linking competitive strategies with human resource...

August, 1987

® The Academy of Management EXECUTIVE, 1987, Vol. 1, No. 3,pp. 207-219

Linking Competitive Strategieswith Human Resource

Management PracticesRandall S. Schuler and Susan E. Jackson

New York University

Over the past several years there has been increasedrecognition that there is a need to match the char-

acteristics of top managers with the nature of the busi-ness. According to Reginald H. Jones, former chairmanand CEO of the General Electric Company,

When we classified. . . [our] . . . businesses,and when we realized that they were going tohave quite different missions, we also real-ized we had to have quite different peoplerunning them.^

Within academia there has been similar growing aware-ness of this need. Although this awareness is being ar-ticulated in several ways, one of the most frequent in-volves the conceptualization and investigation of therelationship between business strategy and the per-sonal characteristics of top managers.^ Here, particularmanager characteristics such as personality, skills, abil-ities, values, and perspectives are matched with partic-ular types of business strategies. For example, a re-cently released study conducted by Hay GroupIncorporated, in conjunction with the University ofMichigan and the Strategic Planning Institute, reportsthat when a business is pursuing a growth strategy itneeds top managers who are likely to abandon the sta-tus quo and adapt their strategies and goals to themarketplace. According to the study, insiders are slowto recognize the onset of decline and tend to perseverein strategies that are no longer effective; so, top manag-ers need to be recruited from the outside.

Recruiting outsiders as a part of strategy hasbeen successful for Stroh Brewing Co., once asmall, family-run brewery in Detroit. Some20% of its senior management team of 25 ex-ecutives, including President Roger T.Fridholm, have been brought into Stroh since1978. They've been instrumental in trans-forming it into the third-largest U.S. brewer.^

The result of such human resource staffing practiceshas been rather significant:

Growth companies that staffed 20% of theirtop three levels with outsiders exceeded theirexpected return on investment by 10%.Those that relied on inside talent fell shortof their goals by 20%. The same holds truefor companies in declining industries: com-panies with outsiders in one out of every fivetop managements jobs exceeded expected re-turns by 20%; those with a low proportion ofoutsiders fell 5% short.*

Outsiders, of course, are not always helpful. When abusiness is pursuing a mature strategy, what is neededis a stable group of insiders who know the intracaciesof the business.

The results of the Hay study suggest that thestaffing practices of top management be tied to the na-ture of the business because different aspects of busi-ness demand different behaviors from the individualsrunning them. The implication, then, is that selectingthe right top manager is an important staffing decision.

Another perspective holds that top managers arecapable of exhibiting a wide range of behavior, and allthat is needed is to match compensation and perform-ance appraisal practices with the nature of the busi-ness. Peter Drucker, commenting on the relationshipbetween compensation and a strategy of innovation,observed that:

/ myself made this mistake [thinking thatyou can truly innovate within the existingoperating unit] 30 years ago when I was aconsultant on the first major organizationalchange in American history, the GeneralElectric reorganization of the early 1950s. I

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advised top management, and they acceptedit, that the general managers would be re-sponsible for current operations as well asfor managing tomorrow. At the same time, weworked out one of the first systematic com-pensation plans, and the whole idea of pay-ing people on the basis of their performancein the preceding year came out of that.

The result of it was that for ten yearsGeneral Electric totally lost its capacity toinnovate, simply because tomorrow producescosts for ten years and no return. So, thegeneral manager—not only out of concern forhimself but also out of concern for hisgroup—postponed spending any money forinnovation. It was only when the companydropped this compensation plan and at thesame time organized the search for the trulynew, not just for improvement outside theexisting business, that GE recovered its inno-vative capacity, and brilliantly. Many com-panies go after this new and slight today andsoon find they have neither.^

Similar results illustrating the power of perform-ance appraisal and compensation to affect individualbehavior have been reported in the areas of reinforce-ment, behavior modification, and motivation theories.*However, while there has been much written on match-ing the behavior of top managers with the nature of thebusiness, less attention has been given to the other em-ployees in the organization. Nevertheless, it seemedreasonable to assume that the rest of the workforcewould also have to be managed differently, dependingon the business. This, then, became our focus ofattention.

A critical choice we had to make in our study con-cerned which aspects of the business we were going touse. Consistent with previous studies, we decided touse the general notion of organizational strategy.' Onthe basis of previous studies that looked at strategyand human resource practices, we decided to adaptPorter's framework of competitive strategy.* Using thecompetitive strategy framework, we developed threearchetypes of competitive strategy—PHRM practicescombinations. These were derived from the literature,:secondary sources, and our previous research. We thenexamined each of the three archetypes in-depth, usingadditional secondary data and field results, and ad-dressed issues regarding implementation and revisionof the archetypes. All are presented in this article.

First, we shall review the nature and importance

of competitive strategy, and then we shall describe theconcept of needed role behavior that enabled us to linkcompetitive strategies and HRM practices.

Competitive StrategiesCrucial to a firm's growth and prosperity is the

ability to gain and retain competitive advantage. Oneway to do this is through strategic initiative. MacMil-lan defines "strategic initiative" as the ability to cap-ture control of strategic behavior in the industries inwhich a firm competes.* To the extent one companygains the initiative, competitors are obliged to respondand thereby play a reactive rather than proactive role.MacMillan argues that firms that gain a strategic ad-vantage control their own destinies. To the extent afirm gains an advantage difficult for competitors to re-move, it stays in control longer and therefore should bemore effective.

The concept of competitive advantage is de-scribed by Porter as the essense of competitive strat-egy.'" Emerging from his discussion are three competi-tive strategies that organizations can use to gaincompetitive advantage: innovation, quality enhance-ment, and cost reduction. The innovation strategy isused to develop products or services different fromthose of competitors; the primary focus here is on of-fering something new and diflferent. Enhancing productand/or service quality is the primary focus of the qual-ity enhancement strategy. In the cost reduction strat-egy, firms typically attempt to gain competitive advan-tage by being the lowest cost producer. Although weshall describe these three competitive strategies aspure types applied to single business units or even sin-gle plants or functional areas, some overalap can occur.That is, it is plausible to find business units, plants, orfunctional areas pursuing two or more competitivestrategies simultaneously. This, and how to manage it,are discussed later.

Competitive Strategy: NeededRole Behaviors

Before developing a linkage between competitivestrategy and HRM practices, there must be a rationalefor that linkage. This rationale gives us a basis for pre-dicting, studying, refining, and modifying both strategyand practices in specific circumstances.

