Please use this identifier to cite or link to this item:
Title: Applying real options theory to HRM: An empirical study of IT software firms in India
Authors: Sanyal, Sanghamitra
Sett, P. K.
Keywords: Environmental dynamism
Firm performance
HR options
Real options theory
Strategic HRM
Issue Date: 2011
Publisher: SCOPUS
International Journal of Human Resource Management
Series/Report no.: 22(1)
Abstract: Environmental uncertainties can impact the market value of a firm's human assets both positively and negatively, and make return on human assets uncertain over time. However, the strategic human resourcemanagement (SHRM) literature has so far focused almost exclusively only on the upside value of human assets of a firm. Real options theory can provide the process heuristics as well as the economic logic for guiding investments in human assets to create sustainable market value for firms operating in uncertain environments. In spite of the growth in popularity of the real options approach, no meaningful progress, however, has been made towards application of this approach to HRM. This study, using data from 108 IT software development firms in India, seeks to address this gap and make three important contributions to the SHRM literature: (1) operationalise the concept of HR options by identifying the HR practices that possess option value; (2) investigate how use of HR options affects firm-level performance; and (3) develop and test a causal model that links the various types of HR options that firms use to exploit uncertainties faced by them with the firm-level operational and financial outcomes. The results support the central hypothesis of the article that use of HR options by firms operating in uncertain environments would have positive impact on their operational and financial performance. Significant differenceswere observed in the nature of linkages between different types of HR options used to address different types of uncertainties, and the operational and financial performance of the firm. © 2011 Taylor & Francis.
Description: Sanyal, Sanghamitra, Human Resource Group, Indian Institute of Management Calcutta, Calcutta, India; Sett, P.K., Human Resource Group, Indian Institute of Management Calcutta, Calcutta, India
ISSN/ISBN - 09585192
DOI - 10.1080/09585192.2011.538969
Appears in Collections:Human Resource Management

Files in This Item:
There are no files associated with this item.

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.