

n’t

av

ery

sen

sib

leth

ing

tod

o.S

oth

eow

nin

gco

mp

any

doe

sh

ave

ab

igb

eari

ng

onth

eG

Msl

ot.”

Cor

por

ate

Dir

ecto

rof

Hu

man

Res

ourc

esG

lob

alal

lian

ce(continued

)

Table IV.

The role ofstrategic groups

529

Page 18: The role of strategic groups in The role of strategic ...bayanbox.ir/view/986578877085326193/The-role-of-strategic-groups-in.pdf · The role of strategic groups in understanding strategic

Mu

ltib

ran

der

sM

ixed

Por

tfol

ioP

urc

has

ers

Pre

stig

eO

per

ator

s

How

and

wh

ere

man

ager

ial

tale

nt

isfo

un

d“W

eh

ave

our

area

,reg

ion

alh

um

anre

sou

rce

peo

ple

hel

pou

rG

Ms

iden

tify

thei

rm

anag

ers

wh

om

igh

ton

ed

aym

ake

it,

wh

oh

ave

the

pot

enti

alto

be

GM

sto

o.T

he

area

hu

man

reso

urc

ep

eop

leth

enru

nso

me

cou

rses

and

do

the

trai

nin

gw

eh

ave

dev

elop

edth

rou

gh

our

com

pan

yu

niv

ersi

ty.”

HR

Vic

eP

resi

den

tfo

rE

uro

mu

ltig

row

“Som

eof

our

app

roac

hto

iden

tify

ing

GM

pot

enti

alis

syst

emat

ic,

som

eis

opp

ortu

nis

tic.

We’

retr

yin

gto

bec

ome

mor

esy

stem

atic

,th

rou

gh

the

new

com

pet

enci

esp

roce

ss.

We’

ve

reco

gn

ised

we

hav

eto

hav

em

ore

loca

ln

atio

nal

san

dfe

wer

exp

atri

ates

.”C

orp

orat

eT

rain

ing

and

Dev

elop

men

tD

irec

tor

Fra

nch

iseK

ing

“Im

ean

Iam

ver

yco

nsc

iou

sfr

omth

isco

nv

ersa

tion

we

are

not

doi

ng

allw

eco

uld

tod

evel

opth

en

ext

gen

erat

ion

ofG

Ms.

Itis

par

tly

bec

ause

the

nu

mb

ertw

op

osit

ion

inso

me

un

its

has

dis

app

eare

d.

So

ther

ear

en’t

enou

gh

opp

ortu

nit

ies

for

hea

ds

ofd

epar

tmen

tsto

mov

eon

and

dev

elop

thei

rex

per

ien

ce.W

eh

aven

’th

ada

pro

ble

mso

far

bu

tas

we

incr

ease

(gro

w)

we

mig

ht

be

stru

gg

lin

gfo

rth

eri

gh

tca

lib

reof

GM

sin

afe

wy

ears

tim

e.”

Bri

tbu

yer

HR

EA

ME

dir

ecto

r

“You

mu

stre

alis

eth

attr

adit

ion

ally

we

hav

eco

nsc

iou

sly

dev

elop

edv

ery

goo

dre

sid

ent

man

ager

s/E

AM

s(E

xec

uti

ve

Ass

ista

nt

Man

ager

s)so

wh

enth

ese

ind

ivid

ual

sto

okov

erth

eir

own

un

its

ther

ew

asa

ver

ylo

wri

skof

fail

ure

.S

ince

our

pu

rch

ases

and

dow

n-s

izin

g,

how

ever

,th

ere

are

now

som

ep

rop

erti

esth

atn

olo

ng

erh

ave

an

um

ber

2m

anag

er.

Th

us

we

hav

eef

fect

ivel

yst

opp

edd

evel

opin

gth

is‘a

lmos

t’ri

skfr

eeh

um

anre

sou

rce

–it

may

cau

seu

sp

rob

lem

sin

the

lon

gte

rm.”