Consistent with previous research, the rationaledeveloped is based on what is needed from employeesapart from the specific technical skills, knowledges,and abilities (SKAs) required to perform a specifictask." Rather than thinking about task-specific SKAs,then, it is more useful to think about what is neededfrom an employee who works with other employees in a

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Exhibit 1

Employee Role Behaviors for Competitive Strategies

1. Highly repetitive, predictable behavior

2. Very short-term focus

3. Highly cooperative, interdependent behavior

4. Very low concern for quality

5. Very low concern for quantity

6. Very low risk taking

7. Very high concern for process

8. High preference to avoid responsibility

9. Very inflexible to change

10. Very comfortable with stability

11. Narrow skill application

12. Low job (firm) involvement

—- Highly creative, innovative behavior

— Very long-term behavior

—- Highly independent, autonomous behavior

— Very high concern for quality

— Very high concern for quantity

—- Very high risk taking

— Very high concern for results

— High preference to assume responsibility

— Very flexible to change

— Very tolerant of ambiguity and unpredictability

—- Broad skill application

— High job (firm) involvement

Adapted from R.S_Schuler. "Human Resource Management Practice Choices," in R. S. Schuler, S. A. Youngblood, and V. L. Huber (Eds.) Readings in Personnel andHuman Resource Management, 3rd Ed., St. Paul, MN: West Publishing, 1988.

social environment.'^ These needed employee behav-iors are actually best thought of as needed role behav-iors.'" The importance of roles and their potential dys-function in organizations, particularly role conflict andambiguity, is well documented."

Based on an extensive review of the literature andsecondary data, several role behaviors are assumed tobe instrumental in the implementation of the competi-tive strategies. Exhibit 1 shows several dimensionsalong which employees' role behaviors can vary. Thedimensions shown are the ones for which there arelikely to be major differences across competitive strate-gies. This can be illustrated by describing the variouscompetitive strategies and their necessary organiza-tional conditions in more detail, along with the neededrole behaviors from the employees.

Innovation Strategy and Needed RoleBehaviors

Because the imperative for an organization purs-ing an innovation strategy is to be the most uniqueproducer, conditions for innovation must be created.These conditions can be rather varied. They can becreated either formally through official corporate policyor more informally. According to Rosabeth MossKanter:

Innovation fand new venture development]may originate as a deliberate and official de-cision of the highest levels of management orthere may be the more-or-less "spontaneous"creation of mid-level people who take the ini-tiative to solve a problem in new ways or todevelop a proposal for change. Of course,highly successful companies allow both, andeven official top management decisions toundertake a development effort benefit fromthe spontaneous creativity of those below.^^

To encourage as many employees as possible tobe innovative, 3M has developed an informal doctrineof allowing employees to "bootleg" 15% of their timeon their own projects. A less systematic approach to in-novation is encouraging employees to ofl!"er suggestionsfor new and improved ways of doing their own job ormanufacturing products.

Overall, then, for firms pursuing a competitivestrategy of innovation, the profile of employee role be-haviors includes (1) a high degree of creative behavior,(2) a longer-term focus, (3) a relatively high level of co-operative, interdependent behavior, (4) a moderate de-gree of concern for quality, (5) a moderate concern for

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quantity, (6) an equal degree of concern for processand results, (7) a greater degree of risk taking, and (8)a high tolerance of ambiguity and unpredictability.'*

The implications of pursuing a competitive strat-egy of innovation for managing people may include se-lecting highly skilled individuals, giving employeesmore discretion, using minimal controls, making agreater investment in human resources, providing moreresources for experimentation, allowing and even re-warding occasional failure, and appraising performancefor its long-run implications. As a consequence of theseconditions, pursuing an innovation strategy may resultin feelings of enhanced personal control and morale,and thus a greater commitment to self and professionrather than to the employing organization. Neverthe-less, benefits may accrue to the firm as well as the ein-ployee, as evidenced by the success of such innovativefirms as Hewlett-Packard, the Raytheon Corporation,3M, Johnson & Johnson, and PepsiCo.

Thus, the innovation strategy has significant im-plications for human resource management. Ratherthan emphasizing managing people so they workharder (cost-reduction strategy) or smarter (qualitystrategy) on the same products or services, the innova-tion strategy requires people to work differently. This,then, is the necessary ingredient."

Quality-Enhancement Strategy andNeeded Role Behaviors

At Xerox, CEO David Kearns defines quality as"being right the first time every time." The implica-tions for managing people are significant. According toJames Houghton, chairman of Corning Glass Works,his company's "total quality approach" is about people.At Corning, good ideas for product improvement oftencome from employees, and in order to carry through ontheir ideas Corning workers form short-lived "correc-tive action teams" to solve specific problems.

Employees [also] give their supervisors writ-ten "method improvement requests," whichdiffer from ideas tossed into the traditionalsuggestion box in that they get a prompt for-mal review so the employees aren't left won-dering about their fate. In the company's Er-win Ceramics plant, a maintenance employeesuggested substituting one flexible tin moldfor an array of fixed molds that shape thewet ceramic product baked into catalyticconverters for auto exhausts.^

At Corning, then, quality improvement involvesgetting employees committed to quality and continualimprovement. While policy statements emphasizing the

"total quality approach" are valuable, they are also fol-lowed up with specific human resources practices: feed-back systems are in place, team work is permitted andfacilitated, decision making and responsibility are apart of each employee's job description, and job classi-fications are flexible.

Quality improvement often means changing theprocesses of production in ways that require workers tobe more involved and more flexible. As jobs change, somust job classification systems. At Brunswick's Mer-cury Marine division, the number of job classificationswas reduced from 126 to 12. This has permitted greaterfiexibility in the use of production processes and em-ployees. Machine operators have gained greater oppor-tunities to learn new skills. They inspect their ownwork and do preventive maintenance in addition torunning the machines.'* It is because of human re-source practices such as these that employees becomecommitted to the firm and, hence, willing to give more.Not only is the level of quality likely to improve underthese conditions, but sheer volume of output is likelyto increase as well. For example, in pursuing a compet-itive strategy involving quality improvement, L.L.Bean's sales have increased tenfold while the numberof permanent employees has grown only fivefold.^"

The profile of employee behaviors necessary forfirms pursuing a strategy of quality enhancement is (1)relatively repetitive and predictable behaviors, (2) amore long-term or intermediate focus, (3) a modestamount of cooperative, interdependent behavior, (4) ahigh concern for quality, (5) a modest concern forquantity of output, (6) high concern for process {howthe goods or services are niade or delivered), (7) lowrisk-taking activity, and (8) commitment to the goals ofthe organization.

