Strategic human resource management (SHRM) implies a concern with the ways in which HRM is critical to organizational effectiveness. This straightforward assertion is examined in theory and through research evidence to reveal high levels of complexity in relation to how, when and why the interconnection between HRM and organizational outcomes is achieved. The two dominant normative models of ‘best fit’ and ‘best practice’ are considered. The paper concludes that the HR strategies of firms are heavily shaped by contextual contingencies, including national, sectoral and organizational factors. However, such a conclusion does not invalidate all ‘best‐practice’ thinking. Although constrained in certain ways, underpinning principles of labour management still have relevance to practice as essential attributes of a firm's ability to compete in its chosen markets. The paper then considers the resource‐based view (RBV) of the firm and asks whether this provides a better basis for the development of theory in SHRM and in understanding the contribution of HRM to the achievement of sustained competitive advantage. While limits to the utility of RBV in respect of SHRM theory are identified, important implications for research are signalled. Trends in the RBV literature are pushing all those interested in strategy towards studies of intellectual capital, learning processes and organizational adaptability. Researchers in HRM could, if they wished, play a central role in these developments because questions of how to attract, motivate and develop workers with critical and scarce abilities, and develop effective processes of work organization, must be fundamental to any model of knowledge‐based competition. Greater progress will be made when organizations are studied in a much more interdisciplinary or systemic way.
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