Vic

eP

resi

den

tH

RU

Sm

ixed

econ

omy

“How

do

we

man

age

our

GM

s?W

ell

we

incl

ud

eal

lm

anag

ers

her

e–

wel

lit

’sa

ver

yin

teg

rate

dap

pro

ach

toca

reer

dev

elop

men

t,or

man

agem

ent

dev

elop

men

tan

dth

ean

nu

alap

pra

isal

and

ital

lco

mes

tog

eth

erw

ith

succ

essi

onp

lan

nin

gan

dth

ew

ork

we

co-

ord

inat

eh

ere

(ges

ture

sto

the

corp

orat

eh

ead

-offi

ce).”

Cor

por

ate

Dir

ecto

rof

Hu

man

Res

ourc

esG

lob

alal

lian

ce

“We’

re[t

he

exec

uti

ve

team

]in

the

hot

els

alo

t,an

dth

eP

resi

den

tw

asre

ally

gre

at,

yes

terd

ayh

ew

assa

yin

g‘Y

ouk

now

ever

yb

ody

wh

eth

ery

ou’r

efi

nan

ceor

bu

sin

ess

dev

elop

men

tor

mar

ket

ing

,w

hen

you

’re

inth

eh

otel

san

dy

ousp

otp

eop

lew

ho

are

real

lyg

ood

,n

otic

eit

,y

ouk

now

get

an

ote

ofth

en

ame,

mak

esu

reth

atw

e’re

also

all

tale

nt

spot

tin

gou

row

np

eop

le.”

HR

Vic

eP

resi

den

tE

uro

alli

ance

“We

mu

stth

eref

ore

nu

rtu

reex

cell

ence

inev

ery

one

ofou

rem

plo

yee

s,es

pec

iall

you

rlo

cal

nat

ion

als

–th

ep

eop

lew

ho

liv

ein

the

cou

ntr

ies

wh

ere

we

oper

ate

hot

els.

”V

ice

Pre

sid

ent

HR

EA

ME

Con

trac

tman

Inte

rnat

ion

al

“At

the

Vic

eP

resi

den

tan

dd

ivis

ion

ald

irec

tor

lev

els

we’

real

way

str

avel

lin

g,

list

enin

gto

wh

atar

ep

eop

lear

esa

yin

gan

dte

llin

gth

emab

out

wh

at’s

hap

pen

ing

acro

ssth

eco

mp

any

.A

nd

spot

tin

gta

len

tto

o.”

An

glo

-Am

eric

anP

rem

ium

Vic

eP

resi

den

tof

HR

s(continued

)

Table IV.

PR41,4

530

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Mu

ltib

ran

der

sM

ixed

Por

tfol

ioP

urc

has

ers

Pre

stig

eO

per

ator

s

Wh

ere

spec

ific

care

erin

terv

enti

ons

emer

ge

“Ou

rre

stru

ctu

rin

gof

bra

nd

san

dg

row

thin

fran

chis

ing

mea

ns

we

hav

eto

be

clea

rab

out

wh

atm

anag

ers

do

tom

ake

the

hot

els

succ

essf

ul.

Ou

rco

mp

any

un

iver

sity

iscr

itic

alfo

rtr

ain

ing

toou

rb

ran

ds

soal

lou

rm

anag

ers

kn

ow.”

Ass

ista

nt

HR

dir

ecto

rfo

rE

uro

mu

ltig

row

EA

ME

“Per

form

ance

ofou

rb

usi

nes

sis

cru

cial

and

that

isw

hy

som

uch

inv

estm

ent

and

dev

elop

men

th

adb

een

mad

ein

this

area

ofco

mp

eten

cies

and

per

form

ance

man

agem

ent.

Th

ere’

sb

een

acl

ear

gro

wth

inp

rofi

tssi

nce

the

com

pet

enci

esw

ere

firs

td

evel

oped

.”V

ice

Pre

sid

ent

for

HR

Fra

nch

iseK

ing

“In

fact

itis

incr

edib

lyin

cest

uou

san

dp

eop

leju

stse

emto

app

ear

orm

ater

iali

se.