Because quality enhancement typically involvesgreater employee commitment and utilization, feweremployees are needed to produce the same level of out-put. As quality rises, so does demand, yet this demandcan be met with proportionately fewer employees thanpreviously. Thanks to automation and a cooperativeworkforce, Toyota is producing about 3.5 million vehi-cles a year with 25,000 production workers—about thesame number as in 1966 when it was producing onemillion vehicles. In addition to having more productiveworkers, fewer are needed to repair the rejects causedby poor quality. This phenomenon has also occurred atCorning Glass, Honda, and L.L. Bean.

Cost-Reduction Strategy and NeededRole Behaviors

Often, the characteristics of a firm pursuing thecost-reduction strategy are tight controls, overheadminimization, and pursuit of economies of scale. Theprimary focus of these measures is to increase produc-tivity, that is, output cost per person. This can mean a

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reduction in the number of employees and/or a reduc-tion in wage levels. Since 1980, the textile industry'slabor force decreased by 17%, primary metals, almost30%, and steel, 40%. The result has been that over thepast four years, productivity growth in manufacturinghas averaged 4.1% per year, versus 1.2% for the rest ofthe economy." Similar measures have been taken atChrysler and Ford and now are being proposed at GMand AT&T. Reflecting on these trends. Federal Re-serve Governor Wayne D. Angell states, "We are invig-orating the manufacturing sector. The period of adjust-ment has made us more competitive.""

In addition to reducing the number of employees,firms are also reducing wage levels. For example, in thehousehold appliance industry where GE, Whirlpool,Electrolux, and Maytag account for 80% of all produc-tion, labor costs have been cut by shifting plants fromstates where labor is expensive to less costly sites. Theresult of this is that a new breed of cost-effective firmsare putting U.S. manufacturing back on the road toprofitability."

Cost reduction can also be pursued through in-creased use of part-time employees, subcontractors,work simplification and measurement procedures,autornation, work rule changes, and job assignmentflexibility. Thus, there are several methods for reducingcosts. Although the details are vastly different, they allshare the goal of reducing output cost per employee.

In summary, the profile of employee role behav-iors necessary for firms seeking to gain competitive ad-vantage by pursuing the competitive strategy of costreduction is as follows: (1) relatively repetitive and pre-dictable behaviors, (2) a rather short-term focus, (3)primarily autonomous or individual activity, (4) mod-est concern for quality, (5) high concern for quantity ofoutput (goods or services), (6) primary concern for re-sults, (7) low risk-taking activity, and (8) a relativelyhigh degree of comfort with stability.

Given these competitive strategies and the neededrole behaviors, what HRM practices need to be linkedwith each of the three strategies?

Typology of HRM PracticesWhen deciding what human resource practices to

use to link with competitive strategy, organizations canchoose from six human resource practice "menus."Each of the six menus concerns a different aspect ofhuman resource management. These aspects are plan-ning, staffing, appraising, compensating, and trainingand development.

A summary of these menus is shown in Exhibit 2.Notice that each of the choices runs along a contin-uum. Most of the options are self-explanatory, but arun-down of the stafiSng menu will illustrate how the

process works. A more detailed description of allmenus is provided elsewhere."

Recruitment

In each of these areas, a business unit (or a plant)must make a number of decisions; the first choice in-volving where to recruit employees. Companies can relyon the internal labor market, e.g., other departments inthe firm and other levels in the organizational hierar-chy, or they can rely on the external labor market ex-clusively. Although this decision may not be significantfor entry-level jobs, it is very important for most otherjobs. Recruiting internally essentially means a policy ofpromotion from within. While this policy can serve asan effective reward, it commits a firm to providingtraining and career development opportunities if thepromoted employees are to perform well.

Career Paths

Here, the company must decide whether to estab-lish broad or narrow career paths for its employees.The broader the paths, the greater the opportunity foremployees to acquire skills that are relevant to manyfunctional areas and to gain exposure and visibilitywithin the firm. Either a broad or a narrow career pathmay enhance an employee's acquisition of skills andopportunities for promotion, but the time frame islikely to be much longer for broad skill acquisitionthan for the acquisition of a more limited skill base.Although promotion may be quicker under a policy ofnarrow career paths, an employee's career opportuni-ties may be more limited over the long run.

Promotions

Another stafiing decision to be made is whether toestablish one or several promotion ladders. Establish-ing several ladders enlarges the opportunities for em-ployees to be promoted and yet stay within a giventechnical specialty without having to assume manage-rial responsibilities. Establishing just one promotionladder enhances the relative value of a promotion andincreases the competition for it.

Part and parcel of a promotion system are the cri-teria used in deciding who to promote. The criteria canvary from the very explicit to the very implicit. Themore explicit the criteria, the less adaptable the pro-motion system is to exceptions and changing circum-stances. What the firm loses in fiexibility, the employeemay gain in clarity. This clarity, however, may benefitonly those who fulfill the criteria exactly. On the otherhand, the more implicit the criteria, the greater thefiexibility to move employees around to develop themmore broadly.

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Exhibit 2Human Resource Management Practice Menus

Planning ChoicesInformal Formal

Short Term Long TermExplicit Job Analysis Implicit Job Analysis

Job Simplification Job EnrichmentLow Employee Involvement High Employee Involvement

Staffing ChoicesInternal Sources External Sources

Narrow Paths Broad PathsSingle Ladder Multiple Ladders

Explicit Criteria —- Implicit CriteriaLimited Socialization Extensive Socialization

Closed Procedures Open Procedures

Appraising ChoicesBehavioral Criteria Results Criteria

Purposes: Development, Remedial, MaintenanceLow Employee Participation -— High Employee Participation

Short-Term Criteria - Long-Term CriteriaIndividual Criteria Group Criteria

Compensating ChoicesLow Base Salaries High Base Salaries

Internal Equity External EquityFew Perks Many Perks

Standard, Fixed Package Flexible PackageLow Participation High Participation

No Incentives Many IncentivesShort-Term Incentives — Long-Term Incentives

No Employment Security High Employment SecurityHierarchical High Participation

Training and DevelopmentShort Term Long Term

Narrow Application Broad ApplicationProductivity Emphasis Quality of Work Life Emphasis

Spontaneous, Unplanned Planned, SystematicIndividual Orientation -- Group Orientation

Low Participation High ParticipationAdapted from R. S. Schuler, "Human Resource Management Practice Choices," in R. S. Schuler. S. A. Youngblood, and V. L. Huber (Eds.) ReadingsHuman Resource Management, 3rd Ed., St. Paul, MN: West Publishing, 1988.

in Personnel and

Socialization

After an employee is hired or promoted, he or sheis next socialized. With minimal socialization, firmsconvey few informal rules and establish new proce-dures to immerse employees in the culture and prac-tices of the organization. Although it is probably easierand cheaper to do this than to provide maximum so-cialization, the result is likely to be a more restricted

psychological attachment and commitment by the em-ployee to the firm, and perhaps less predictable behav-ior from the employee.

