






































18 

Exploring the Interaction Effects Between Human 
Resource Systems and Resource Orchestration on  

Firm Outcomes 

Daniel Peat 
University of Cincinnati 

Jaclyn Perrmann-Graham 
Northern Kentucky University 

Firms that leverage the interaction of HR systems with resource orchestration are better able to respond to 
increasing globalization and the inherent complexities and dynamism of operating in these environments. In 
this paper, we theorize how firms leverage this interaction to influence organizational level outcomes, 
specifically firm financial performance and organizational learning. In doing so, we both examine how human 
capital is viewed and answer calls within the literature on how resources are combined to influence firm 
outcomes. Our work follows Sirmon et al. (2007) framework and spans departmental boundaries making it 
both relevant and practical to all business disciplines and fields.  

Keywords: HR Systems; Human Capital; Resource Orchestration 

Introduction 
Strategic human resources management (SHRM) research focuses in part, on how firms utilize systems 

of human resource practices, policies, and processes (i.e., HR systems) to implement firm strategy and affect 
organizational outcomes by leveraging individual and collective knowledge, skills, abilities, and other 
characteristics (KSAOs). Strategic Human Capital (SHC) research focuses on how KSAOs and HR systems 
integrate across levels into firm strategy development (Boon et al., 2018; Fulmer & Ployhart, 2013). SHRM 
research examines how the collective of individuals in organizations and HR systems help with strategy 
implementation, while SHC examines how the collective and HR systems might influence strategy 
formulation. Historically, the two streams of research investigate “what” components of HR systems and 
“what” individual resources help firms build and sustain competitive advantages (Brymer et al., 2015) through 
strategy formulation and implementation.  In this paper, we theorize about “how” firms leverage HR systems 
and resources in conjunction with each other to affect various organizational outcomes by focusing on the 
interaction between HR systems and resource orchestration.  

HR systems have been shown to amplify financial performance (Bowen & Ostroff, 2004; Huselid, 1995), 
increase organizational learning (Snell et al., 1996), and contribute to successful financial investment decisions 
(Molloy et al., 2011).  While studies have examined links between HR systems and organizational outcomes, 
the conditions under which the relationship operates remains unclear, especially across different contexts (Li 
et al., 2011). Research using resource-based theory (Barney, 1991) and resource orchestration (Sirmon et al., 
2011) argues that capabilities interact with managerial resource orchestration to influence firm outcomes 
(Sirmon et al., 2008; Sirmon et al., 2007). We use these arguments to show how the interactions between HR 
systems and resource orchestration leads to various outcomes, as opposed to HR systems alone.  

http://journals.sfu.ca/abr ADVANCES IN BUSINESS RESEARCH 
2020, Volume 10, pages 18-35 



 

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We focus on the synergistic effects when resources are bundled and leveraged, and rely on several 
assumptions. First, we are assuming that organizations are engaging in effective HR policies and procedures 
which utilize High Performing Work System Practices (HPWS). In doing so, we are taking a truly synergistic 
approach. Jiang et al. (2012b) discuss that HR research uses one of three approaches or frameworks when 
discussing how resources are bundled: additive, substitutive, and synergistic. In this paper, we adopt the latter. 
Each subcomponent of the forthcoming propositions can stand alone. However, alone they do not provide a 
sustainable advantage in either organizational learning or firm performance, two key tenants of this paper. 
Resources in this paper cannot substitute for one another and sustain advantage either. While they are additive, 
this still doesn’t work toward sustainability. It is the synergy that is created by the unique combinations of all 
of the components discussed below that fosters sustainable learning and performance. To further illuminate 
this fact, consider the following statement by Jing and colleagues (2012b:83): “HR configurations are assumed 
to be theoretical combinations of HR practices that maximize synergistic effects on outcomes.” 

This article contributes to the SHRM and SHC literature in two ways. First, we examine the interactions 
between HR systems and resource orchestration to gain a more complete understanding of conditions 
influencing the relationship between HR systems and organizational outcomes. Existing research in SHRM 
and SHC views HR systems as standalone structures that have direct connections to firm outcomes. We 
describe how HR systems must instead work in tandem with other aspects of a firm’s internal environment, 
bundled by firm managers. We focus on resource orchestration because as the world economy expands and 
globalization increases, firms that successfully integrate their human capital with internal resource 
orchestration are able to respond to more dynamic, complex problems in their operating environments (Snell 
& Dean, 1992), making resource orchestration a key element of a firm’s internal environment. This responds 
to a call in the literature to explore how human capital integrates with other organizational resources and 
capabilities (Wright et al., 2014). 

A second major contribution is that SHRM and SHC studies have often used firm performance as the 
outcome of interest. We argue that the outcome depends on which resources are bundled with the HR system. 
For example, we propose that land selection processes (the location of headquarters, plants, etc.) interact with 
HR systems to increase organizational learning as the firm will use recruitment practices that focus on 
attracting and selecting individuals most likely to be integrated with the firm’s other resources.   