We

wou

ldn

’td

irec

tly

poa

chso

meo

ne,

wel

l...

,b

ut

ifso

meo

ne

mad

eit

clea

rto

us

they

’db

ein

tere

sted

then

we’

dfe

elfi

ne

abou

tca

llin

gth

emu

p.”

Bri

tbu

yer

HR

EA

ME

dir

ecto

r

“Wh

enw

eg

oou

tsid

e,w

ell

we

stea

lfr

omth

eco

mp

etit

ion

and

just

rely

onth

eg

rap

evin

eor

may

be

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Strategic groups Strategic group variables HRM outcomes

Brands and market segmentationMulti-branders Hard brands, serving several

different market levelsAllows more localisation ofmanagement talent due tostandardisation and clear criteriafor operating brandsMovement within and betweenbrands facilitated to preventcareer bottlenecks

Mixed Portfolio Purchasers Some soft (international) and somehard (domestic) brands

Difficult to facilitate movementbetween international brands dueto recent purchases, no transferbetween domestic andinternational brands due to skillsmismatchImportance of communication toassimilate new acquisitions

Prestige Operators Softer brands Emphasis on transfers to developmanagerial experience of differentcountries/markets, and types ofhotelsEncourages and facilitatesemployees at all levels to gaininternational experience

Structure and organisationMulti-branders Large diverse organisations,

structured on the basis of brandsand some geographical factorsCritical mass of units in somelocations

Companies have developed guidesto articulate managementpositions and skills across brandsCritical mass allows multi-unitUGMs and more local recruitmentand selection activities

Mixed Portfolio Purchasers Organised on International anddomestic divisions. Slowassimilation of newly purchasedinternational brandSome critical mass of units

Some local recruitment andselection, less developmentthrough strong internal labourmarket and more acquisition ofmanagement talentCritical mass allows morelocalisation of management talentbut not co-ordinated effectivelythroughout the companies

Prestige Operators Smaller portfolios organised onregional linesLimited critical mass of units

Regional offices co-ordinatetransfers and HRM practices butalso learn from subsidiaries topass experience, knowledge andexpertise on across other regions.IT plays an important role hereAcross company recruitment anddevelopment schemes rather thanlocalised versions. Provides singleports of entry at (sub) departmentmanagement level to locals

(continued )

Table V.The IHC strategic groups,their strategic variablesand the HRM outcomes

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Strategic groups Strategic group variables HRM outcomes

Centric orientationMulti-branders Primarily ethnocentric Highly standardised services

seem to facilitate low reliance onPCNs at subsidiary level thoughthey are prevalent at executivelevel

Mixed Portfolio Purchasers Difficult to discern - bypassing ofstages through acquisitions(McKiernan, 1992)

PCNs still mainly in place foracquired companies, somelocations with HCNs (criticalmass) but dominated by Westernnationals

Prestige Operators Aspiring geocentric Attempts to harness managerialtalent from around the worldregardless of nationality throughco-ordinated and integrated HRMactivitiesUGMs still primarily fromWestern (European andAmerican) backgrounds,executives in particular

Methods of growth and market entry expertiseMulti-branders Growth through hard brands and

the development of suitableinvestors (master franchisees andowners)

UGMs have specific knowledgeand skills in operating highlystandardised hotel services andpassing knowledge onto others(franchisees)HRM mechanisms defineperformance and selection criteriafor managers and employees

Mixed Portfolio Purchasers Acquisition used alongside mixedmethods of market entry (mainlymanagement contracts)

UGMs are likely to have expertisein exploiting value frompurchased propertiesDe-layering of organisationalhierarchies (disappearance ofdeputy UGM position) and localrecruitment initiatives were seento help realise returns on theiracquisitions

Prestige Operators Growth primarily throughmanagement contracting, somemarketing agreements, and equityinvestment. Global but localoutlook

Managers demonstrate specificproficiency in managing moreluxurious and culturally adaptedhotels and their ownersMore extensive and integratedHRM interventions, whichsupport extensive transfers anddevelopment opportunities,throughout human resources, notjust managers Table V.

