Employment Security, Employability and Sustainable Competitive Advantage

Abstract

The employment relationship is undergoing fundamental change and promises of employment security, long a central feature of the modern employment relationship, are increasingly losing credibility (Cappelli, 1995). Many see this change as an inevitable response to a dilemma brought about by the increasingly competitive that many employers must reckon with; dynamic require flexible workers, flexible workers require a stable employment relationship, but stable employment relationships may not be possible in environments (Heath, Knez, & Camerer, 1993: 89). Whatever the reason for its demise, however, companies world-wide are abandoning long held promises and policies of employment security, with no clear alternative to replace it. In this paper, we present a model of sustainable competitive advantage in that points to one way of overcoming this dilemma and provides a theoretical basis for addressing the observed changes in employment practices. In our model, rent creation replaces rent appropriation as the key source of competitive advantage and employability substitutes for employment security as the defining characteristic of the employment relationship. Such a relationship, we show, can provide for stable adaptable employment relationships and may, therefore, be of advantage for the firm as well as for the employee.

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