Openness

A final choice to be made in the staffing menu isthe degree of openness in the staffing procedures. Themore open the procedures, the more likely there is to

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he job posting for internal recruitment and self-nomi-nation for promotion. To facilitate a policy of open-ness, firms need to make the relevant informationavailable to employees. Such a policy is worthwhile;since it allows employees to select themselves into jobs,it is a critical aspect of attaining successful job-personfit. The more secret the procedures, the more limitedthe involvement of employees in selection decisions,but the faster the decision can be made.

A key aspect of the choices within the staffing ac-tivity or any other HRM activity is that differentchoices stimulate and reinforce different role behaviors.Because these have been described in detail elsewhere,their impact is summarized below.

Hypotheses of CompetitiveStrategy-HRM Archetypes

Based on the above descriptions of competitivestrategies and the role behaviors necessary for each,and the brief typology of HRM practices, we offerthree summary hypotheses.

Innovation Strategy

Firms pursuing the innovation strategy are likelyto have the following characteristics: (1) jobs that re-quire close interaction and coordination among groupsof individuals, (2) performance appraisals that aremore likely to refiect longer-term and group-basedachievements, (3) jobs that allow employees to developskills that can be used in other positions in the firm,(4) compensation systems that emphasize internal eq-uity rather than external or market-based equity, (5)pay rates that tend to be low, but that allow employeesto be stockholders and have more freedom to choosethe mix of components (salary, bonus, stock options)that make up their pay package, and (6) broad careerpaths to reinforce the development of a broad range ofskills. These practices facilitate cooperative, interde-pendent behavior that is oriented toward the longerterm, and foster exchange of ideas and risk taking.^"

Quality-Enhancement Strategy

In an attempt to gain competitive advantagethrough the quality-enhancement strategy, the keyHRM practices include (1) relatively fixed and explicitjob descriptions, (2) high levels of employee participa-tion in decisions relevant to immediate work conditionsand the job itself, (3) a mix of individual and groupcriteria for performance appraisal that is mostly short-term and results-oriented, (4) relatively egalitariantreatment of employees and some guarantees of em-ployment security, and (5) extensive and continuous

training and development of employees. These prac-tices facilitate quality enhancement by helping to en-sure highly reliable behavior from individuals who canidentify with the goals of the organization and, whennecessary, be fiexible and adaptable to new job assign-ments and technological change.^*

Cost-Reduction Strategy

In attempting to gain competitive advantage bypursuing a strategy of cost reduction, key human re-source practice choices include (1) relatively fixed (sta-ble) and explicit job descriptions that allow little roomfor ambiguity, (2) narrowly designed jobs and narrowlydefined career paths that encourage specialization, ex-pertise, and efficiency, (3) short-term, results-orientedperformance appraisals, (4) close monitoring of marketpay levels for use in making compensation decisions,and (5) minimal levels of employee training and devel-opment. These practices maximize efficiency by provid-ing means for management to monitor and controlclosely the activities of employees.

An Innovative Strategy: One Com-pany* s Experience

Frost, Inc., is one company that has made a con-scious effort to match competitive strategy with humanresource management practices. Located in GrandRapids, Michigan, Frost is a manufacturer of overheadconveyor trolleys used primarily in the auto industry,with sales of $20 million.** Concerned about dependingtoo heavily on one cyclical industry. President CharlesD. "Chad" Frost made several attempts to diversify thebusiness, first into manufacturing lawn mower compo-nents and later into material-handling systems, such asfioor conveyors and hoists. These attempts failed. Theengineers didn't know how to design unfamiliar compo-nents, production people didn't know how to makethem, and sales people didn't know how to sell them.Chad Frost diagnosed the problem as inflexibility. "Wehad single-purpose machines and single-purpose peo-ple," he said, "including single-purpose managers."

Frost decided that automating production was thekey to fiexibility. Twenty-six old-fashioned screw ma-chines on the factory fioor were replaced with 11 nu-merical-controlled machines paired within 18 industrialrobots. Frost decided to design and build an automatedstorage-and-retrieval inventory control system, whichwould later be sold as a proprietary product, and to au-tomate completely the front office to reduce indirect la-bor costs. The new program was formally launched inlate 1983.

What at first glance appeared to be a hardware-oriented strategy turned out to be an exercise in

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human resource management. "If you're going to reapa real benefit in renovating a small to medium-sizecompany, the machinery is just one part, perhaps theeasiest part, of the renovation process," says RobertMclntyre, head of Amprotech, Inc., an affiliated con-sulting company Frost formed early in the automationproject to provide an objective, "outside" view. "Thehardest part is getting people to change."

Frost was clearly embarking on a strategy of inno-vation. As it turns out, many of the choices the coni-pany made about human resource practices were in-tended to support the employee role behaviorsidentified as being crucial to the success of an innova-tion strategy.

For example, the company immediately set out toincrease employee identification with the company bygiving each worker 10 shares of the closely held com-pany and by referring to them henceforth as "share-holder-employees." The share ownership, which em-ployees can increase by making additional purchasesthrough a 401 (d) plan, are also intended to give em-ployees a long-term focus, which is another behaviorimportant for an innovation strategy to succeed. Addi-tional long-term incentives consist of a standard corpo-rate profit-sharing plan and a discretionary profit-shar-ing plan administered by Chad Frost.

Frost's compensation package was also restruc-tured to strike a balance between results (productivity)and process (manufacturing). In Frost's case, the latteris a significant consideration, since the production pro-cess is at the heart of the company's innovation strat-egy. Frost instituted a quarterly bonus that is based oncompanywide productivity, and established a "celebra-tion fund" that managers can tap at their discretion toreward significant employee contributions. The bo-nuses serve to foster other needed employee role be-haviors. By making the quarterly bonus dependent oncompanywide productivity, the company is encouragingcooperative, interdependent behavior. The "celebrationfund" meanwhile, can be used to reward and reinforceinnovative behavior. (Even the form of the celebrationcan be creative. Rewards can range from dinner withChad Frost to a weekend for an employee and spouseat a local hotel, to a belly dancing performance in theoffice.)

