Thus, more skilled individuals are more likely to possess these.
Ensure that the Culturally Diverse Human Resources is Rare
Any firm's human resource must be rare, especially if it aims to be the source of sustained competitive advantage. Human skills are normally dispersed in the population, but human resources with high skill levels are rare (Jenson, 1980). In the same manner, the responsibility attached to working in a company or firm requires variation in skills to offer variation in contributions (Hunter & Hunter, 1984).
This is also the very reason why redundancy in human resource is extremely avoided. In every organizational structure, the role of each member of the organization, his/her responsibility, his/her direct contribution to the realization of the company's goal is always being assed so at to checked that every member of the organizational chart is rare and that every body is contributing a unique input to achieving the desired output of the company.
Consider the Culturally Diverse Human Resources as Inimitable
Like the idea that human resource is rare, if a human resource is difficult to imitate, it can be the source of a sustainable competitive advantage. In support with this, it has also been noted that resources is a lot difficult to imitate if in the presence of causal uncertainty and social complexity (Barney 1991).
Causal uncertainty or ambiguity happens when it is hard to understand the link between a firm's resources and its competitive advantage (Reed & DeFillippi, 1990). Thus, in human resource' point-of-view, competing firms which cannot identify the human resources that are responsible for the competitive advantage, or the way by which human resources create the competitive advantage only signifies that they cannot imitate the advantage. It is also in this point-of-view why it is noted that team production often leads human resources to causal ambiguity. This is because with team production, difficulty in isolating and identifying the particular human resources (individuals) that produce the superior performance of the team can be expected (Alchian & Demsetz, 1972).
Social complexity, on the other hand, usually occurs from transaction-specific relationships, and the competitive advantage these relationships create may be due to transaction-specific human capital, i.e., human capital, such as knowledge, that is only important during the focal transaction. In various firms, different enablers interact with different people in and out of the company premises, This in turn enable them to establish relation which can be company-related or not.
Because of such relationship, a very complex social situation may result and this may constitute a competitive advantage for the firm. Even if the relationship can be considered as too intricate to dissect, it is also reasonable to hypothesize that the value of the focal relationship may be due to transaction-specific human capital, wherein the knowledge and trust that are developed over time by the focal personnel (Becker, 1964).
Regard the Culturally Diverse Human Resources as Non-substitutable
It should be noted that any human resource is considered as a source of a sustainable competitive advantage if it is a non-substitutable resource, especially if the human resource comes from a culturally different background. Human resources are among the firm's few resources which can be transferred to series of technologies, products, and/or markets so as to prevent becoming obsolete (Harrigan & Dalmia, 1991).
In today's modern time, a lot of technology types can now be used to replace human function. Continuous upgrades of equipments, series of technology linkages, and even non-stop innovation and invention offers threat to the strength of human-resource. Like for example, the general human capital resources such as learning capability which can now be transferred across a wide variety of technologies, products, and markets. Furthermore the firm's continuing acquisition of individuals with high levels of learning capability and eventually training in various state-of-the-art technological skills could also mean that the resource does not become obsolete (Harrigan & Dalmia, 1991).
Therefore, it is very unlikely the substitution of human resource to technology would eliminate the advantage of the human resources for long. This is proven by the fact that technologies can already replace the people. So why would a company continuously hire a person - who will be receiving years of benefits, medical benefits, and even retirement benefits that are all too costly- if the company can only buy a certain technology and use it without even worrying for the benefits that human resource have? However, it is also worth noting that there are certain limitations that technology has which human resource does not have. First is the fact that technology is now and continuously being internationalized. This just proved the fact that technology may be easier to imitate or be substituted as competition becomes more global because (Mansfield, 1984):
The number of companies with equivalent R&D resources increases as an industry goes global.
There is a direct relationship between the knowledge and the number o firms in a way that as the amount of knowledge available to build on increases, the number of firms also increases.
The property rights to intellectual capital turn out to be increasingly hard to protect.
With this idea, the competition of technology vs. human resource became more on the side of the former, if it is managed properly. This is because as competition becomes increasingly global, technology also become increasingly imitable, which, in turn, argues for the increasing importance of human resources as a source of sustainable competitive advantage (Mansfield, 1984).
Example of Cultural Diversity in Two Countries
Different countries will mean different culture and traditions. Among the most noted differences between countries are language difference, variations in philosophies, beliefs and cultures and differences in business etiquettes and cultures (Schuler, 2001).
China and the U.S. are two of the most compared countries around the world. These two countries are the most sought-after areas where establishing a business is concerned (Sohmen and Levin, 2001). China and the U.S.A. are two of the most powerful countries around the world. Both of which maintains several strengths which enable them to maintain a good standing in the business world. China for instance has one of the largest populations in the world and one of the known countries that offer very cheap labor cost. This is the very reason why most businesses would want to establish their branch in this country. Cheap labor cost coupled with large input resources means good profit. Meanwhile, USA can offer high quality products because of the highly technological equipments and advanced business systems in this country. It may be expensive to establish a business in this country, but if one has successfully penetrates the U.S. market, an influx of profit will surely follow.
This is not the only difference of these two countries when it comes to doing business. The culture within the business context of these two countries and the characteristics of the people are also very different.
In China, doing business can start on the right note will first seek a Chinese who will act as a "sponsor" because Chinese only deals with people that they know of. The sponsor will serve as the guarantor or will initiate the business dealings. Moreover, it should be noted that a highly structured organization is being followed in China wherein the hierarchical structures of Chinese society and business organizations are based on a strict observation of rank where the individual is subordinate to the organization. People are expected to enter the meeting room in hierarchical order, as the Chinese are very status conscious. Senior members are the only ones who generally lead the negotiations and will direct the discussion (Gorrill, 2004).
Harmonious working relationship in China is to be earned because Chinese businessmen preferred longer term relationships than hurried transactions. Needless to say, trust, based on a beneficial relationship very significant for the Chinese. As a structured business context is still followed in China, the collectivist way of thinking is then very common and has still affected or influenced many negotiations or business ventures (Gorrill, 2004).
Meanwhile, in the U.S., the business culture is very different when compared to China. USA is famous for its philosophy of individualism and diversity. This philosophy is also being followed with in the American business context. Office hierarchy within an American company is utterly important. Thus, it is highly advisable for business people from outside the country to learn the rank and titles of all members of the organization first if they are to establish a business with an American or with an American company (Gorrill, 2004).
The person who has the chief authority or the person who occupies the highest rank in the company typically makes the negotiations and final decisions for the business. Team negotiations are rarely carried out in American companies. More so, it is imparted in the American business culture that the hierarchical chain of command supersedes personal relationships (Gorrill, 2004).
In the American business culture, professionalism and/or professional relationship is what matters most. As a result, managers are only approached for help in essential situations. These concepts…