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Firms compete in differently dynamic environments. Their SHRM systems need to develop different dynamic capabilities for dealing with market dynamics. In this paper, the author investigates the contribution of a control (Internal Labor Market) and a commitment (High-Commitment) SHRM system to cultivate dynamic capabilities. Both generic SHRM systems are underpinned with a practice-based approach to make a comparison feasible. They analyze the role of ILM and H-C systems in a moderately dynamic and in a high-velocity environment. The level of the employee's background knowledge determines the appropriateness of ILM and H-C for facilitating or preventing a firm's dynamic evolution.
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