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only in a few hotels or in specific countries and with specific types of owners (forexample, governments) were there two or three managers presented to owners in a“beauty parade”.

The Multi-branders were more concerned about the co-ordination of franchiseoperators and training and communication were seen to be vital mechanisms formanaging these issues. These were the only companies who identified mandatorytraining courses for managers and held specific courses that their franchise partnerswere obliged to attend. Constant travelling by corporate executives was seen to furtherreinforce company values and assist in harmonization between geographicallydisparate franchised, managed and owned units. Both companies showed evidence ofstrong similarities associated with managing their multi-branded, and multi-marketentry strategies and large, diverse portfolios. Dividing their HRM interventions intoareas or countries where there was a critical mass of units was appropriate given thescale of their operations. Strong values, often based on the origins of the company,were communicated through frequent communiques and training opportunities furtherreinforced the brand standards and achieved appropriate levels of corporate synergy inthe face of competition from their smaller but potentially more nimble competitors.

Strategic group 2: Mixed Portfolio PurchasersThe Mixed Portfolio Purchasers had been through considerable periods of change andgrowth prior to the researchers’ fieldwork. In addition to acquiring smaller Europeanhotel chains they had substantially expanded their domestic and internationalportfolios through other acquisitions and mixed market entry methods. Both hadinternational and larger domestic sections which were managed almost completelyseparately, although they operated at similar market levels. While their existinginternational managers had primarily “worked their way up through the company” theexecutives and administrators interviewed indicated lower proportions of internalHGM appointments (75-80 per cent compared to 90-95 per cent in the companies of theother strategic groups). In addition, deputy HGM positions had previously provided a“risk free” training ground for HGMs but restructuring activities a decade earlier hadeliminated most deputy roles within the Mixed Portfolio Purchasers. The HRexecutives were resigned to such restructuring activities but held reservations aboutthe long-term implications for aspiring managers and talent development.

Both organisations took a “blanket” approach to recruitment combining everyaspect of coverage of potential hotel management talent. They relied heavily on the“grapevine” or industry network to identify possible external recruits at the senior unitmanagement level. They also recruited specifically from the international hotel schoolsin Switzerland and The Netherlands. One company positioned such recruits in juniormanagement jobs while the other provided a management development programme. Inaddition, the HR executives and their teams identified that speculative applicationswere encouraged from “second jobbers”, graduates who had undertaken some form ofinternational experience, and who were now ready to settle down and develop theircareers. Specific recruitment initiatives also existed for locations where the twocompanies had a critical mass of units (UK, Southern Europe and Germany) allowingthese units their own junior management recruitment initiatives. However, managersfrom their domestic hotel brands were not deemed appropriate for their internationalproperties as they lacked the necessary international experience and language skills.

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The acquisitions undertaken by the Mixed Portfolio Purchasers had resulted infervent attempts to build strong, coherent corporate cultures in their newly enlargedorganisations. While all the IHCs had mentioned corporate communication as animportant facet of managing international human resources the Mixed PortfolioPurchasers emphasised the value of communicating to their newly merged companies.Such communications still typically took place through top down processes; holdingregional and HGMs meetings where company values were disseminated. Newsletterswere also produced along with other documents informing staff of events, news andcompany priorities. Both Mixed Portfolio Purchasers were adamant that their acquiredbusinesses had developed some effective HRM interventions and attempts had beenmade to adopt and adapt these practices, with mixed success. They also highlightedproblems of over-staffing in their acquired firms and these had been dealt with throughrestructuring in an attempt to squeeze as much value out of the acquisitions aspossible. However, the respondents remarked that these activities had not always beenwell-timed or popular, and their long-term ramifications would have implications forfuture human resource and talent development.