Frost encourages cooperative behavior in a num-ber of other ways as well. Most offices (including ChadFrost's) lack doors, which is intended to foster open-ness of communication. Most executive perks havebeen eliminated, and all employees have access to thecompany's mainframe computer (with the exception ofpayrole information) by way of more than 40 terminalsscattered around the front office and factory floor.

In our view, a vital component of any innovationstrategy is getting employees to broaden their skills, as-sume more responsibilities, and take risks. Frost en-courages employees to learn new skills by paying forextensive training programs, both at the company and

at local colleges. It even goes further, identifying thedevelopment of additional skills as a prerequisite foradvancement. This is partly out of necessity, sinceFrost has compressed its 11 previous levels of hierarchyinto four. Because this has made it harder to rewardemployees through traditional methods of promotion,employees are challenged to advance by adding skills,assuming more responsibilities, and taking risks.

Honda's Quality-Enhancement Strategy

We can identify those human resource practicesthat facilitate product quality by examining Honda ofAmerica's Marysville, Ohio plant.*' With a currentworkforce of approximately 4,500, this plant producescars of quality comparable to those produced by Hondaplants in Japan. Although pay rates (independent ofbonuses) may be as much as 30-40% lower than ratesat other Midwest auto plants, Honda has fewer layoffsand lower inventory rates of new cars than its competi-tors. How is this possible?

One possible explanation is that Honda knowsthat the delivery of quality products depends on pre-dictable and reliable behavior from its employees. Inthe initial employee orientation session, which may lastbetween 3 and 4 hours, job security is emphasized. Em-ployees' spouses are encouraged to attend these ses-sions, because Honda believes that spouse awareness ofthe company and its demands on employees can helpminimize absenteeism, tardiness, and turnover. Ofcourse, something so critical to (juality as reliable be-havior is not stimulated and reinforced by only onehuman resource practice. For example, associates whohave perfect attendance for four straight weeks receivea bonus of $56. Attendance also infiuences the size ofthe semiannual bonus (typically paid in spring and au-tumn). Impressive attendance figures also enhance anemployee's chances for promotion. (Honda of Americahas a policy of promotion from within.)

In addition to getting and reinforcing reliable andpredictable behavior, Honda's HRM practices eri-courage a longer-term employee orientation and a fiexi-bility to change. Employment security, along with con-stant informal and formal training programs, facilitatethese role behaviors. Training programs are tailored tothe needs of the associates (employees) through theformal performance appraisal process, which is devel-opmental rather than evaluational. Team leaders (notsupervisors) are trained in spotting and removing per-formance deficiencies as they occur. To help speedcommunication and remove any organizational sourcesof performance deficiences, the structure of the organi-zation is such that there are only four levels betweenassociates and the plant manager.

At Honda, cooperative, interdependent behavioris fostered by egalitarian HRM practices. All associateswear identical uniforms with their first names em-

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bossed; parking spaces are unmarked, and there is onlyone cafeteria. All entry-level associates receive thesame rate of pay except for a 60-cents-an-hour shiftdifferential. The modern health center adjacent to themain plant is open to all. These practices, in turn, en-courage all associates to regard themselves collectivelyas "us" rather than "us" versus "them." Without thisunderlying attitude, the fiexible work rules, air-condi-tioned plant, and automation wouldn't be enough tosustain associate commitment and identification withthe organization's goal of high quality.

The success of Honda's quality enhancementstrategy goes beyond concern for its own HRM prac-tices. It is also concerned with the human resourcepractices of other organizations, such as its suppliers.For example, Delco-Remy's practice of participativemanagement style, as well as its reputation for produc-ing quality products at competitive prices, was the rea-son why Delco was selected by Honda as its sole sup-plier of batteries.*"

A Cost-Reduction Strategy at UnitedParcel Service

Through meticulous human engineering and closescrutiny of its 152,000 employees. United Parcel Ser-vice (UPS) has grown highly profitable despite stiffcompetition. According to Larry P. Breakiron, thecompany's senior vice-president of engineering, "Ourability to manage labor and hold it accountable is thekey to success."" In other words, in an industry where"a package is a package," UPS succeeds by its cost-re-duction strategy.

Of all paths that can be taken to pursue a cost-reduction strategy, the one taken by UPS is the workstandard/simplification method. This method has beenthe key to gains in efficiency and productivity in-creases. UPS's founder, James E. Casey, put a pre-mium on efficiency. In the 1920s, Casey hired pioneersof time and motion study such as Frank Gilbreth andFredrick Taylor to measure the time each UPS driverspent each day on specific tasks. UPS engineers cutaway the sides of UPS trucks to study how the driversperformed, and then made changes in techniques toenhance worker effectiveness. The establishment of ef-fective work standards has led not only to enormousgains in efficiency and cost reduction; it actually makesemployees less tired at the end of the day. During theday, the employees engage in short-term, highly repeti-tive role behaviors that involve little risk taking. Be-cause specialists identify the best way to accomplishtasks, employee participation in job decisions isunnecessary.

Through the use of time and motion studies, UPShas established very specific ways for workers to per-form their jobs. The company also monitors closely the

performance of the workers. More than 1,000 industrialengineers use time and motion study to set standardsfor a variety of closely supervised tasks. In return, theUPS drivers, all of whom are Teamsters, earn approxi-mately $15 per hour—a dollar or so more than thedrivers at other companies. In addition, employees whoperform at acceptable levels enjoy job security.

Implementation IssuesThese descriptions of Frost, Honda, and UPS il-

lustrate how a few organizations systematically matchtheir HRM practices not only with their articulatedcompetitive strategies, but also with their perceptionsof needed role behavior from their employees. Al-though only a beginning, the success of these firms sug-gests that HRM practices for all levels of employeesare affected by strategic considerations. Thus, while itmay be important to match the characteristics of topmanagement with the strategy of the organization, itmay be as important to do this for all employees.

Although the results of these examples generallysupport the three major hypotheses, they also raiseseveral central issues: Which competitive strategy isbest? Is it best to have one competitive strategy or sev-eral? What are the implications of a change of compet-itive strategy?

