Human Resource Configurations, Intellectual Capital, and Organizational Performance.

Throughout the past fifteen years researchers have examined the link between human resource (HR) activities and organizational-level performance. Many of the early studies in this area simply looked at the performance impacts of individual HR practices such as staffing, training, and compensation in isolation. More recent HR studies have tended to take a more holistic approach to HR by focusing on the performance impacts of systems or configurations of multiple HR activities (e.g., Huselid, 1995; MacDuffie, 1995; Youndt et al., 1996). While both of these lines of research have demonstrated that HR activities can have a positive influence on organizational value creation and performance, neither approach has given us a very clear understanding as to how this value-creating process actually occurs. As Becker and his colleagues noted, "To date there is very little research that . describes the processes through which HRM systems influence the principal intermediate variables that ultimately affect firm performance" (1997: 40-41). In short, we know very little about the black box between a firm's HR activities and its bottom line. Accordingly, the purpose of this study is to introduce intellectual capital as a mediating construct between HR configurations and organizational performance, thereby combining research streams in HR and strategic management. Although, academic and business strategists have acknowledged that HR plays a role in developing and managing strategic resources and core competencies, theoretical development and empirical research have been slow to follow. By introducing intellectual capital as a mediating construct, we hope to better frame how HR systems drive organizational performance. In essence, this article suggests HR activities do not directly increase organizational-level performance; rather they help increase employees' knowledge and skills (i.e., human capital), facilitate group interaction and knowledge sharing (i.e., social capital), and enable organizations to store knowledge in systems, routines, processes, and cultures (i.e., organizational capital), which, in turn, drive organizational performance. In what follows, we begin by outlining a conceptualization of the various aspects on intellectual capital. Next, we examine how different FIR configurations might facilitate the development of these various aspects of intellectual capital and how intellectual capital might enhance organizational performance. Then, we test the mediating role of intellectual capital between FIR configurations and organizational performance. To conclude, we discuss the implications of our findings and briefly outline several limitations of the present study as well as suggest potential future research directions. THEORETICAL FRAMEWORK AND HYPOTHESES Spender and Grant noted in their introduction to Strategic Management Journal's special issue on knowledge and the firm that strategy researchers are facing a "growing realization that the variables which are most theoretically interesting are those which are least identifiable and measurable" (1997: 8). Intellectual capital is one such variable. Several writers have presented frameworks, however, to help us conceptualize the construct and make it easier to operationalize for research. Edvinsson and Malone (1997), for example, view intellectual capital as being comprised of two primary components: human capital (i.e., the knowledge skills and experience of employees) and structural capital (i.e., the embodiment, empowerment, and supportive infrastructure of human capital). The authors then sub-divide structural capital into two smaller components: organizational capital (i.e., the systems, tools, and operating philosophy that speed the flow of knowledge through the organization) and customer capital (i.e., relationships a company has with its customers). Stewart (1997) similarly conceives of intellectual capital as composed of human capital and structural capital. …