Succession planning practices existed in this strategic group though one companytook a more sophisticated and IT-led approach to succession, linking it to theirperformance appraisal and a management training programme. Both Mixed PortfolioPurchasers had created profiles of their hotel units to help in the selection of HGMs.These were based on the location and size of the unit, owner relations, marketingneeds, customer groups, staff relations and the complexity and maturity of eachbusiness. However, the respondents were unsure as to how Regional OperationsDirectors exactly used these profiles to match managers to hotel properties. The MixedPortfolio Purchasers were large companies eager to grow further but their acquisitionshad provided considerable challenges to the effective development and management oftheir managerial resources. It was difficult to detect a clear international strategicorientation as they had leap-frogged stages through their acquisitions. Time toevaluate HRM practices and managerial talent was required but the executives andtheir teams were not afforded the resources (time or capital) to do this effectively. TheMixed Portfolio Purchasers were then positioned somewhere between theMulti-brander and Prestige Operator groups, in a state of flux. They were concernedwith realising the value from their acquisitions by reducing overheads andassimilating effective practices across their organisations, rather than harnessingthe resources and expertise of their HRM practices and managers to achievecompetitive advantage through human resources.

Strategic group 3: The Prestige OperatorsThe four companies in the Prestige Operators strategic group provided the mostextensive range of international and integrated HRM practices and approaches tomanage HGMs. Their focus on luxury hospitality facilities and a more selectiveportfolio of hotels in key gateway locations across the world influenced theirmanagement of human resources in specific ways. The four companies were veryproud of their international management cohort and the practices used to managethem, though they admitted that their recent corporate expansion plans made thesupply of managerial human resources more challenging. Specific HRM practices hadbeen enacted within the Prestige Operators to alleviate such issues and to ensure that

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strategic objectives related to growth and the maintenance of standards were achieved.They recruited almost exclusively into their management development programmes ordirectly to junior management positions from European hotel schools. In addition, theyall ran management development programmes designed to advance the progress oftalented managers from their existing staff to HGM positions within eight to ten years.These development programmes identified junior staff via performance appraisalsystems and senior unit management reviews. They then attended assessment centresrun by corporate and regional HR and operational specialists. Two members of thisgroup had formal management training programmes where diploma and degreegraduates joined and were provided with insights into key hotel departments. Theother two organisations did not have such schemes but recruited the same calibre ofgraduates to junior management positions, though these recruits attended specifictraining courses and were tracked through regional and corporate HR systems.

The importance of mobility and international transfers were highlighted by allrespondents from the Prestige Operators group indicating that international flexibilityand cultural adaptability were vital for aspiring managers in line with their geocentricambitions. The value of international experience was prioritised based on the nature ofthe clientele, not only providing international hotel service standards but alsocustomising these sensitively to local traditions and conventions. Managerial staffwere not the only human resources encouraged to gain international experience, asthese IHCs had developed international transfer opportunities for staff at all otherlevels too. Three companies offered sabbaticals for operative staff, while the fourth wasabout to introduce such a scheme following feedback from their recent employeeattitude survey.

The Prestige Operators also exhibited more integration between their HRMpractices. For example, their succession planning, performance appraisal, training anddevelopment programmes, transfers and career management activities were allco-ordinated which led to a high level of consistency in terms of the managersidentified against the criteria set by the companies as future talent. One of the ways thecompanies achieved such integration was through the use of computerised systems ofmanagers’ details, where issues of mobility, succession planning, human resourceplanning and the level of managerial talent generally, could be discerned.

The HR executives in the Prestige Operators were themselves in much morepowerful positions, compared with their other strategic group counterparts, wheresenior operational managers often held the reins in HR decisions. The PrestigeOperators HR executives were more likely to work alongside their senior operationalcolleagues, have the power of veto over some appointments and moves, and generallyseemed to have a more positive and proactive influence in their companies. Despite thestrong similarities between the HRM practices and approaches taken to managingstrategic human resources the Prestige Operators all claimed that their tactics meantthey were breeding better managerial talent than the competition. Comments such as“It’s not what the rest of them are doing!” and “We’re producing managers who’lloutplay the competition” signified what they felt was their departure from theestablished practices used to manage and develop HGMs. There is some evidence tosupport these claims as they demonstrated more sophisticated, co-ordinated andcoherent HRM activities to ensure sufficient quantity and quality of internationalHGMs. However, these interventions took place in a more challenging context, as they