Which Competitive Strategy Is Best?

Of the three competitive strategies describedhere, deciding which is best depends on several factors.Certainly customer wants and the nature of the compe-tition are key factors. If customers are demandingquality, a cost-reduction strategy may not be as fruitfulas a quality improvement strategy. At the MercuryMarine division of Brunswick and at Corning GlassWorks, the issues seem to be quality. According to Mc-Comas, "Customers, particularly industrial trial buy-ers, would have been no more inclined to buy theirproducts even if the manufacturer could have passedalong savings of, say, 10% or even 20%.'"='

If, however, the product or service is relativelyundifferentiated, such as the overnight parcel deliveryindustry, a cost-reduction strategy may be the best wayto gain competitive advantage. Even here, though,there is a choice. United Parcel Service, for example, ispursuing the cost-reduction strategy through work pro-cess refinements such as work clarification, standardi-zation, measurement, and feedback. Roadway, in con-trast, pursues the same strategy by combiningemployee independence and ownership (drivers owntheir own trucks, of various colors; UPS drivers do notown their brown trucks) with as much automation aspossible.^' The advantage of these latter approaches tocost reduction, compared with such approaches as wage

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concessions or workforce reductions, is the amount oftime required to implement them. Cost reductionthrough wage concessions or employee reductions,though painful, can be relatively straightforward to im-plement. As a consequence, it can be duplicated byothers, essentially eliminating the competitive advan-tage gained by being able to offer lower prices. Theadoption of two-tiered wage contracts within the air-line industry is a good example: Soon after AmericanAirlines installed a two-tier wage system for its pilots.Eastern, United, and Frontier Airlines negotiated simi-lar contracts with their employees.

There may, however, be some external conditionsthat might permit the success of a strategy of cost re-duction to last. After four straight years of losses and ashrinkage in the number of stores from nearly 3,500 in1974 to a little more than 1,000 in 1982, the Great At-lantic & Pacific Tea Company (A&P) and the UnitedFood and Commercial Workers (UFCW) saw the hand-writing on the wall: Either reduce costs and be compet-itive, or go out of business. According to a BusinessWeek article.

In an experimental arrangement negotiatedwith the . . . . UFCW at 60 stores in the Phil-adelphia area, workers took a 25% pay cut inexchange for an unusual promise: If a store'semployees could keep labor costs at 10% ofsales—by working more efficiently or byboosting store traffic—they'd get a cash bo-nus equal to 1% of the store's sales. They'dget a 0.5% bonus at 11% of sales or 1.5% at9.5% of sales. It was a gamble in the low-margin supermarket business, but itworked.^*

The result? An 81% increase in operating profitsin 1984 and a doubling of A&P's stock price. Althoughthe UFCW agreed with the incentive compensationscheme at A&P, the union appears unwilling to see thispractice spread. Consequently, competitors of A&P,such as Giant Food Inc., would have difficulty imple-menting the same scheme.*"

By contrast, a quality improvement strategy,whether by automation or quality teams, is more timeconsuming and difficult to implement. As the U.S. autoindustry has experienced, it is taking a long time toovercome the competitive advantage gained by theJapanese auto industry through quality improvement.The J.D. Powers 1986 Consumer Satisfaction Index ofautomobiles suggests, however, that Ford's dedicatedapproach to quality enhancement may be reapingbenefits.

One Competitive Strategy or Several?

Although we focused on the pursuit of a commoncompetitive strategy in our examples, this may be over-simplifying reality. For example, at Honda in Marys-ville, associates are encouraged to be innovative. Eachyear the group of associates that designs the mostunique or unusual transportation vehicle is awarded atrip to Japan. At UPS, teamwork and cooperation arevalued and at Frost, Inc., product and service qualityare of paramount importance. Lincoln Electric is recog-nized as one of the lowest cost and highest quality pro-ducers of arc welders. While these examples indicatethat organizations may pursue more than one competi-tive strategy at a time, it may be that organizations ac-tually need to have multiple and concurrent competi-tive strategies. Using multiple strategies results in thechallenge of stimulating and rewarding different rolebehaviors while at the same time trying to manage theconfiicts and tensions that may arise as a consequence.This may be the very essence of the top manager's job.According to Mitchell Kapor of Lotus DevelopmentCorporation:

To be a successful enterprise, we have to dotwo apparently contradictory things quitewell: We have to stay innovative and crea-tive, but at the same time we have to betightly controlled about certain apects of ourcorporate behavior. But I think that whatyou have to do about paradox is embrace it.So we have the kind of company where cer-tain things are very loose and other thingsare very tight. The whole art of managementis sorting things into the loose pile or thetight pile and then watching themcarefully.^^

Perhaps, then, the top manager's job is facilitatedby separating business units or functional areas thathave different competitive strategies. To the extentthat this separation is limited or that a single businessunit has multiple strategies, effective means of confron-tation and collaboration need to exist. However, evenwith this issue under control, there is another equallysignificant challenge.

Change of Competitive Strategies

By implication, changes in strategy should be ac-companied by changes in human resources practices.As the products of firms change, as their customers' de-

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mands change, and as the competition changes, thecompetitive strategies of firms will change. Conse-quently, employees will face an ever-changing employ-ment relationship. A significant implication of this isthat employees of a single firm may be exposed to dif-ferent sets of human resource practices during thecourse of employment. Thus, employees may be askedto exhibit different role behaviors over time and theymay be exposed to several different conditions of em-ployment. Although it remains to be seen whether allemployees can adjust to such changes, it appears thatmany can and have. For those who wish not to, firmsmay offer outplacement assistance to another firm, oreven to another division in the company. For thosewho have problems changing, firms may offer trainingprograms to facilitate the acquisition of necessary skillsand abilities as well as needed role behaviors.

Another implication is that all components of asystem of human resource practices need to be changedand implemented simultaneously. The key human re-source practices work together to stimulate and rein-force particular needed employee behaviors. Not to in-voke a particular practice (e.g., high participation)implies invoking another (e.g., low participation) thatis less likely to stimulate and reinforce the necessaryemployee behaviors. The likely result is that employeeswill experience confiict, ambiguity, and frustration.

