Human Resouce Management Systems, Dynamic Capabilities And Environmental Dynamics: A Practice Theoretical Analysis

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.