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reported more extensive problems of managing owner relations and coping with localand cultural differences, in line with their geocentric orientation (Perlmutter, 1969), andacknowledged in more detail the problems of standardising and customising HRMpractices within and across their hotel units. Such matters were seen to be due to theirmore sensitive and adaptive approaches to serving international customers anddeveloping partnerships through management contracts with local businesses. In shorttheir industry positions, as global and luxury hotel service providers also suggest awider range of challenges in managing and developing their human resources.

DiscussionThe evidence of strategic groups, highlighted through the extensive similarities inHRM strategies and practices across the eight IHCs, presents a valuable insight intothe opportunities for and limitations to creating competitive advantage via humanresources and HRM practices. Overall the discussion of the results surfaces around twomain themes; those that refer to the strategic human resource management (SHRM)approaches, and those that emphasise the insights from the strategic groupsthemselves.

In relation to the SHRM approaches, the results support the latest arguments thatthe table stake best practice approach emerges via a set of HRM practices which firmsadopt in order to be socially legitimate in that industry (Bjorkman, 2006; Boxall andPurcell, 2003; Paauwe and Boselie, 2003). The common HRM practices implementedacross the IHC sample occurred because of the specific nature of companies’internationalisation and development within the industry, and the occupationalconventions and communities associated with managing hotels (Nickson, 1999; Roperet al., 2001). This is evidence that industry and competitive institutional forces(DiMaggio and Powell, 1983) play an influential role in creating conformity in HRMpractices across the IHCs (Boxall and Purcell, 2003; Morris et al., 2006; Paauwe andBoselie, 2003). While there was also evidence of the IHCs deploying integrated anddistinctive HRM practices it was not as compelling or as apparent as the similaritiesfound. Despite the claims of uniqueness made by all the HRM executives, their teamsand the documents they supplied, only three companies were judged to have developedsufficiently idiosyncratic and integrated HRM practices in line with pursuing a RBVSIHRM approach to achieving competitive advantage via their human resources.These three companies, comprising one Multi-brander (FranchiseKing) and twoPrestige Operators (Globalalliance and Contractman International), were singled out asperforming the RBV SIHRM approach not only due to their distinctive HRM practicesbut also because of their overall attempts to bundle practices and achieve coherenceand synergy between their human resource strategies and interventions (Kamoche,2001). Three companies demonstrating any semblance of the RBV SHRM approachsuggests that, although firms purportedly strive for competitive distinction throughtheir human resources and associated practices, the pressures for conformance arestrong (Bjorkman, 2006; Boselie et al., 2002, 2003).

The specific nature of an industry is important here as it suggests that differentindustries will be influenced in contradictory ways by the institutional and competitiveinfluences at play. Previous studies on the international hotel industry havehighlighted a lower level of national institutional impact in comparison to other sectors(Boselie et al., 2002, 2003). In addition, the dominance of American companies at key

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stages in the industry’s expansion (Nickson, 1999) has also led to a suggestion of anAmerican model of growth across the industry. Further research is required tounderstand how the American model has evolved more recently and whether otherindustries and sectors have experienced similar heritage issues within HRM and otherareas of management.

It is not only the “table stake” version of the SHRM approach but another level ofconvention, identified through strategic groups, which limit companies’ capacity todifferentiate themselves through their HRM practices and strategic human resources.The “best fit” SHRM approach may suggest that HRM practices and strategies aredetermined by firms’ strategies and market positions, but within close and competitiveindustries distinction via market position and strategies may be insufficient. Therespondents identified how their HRM practices and policies for developing theirmanagers were justified by their strategies, portfolio characteristics and marketpositions. However, the eight IHCs fell into three strategic groups based on their similarmarket positions, international orientations, portfolio characteristics and strategies andcommon HRM practices and approaches. Such findings suggest an additional level ofinstitutional assimilation and conformity among companies and their HRM practiceswithin industries (Powell and DiMaggio, 1991; Oliver, 1997). The findings suggest thatstrategic approaches used to manage human resources can be understood in relation tostrategic groups functioning in an industry, not just at the firm or industry levels.