ConclusionThe recent attack on U.S. firms for failing to keep

costs down, not maintaining quality, and ignoring inno-vation are misdirected, given what many firms likeFrost, Honda-Marysville, UPS, Corning Glass, A&P,3M, and Brunswick are doing." These firms and othersare pursuing competitive strategies aimed at cost re-duction, quality improvement, and innovation. Theaim in implementing these strategies is to gain compet-itive advantage and beat the competition—both do-mestically and internationally. While cost and marketconditions tend to constrain somewhat the choice ofcompetitive strategy, the constraint appears to be oneof degree rather than of kind. Consequently, we canfind firms pursuing these three competitive strategiesregardless of industry.

All firms are not seeking to gain competitivestrategy. Not doing so, however, is becoming more of aluxury. For those attempting to do so, the experiencesof other firms suggest that effectiveness can be in-creased by systematically melding human resourcepractices with the selected competitive strategy. Cer-tainly, the success or failure of a firm is not likely toturn entirely on its human resource management prac-tices, but the HRM practices are likely to be

i t i l * * B

Randall S. Schuler is a professor at theGraduate School of Business at New York Uni-versity. His interests are stress management,international human resource management, or-ganizational uncertainty, personnel and humanresource management, entrepreneur ship, andthe interface of business strategy and humanresource management. He is currently studyinghow companies use their human resource prac-tices to gain competitive advantage, the subjectof this article.

Professor Schuler was just recently visit-ing professor at the University of Michigan,and was also on the faculties of the Universityof Maryland, Ohio State University, and PennState University. He worked for a year at theU.S. Office of Personnel Management, and hasconsulted with the U.S. Department of Agricul-ture, the Maryland Bankers Association, PeatMarwick, Owens-Illinois, and Mill Rose. He re-ceived his Ph.D. and M.A. degrees from Michi-gan State University.

Professor Schuler has written and edited15 books, including Personnel and Human Re-source Management (3rd Ed.), Case Problems inManagement (3rd Ed.), Human Resource Man-agement in the 1980s, Personal Computers forthe PHRM, and Managing Job Stress. In addi-tion, he has contributed over 14 chapters tobooks and has published over 70 articles in pro-fessional journals and academic proceedings.Presently, he is serving on the board of theEastern Academy of Management and is on theeditorial boards of the Academy of ManagementExecutive, Human Resource Management, andJournal of Management Group and OrganizationStudies. He is editor of the Human ResourcePlanning Journal and is on the board of direc-tors of the Human Resource Planning Society.

iSusan E. Jackson, Ph.D., is associateprofessor of psychology at New York Univer-sity. She received her Ph.D. from the Universityof California at Berkeley and has since been onthe faculties of the University of Maryland andthe University of Michigan. Professor Jackson'sresearch interests include human resource man-agement practices, job-related stress, and topmanagement teams as creative problem solvers.Her articles on these and related topics haveappeared in numerous journals, including theAcademy of Management Journal, Academy ofManagement Review, Journal of Applied Psy-chology, and Organizational Behavior andHuman Decision Making, among others. She isan active member of the Academy of Manage-ment and the American Psychological Associa-tion, and serves on the editorial board of Per-sonnel Psychology.

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ENDNOTESThe authors wish to thank John W. Slocum, Jr., C.K.

Prahalad, and John Dutton for their many helpful sugges-tions, and the Human Resource Planning Society, the Centerfor Entrepreneurial Studies, New York University, and theUniversity of Michigan for their financial support of thisproject.

1. C. Fomhrun, "An Interview with Reginald Jones,"Organizational Dynamics, Winter 1982, p. 46.

2. D. C. Hamhrick and P.A. Mason, "Upper Echelons:The Organization as a Reflection of Its Top Managers,"Academy of Management Review, 9, 1984, 193-206; A. K.Gupta, "Contingency Linkages Between Strategy and Gen-̂eral Manager Characteristics: A Conceptual Examination,"Academy of Management Review, 9, 1984, 399-412; A. K.Gupta and V. Govindarajan, "Build, Hold, Harvest: Con-verting Strategic Intentions into Reality," Journal of Busi-ness Strategy, 4, 1984a, 34-47; A. K. Gupta andGovindarajan, "Business Unit Strategy, Managerial Charac-teristics, and Business Unit Effectiveness at Strategy Imple-mentation," Academy of Management Journal, 9, 1984b, 25-41; M. Gerstein and H. Reisman, "Strategic Selection:Matching Executives to Business Conditions," Sloan Man-agement Review, Winter 1983, pp. 33-49; D. Miller, M.F.R.Kets de Vries, and J.M. Toulouse, "Top Executives' Locus ofControl and Its Relationship to Strategy-Making, Structure,and Environment," Academy of Management Journal, 25,1982, 237-253; A. D. Szilagyi and D.M. Schweiger, "MatchingManagers to Strategies: A Review and Suggested Frame-work," Academy of Management Review, 9, 1984, 626-637;and J.D. Olian and S.L. Rynes, "Organizational Staffing: In-tegrating Practice with Strategy," Industrial Relations, 23,1984, 170-183.

3. Lee J.A. Byrne and A. Leigh Cowan, "Should Com-panies Groom New Leaders or Buy Them?" Business Week,September 22, 94-95.

4. Ihid.5. A.J. Rutigliano, "Managing the New: An Interview

with Peter Drucker," Management Review, January 1986, 38-41.

6. D.Q. Mills, The New Competitors, New York: TheFree Press, 1985; and M. Beer, B. Spector, P.R. Lawrence,D.Q. Mills, and R.E. Walton, Managing Human Assets, NewYork: Macmillan, Inc., 1984; R.M. Kanter, "Change Mastersand the Intricate Architecture of Corporate Culture Change,"Management Review, October 1983, 18-28; and R.M. Kanter,The Change Masters, New York: Simon and Schuster, 1983.

7. J.L. Kerr, "Diversification Strategies and ManagerialRewards: An Empirical Study," Academy of ManagementJournal, 28, 1985, 155-179; J.W. Slocum, W.L. Cron, R.W.Hansen, and S. Rawlings, "Business Strategy and the Man-agement of Plateaued Employees," Academy of ManagementJournal, 28, 1985, 133-154; D. C. Hamhrick and C.C. Snow,"Strategic Reward Systems," in C. C. Snow (Ed.) Strategy,Organization Design and Human Resources Management,Greenwich, CT: JAI Press, 1987.

8. For detailed examples of how firms use their humanresource practices to gain competitive advantage, see R.S.Schuler and I.C. MacMillan, "Gaining Competitive Advan-tage Through Human Resource Management Practices,"Human Resource Management, Autumn 1984, 241-255; R. S.Schuler, "Fostering and Facilitating Entrepreneurship in Or-ganizations: Implications for Organization Structure andHuman Resource Management Practices," Human Resource

Management, Winter 1986, 607-629; and M.E. Porter, Com-petitive Strategy, New York: The Free Press, 1980; and M.E.Porter, Competitive Advantage, New York: The Free Press,1985.