The second theme of strategic groups shaping SHRM practices and approaches raisesimportant considerations for a more nuanced understanding of SHRM. Thecharacteristics which help delineate the three strategic groups are familiar in strategicmanagement, and specifically the best fit SHRM approach, as helping to determinepeople management approaches and practices (Boxall and Purcell, 2003, 2008). Forexample, the international strategic orientations (Perlmutter, 1969) of the strategicgroups as well as their predominant market entry modes, parent company interests andmain strategic choices at corporate and business levels (Johnson and Scholes, 2005),highlight that the original best fit SHRM arguments for how people should be managedneeds to challenged in relation to the opportunity they offer companies to differentiatethemselves within certain industries. There is then value in exploring companies’corporate and business strategies at an industry level for a more fine grainedunderstanding of how competition shapes people management strategies and practices.

The cognitive approach to identifying strategic groups suggests that the insights ofcorporate executives into competition shape strategies and practices (Reger and Huff,1993; Peteraf and Shanley, 1997; Panagiotou, 2006, 2007). In this study, the HRrespondents mentioned their competitors when explaining their own organisation’sresponses to industry developments and ways of managing human resources. It isevident that what “the others” are doing shapes the management of strategic humanresources resulting in the detection of similar HRM practices within the three strategicgroups in the international hotel industry. However, the implications of these commonpractices are less clear. There are positive and negative consequences of strategicgroup membership (Peteraf and Shanley, 1997). The positive outcomes of strategicgroup membership include coordination effects (where there are interdependentbenefits from members’ actions); efficiency effects (where information exchangebetween members increases efficiencies and innovation); and reputation effects (wherethe identity of members helps to reduce search costs) (Peteraf and Shanley, 1997).

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These outcomes need to be explored directly in HRM terms to see whether there are, forexample, more movements of human resources between strategic group members,similar levels of adoption of HRM techniques and technologies, and similar employerreputations achieved within strategic groups. Conversely the negative consequences ofstrategic group identity are: “reduced flexibility, strategic myopia and suboptimizingbehavior” (Peteraf and Shanley, 1997, p. 180). Likewise, such obstructive rigidities andstagnant thinking and behaviour in HRM interventions, needs to be investigated inrelation to the links between strategic groups and SHRM.

Another feature of strategic group research is the appearance of transient groups(Panagiotou, 2006), which are firms (Reger and Huff, 1993 p.117) who “are changingfrom one strategic position to another, but along dimensions common to other firms inthe industry.” The Mixed Portfolio Purchasers strategic group is suggestive of justsuch a transient group, moving from the strategic position associated with PrestigeOperators towards that of the Multi-branders. The mobility barriers associated withaccessing new strategic groups are highlighted in the literature (McGee et al., 1995;Reger and Huff, 1993) and appear evident in the HRM challenges and changingpriorities the Mixed Portfolio Purchasers encountered as they attempted to realise thebenefits of their newly enlarged organisations. The real difficulty in achieving theadded value of their acquisitions, and subsequent moves to become international hoteloperators of multiple brands, occurs where both Mixed Portfolio Purchasers were preyto hostile takeovers just after the research was completed. Transient groups also reflectthe broader repositioning of an industry (Panagiotou, 2006, 2007) and subsequentmoves in the international hotel industry support this suggestion as three of the eightfirms have now secured membership of the Multi-branders strategic group by movingalong a similar strategic path to the Mixed Portfolio Purchasers, but with more success.

Conclusions and recommendationsWithin the SHRM literature the three main approaches (best practice, “best fit” andRBV) have traditionally been seen as independently pursued by firms. However, morerecent work has suggested that companies will simultaneously adopt variations ofthese approaches and so a combined view of SHRM is more appropriate and reflectsthe complex environments and competing perspectives companies face (Boxall andPurcell, 2003, 2008). This study has focused on the strategic human resources andassociated HRM strategies and practices in a global industry in order to explore howcompanies pursue competitive advantage in an industry. The literature hasacknowledged that different industries experience institutional factors to varyingextents (Boselie et al., 2002, 2003; Paauwe and Boselie, 2003) and as such in someindustries it may be that other institutional factors may take precedence over parentcountry aspects of influence. This study of the international hotel industry suggeststhis to be the case for strategic human resources, not only because of industry widefeatures, but also because of the prominence of strategic groups. This conclusionemerges amidst wider calls for HRM research focused more clearly on newinstitutionalism and the strategic balance theory (Boselie et al., 2009; Oliver, 1997), withlevels of analysis stretching beyond the firm and industry dimensions.

In the last 30 years SHRM theoretical and empirical research has advanced throughengagement with strategic management concepts and theories (Boxall and Purcell,2003, 2008; Storey, 1992). Within strategic management, strategic groups have been

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seen as way of understanding the competitive environments firms face withinindustries (Porter, 1980; McGee et al., 1995; Dranove et al., 1998) and has taken aprescriptive approach to determining firms’ closest industry rivals. More recent studiesof strategic groups have adopted a cognitive approach asking executives andstrategists themselves to identify the strategic variables, which determine subsets ofindustry rivals (Reger and Huff, 1993; Peteraf and Shanley, 1997; Panagiotou, 2006,2007). This research asked HRM executives about the approaches they took tomanaging their strategic human resources across their international hotel portfolios,and strategic groups emerged through the strategic variables and HRM practices usedto manage HGMs as strategic human resources in the IHCs. Such evidence reinforcesthe (mobility) barriers companies need to overcome in their quest for competitiveadvantage through human resources and other strategic options. This link betweenSHRM approaches and strategic groups has not been identified previously andsuggests several important routes for further investigation. Future research directionsinclude longitudinal studies exploring the mobility of organisations between strategicgroups and the mobility of human resources between organisations and strategicgroups. Most significantly the emergence of strategic groups highlights another levelof institutional fit with more pressures for conformance among organisationssupposedly attempting to differentiate themselves from each other (Panagiotou, 2007).Managing these dualities of conformance and differentiation is challenging but asBoon et al. (2009) suggest not impossible with opportunities for innovative responsesapparent. Above all these studies highlight that strategists (executives from allfunctions) may benefit from greater awareness of industry and strategic grouppressures. If competitive advantage is achieved via differentiated and synergisticstrategies and practices then such decision-makers should be encouraged to see beyondthe conventional limitations of their industries and strategic groups. This may demandnew priorities and ways of educating and developing strategic management skills andthinking in the strategic management and SHRM fields (Panagiotou, 2006, 2007).

The results and conclusions from this study do need to be considered alongside thelimitations of the research where the perspectives of human resource executives andtheir teams were the prime focus. Finally, although the specific value of understandingcompetition within an international industry has been highlighted as a key featurethroughout this article, it is important to acknowledge that other industries mayprovide different insights into strategic groups and HRM strategies and practices.

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Further reading

Mueller, F. (1996), “Human resources as strategic assets: an evolutionary resource-based theory”,Journal of Management Studies, Vol. 33 No. 6, pp. 757-85.

Nickson, D. (1998), “A review of hotel internationalisation with a particular focus on the key roleplayed by American organisations”, Progress in Tourism and Hospitality Research, Vol. 4,pp. 53-66.

Panagiotou, G. (2008), “Conjoining prescriptive and descriptive approaches: towards anintegrative framework of decision making: a conceptual note”, Management Decision,Vol. 46 No. 4, pp. 553-64.

Pfeffer, J. (1994), Competitive Advantage through People, Harvard Business School Press, Boston,MA.

Corresponding authorJudie M. Gannon can be contacted at: [email protected]

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