9. For an extensive discussion of competitive initiative,competitive strategy, and competitive advantage see I. C.MacMillan's "Seizing Competitive Initiative," Journal ofBusiness Strategy, 1983, 43-57.

10. See Endnote 18, Porter, 1980, 1985.11. B. Schneider, "Organizational Behavior," Annual

Review of Psychology, 1985, 36, 573-611.12. D. Katz and R.L. Kahn, The Social Psychology of

Organizations, 2nd Ed., New York: John Wiley, 1978.13. J.C. Naylor, R. D. Pritchard, and D.R. Ilgen, A

Theory of Behavior in Organizations, New York: AcademicPress, 1980; T. W. Dougherty and R.D. Pritchard, "The Mea-surement of Role Variables: Exploratory Examination of aNew Approach," Organizational Behavior and Human Deci-sion Processes, 35, 1985, 141-155.

14. J. R. Rizzo, R.J. Hose, and S.I. Lirtzman, "RoleConflict and Ambiguity in Complex Organizations," Admin-istrative Science Quarterly, 14, 1970, 150-163; S.E. Jacksonand R. S. Schuler, "A Meta-Analysis and Conceptual Cri-tique of Research on Role Ambiguity and Role Conflict inWork Settings," Organizational Behavior and Human Deci-sion Processes, 36, 1985, 16-78.

15. R. M. Kanter, "Supporting Innovation and VentureDevelopment in Established Companies," Journal of Busi-ness Venturing, Winter 1985, 47-60.

16. H. DePree, Business as Unusual. Zeeland, MI: Her-man Miller, 1986.

17. The following discussion is based on our survey andobservations, and findings reported on by others. For a re-view of what others have reported, see R. S. Schuler's"Human Resource Management Practice Choices," HumanResource Planning, March 1987, 1-19.

18. M. McComas, "Cutting Costs Without Killing theBusiness," Fortune, October 13, 1986, p. 76.

19. For a detailed presentation of Marine Mercury'sprogram to improve quality, see Endnote 18 above.

20. S. E. Prokesch, "Bean Meshes Man, Machine," TheNew York Times, December 23, 1985, pp. 19, 21.

21. S. E. Prokesch, "Are America's Manufacturers Fi-nally Back on the Map?" Business Week, November 17,1986, pp. 92, 97.

22. Ibid., p. 92.23. Ibid., p. 97. For more on Electrolux's human re-

source practices, see B.J. Feder's "The Man Who ModernizedElectrolux," The New York Times, December 31, 1986, p. 24.

24. Schuler, 1987.25. E. E. Lawler III, "The Strategic Design of Reward

Systems," in R. S. Scholer and S. A. Youngblood (Eds.),Readings in Personnel and Human Resource Management,2nd Ed., St. Paul, MN: West Publishing, 1984, pp. 253-269;and R. S. Schuler, "Human Resource Management PracticeChoices," in R. S. Schuler, S.A. Youngblood, and V.L. Huber(Eds.) Readings in Personnel and Human Resource Manage-ment, 3rd Ed., St. Paul, MN: West Publishing, 1988. Otherfactors that can influence the human resource practices aretop management, hierarchical considerations, what otherfirms are doing, what the firm has done in the past, the typeof technology, size and age of firm, unionization status, andthe legal environment and its structure (see R. K. Kazanjianand R. Drazin, "Implementing Manufacturing Innovations:

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Critical Choices of Structure and Staffing Roles," Human Re-source Management, Fall 1986, 385-404).

26. P. F. Drucker, Innovation and Entepreneurship,New York: Harper & Row, 1985; K. Albrecht and S. Albrecht,The Creative Corporation, Homewood, IL: Dow Jones-lrwin1987.

27. P. F. Drucker, "Quality Means a Whole New Ap-proach to Manufacturing," Business Week, June 8, 1987,131-143; P.F. Drucker, "Pul-eeze! Will Somebody Help Me?"Time, February 2, 1987, 48-57; and R. L. Desatnick, Manag-ing to Keep the Customer, San Francisco: Jossey-Bass, 1987.

28. This description is expanded upon in detail by S.Galante, "Frost, Inc.," Human Resource Planning, March1987, 57-67.

29. For additional collaborating information, see J.Merwin, "A Tale of Two Worlds," Forbes, June 16, 1986,101-105; and S. Chira, "At 80, Honda's Founder Is Still aFiery Maverick," The New York Times, January 12, 1987 p35.

30. As reported in Schuler and MacMillan, "GainingCompetitive Advantage Through Human Resource Manage-ment Practices," Human Resource Management, Autumn1984, 249-250.

31. D. Machalaba, "United Parcel Service Gets Deliv-eries Done by Driving Its Workers," The Wall Street Jour-nal, April 22, 1986, pp. 1 and 23.

32. M. McComas, "Cutting Costs Without Killing theBusiness," Fortune, October 13, 1986, p. 77.

33. Ibid.34. M. McComas, "How A&P Fattens Profits by Shar-

ing Them," Business Week, December 22, 1986, p. 44. For anexcellent discussion of the difficulties to be overcome in deal-ing with changing from human resource practices based onhierarchy or status to those based on performance or what'sneeded, see R. M. Kanter, "The New Workforce Meets theChanging Workplace: Strains, Dilemmas, and Contradictionsin Attempts to Implement Participative and EntrepreneurialManagement," Human Resource Management, Winter 1986515-538.

35. For a discussion of relevant issues, see D. Q. Mills,"When Employees Make Concessions," Harvard BusinessReview, May-June 1983, 103-113; and R. R. Rehder andM.M. Smith, "Kaizen and the Art of Labor Relations," Per-sonnel Journal, December 1986, 83-94.

36. The Boston Globe, January 27, 1985.37. Recent attacks on public and private firms have

been summarized by the use of the word "corpocracy." Adescription of corpocracy is found in M. Green and J. F.Berry's "Takeovers, a Symptom of Corpocracy," The NewYork Times, December 3, 1986.

38. The application of these human resource practicesto strategy can be done by a firm on itself and even uponother firms that may be upstream or downstream of the localfirm. For a further description, see Schuler and MacMillan(Endnote 30).

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linking competitive strategies with human resource...

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