We start with a review of the SHRM and SHC research focusing on HR systems. We then review the 
resource-based theory (RBT) and resource orchestration approach as well as our two outcomes of interest 
(organizational learning and firm performance) before proceeding to our propositions. We conclude by 
addressing theoretical and practical implications. 
 

Literature Review 
SHRM and SHC research crosses multiple disciplinary and theoretical divides (Wright et al., 2014), and 

it is important to detail and understand these divides as we build our propositions. Ployhart and colleagues 
(2014) noted that economics scholars study HR vis-a-vis how investment in employees yields value for the 
firm, while HR researchers examine how KSAO aggregation leads to unit-level HR emergence. Finally, 
strategic management scholars explore interconnections among the structure (what it is), function (what it 
does), and level (where in the organizational hierarchy) of human capital resources and how these shape firm 
strategies. Within these disciplinary areas, HR is theoretically studied from three perspectives - universalistic, 
contingency, and configurational (Delery & Doty, 1996). A universalistic perspective assumes that individuals 
respond similarly to environmental stimuli; contingency focus on context and assumes that individuals react 
differently based on the internal and external environment (Delery & Doty, 1996); and finally, configurational 
perspectives assume that HR systems are configured to produce firm outcomes (Guest & Conway, 2011). We 
draw from all three perspectives to show how configurations of the HR system in the context of firm resource 
orchestration yield firm outcomes. Specifically, effective use of HR systems with firm resource orchestration 
activities such as land selection, branding, production processes, and R&D unlock synergies and increase firm 
financial performance and organizational learning.    



 

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HR Systems  

Jiang and colleagues (2012b) note that HR systems are the highest level of aggregation for HR activities 
and represent overall patterns of HR activities. HR systems contain policies (programs that focus on different 
domains like motivation) and practices (individual procedures within policies). System composition varies 
between firms, but internal consistency and synergy between HR systems and firm strategy increases firm 
outcomes by affecting ability, motivation, and opportunity among employees stronger than simple aggregation 
of HR activities (Huselid et al., 1997; Jiang et al., 2012a). Similarly, High Performance Work Systems (HPWS) 
are a subset of HR systems that link overall human capital to firm-level outcomes. HPWS include rigorous 
selection procedures, internal merit-based promotions, grievance procedures, cross-functional and cross-
trained teams, high levels of training, information sharing, participatory mechanisms, group-based rewards, 
and skill-based pay. HPWS are theoretically and empirically linked to turnover rates, firm productivity, 
financial performance (Guthrie, 2001; Huselid, 1995; Lepak & Snell, 1999; Messersmith et al., 2011), and 
organizational learning (Snell et al., 1996). HPWS unlock these firm outcomes most effectively when HR 
systems complement overall firm strategy. Additionally, HPWS increase organizational learning by building 
firm-specific skills when tied into firm strategy based on the allocation of individual and collective KSAOs 
(Bidwell & Keller, 2014). Allocation of KSAOs are facilitated through promotions and transfers, and facilitate 
information impactedness (when knowledge is known but not easily shifted) by restructuring information that 
is known but cannot be easily transferred. This information flow is enhanced by high involvement work 
processes that enhance employee skills, allow participation in firm decision-making, and increase motivation. 
In these environments, workers have higher skill requirements, discretion is emphasized in work design, and 
incentives are tied to motivation and commitment leading to higher levels of organizational learning (Pil & 
MacDuffie, 1996).  

HPWS are most effective in highly capital intense industries when market growth is strong, and when 
industry differentiation for products and services is high as managers use discretion to maximize HR policy 
utility (Datta et al., 2005). Other contextual factors include industry characteristics that allow increased 
innovation, speed, and adaptability (Chadwick et al., 2013).  

Internal firm contingencies include the strength of the HR system. Bowen and Ostroff (2004) define 
HR system strength as, “the process by which a consistent message about HRM content can be sent to 
employees” (207). Stronger systems lead to shared standing and better interpretation of what behaviors are 
expected and rewarded. Misaligned HR systems negatively affect psychological contracts and yield negative 
organizational outcomes, such as increased turnover (Peat & Perrmann-Graham, 2019). Finally, we assume 
that HR system strength yields a common understanding of processes and allows the organization to capitalize 
on resource orchestration. While employees must attribute meaning to HR systems, they can lead to increased 
performance through message-based persuasion where employees are convinced of their effectiveness, 
irrespective of actual efficacy. Strong HR systems lead to high levels of distinctiveness, consistency, and 
consensus (Bowen & Ostroff, 2004), but full understanding of the HRM-performance relationship requires 
examination of implementation processes (Guest, 2011).  

While these contingencies have some theoretical and empirical support, others (including more robust 
internal firm contingencies) are underexamined in the literature (Messersmith et al., 2011). By examining how 
firms bundle and orchestrate other resources in conjunction with HR systems (primarily HPWS), we can more 
fully understand how they lead to organizational outcomes and how firms adapt to dynamic environments.   
 
The Resource-Based Theory 

The Resource-Based Theory (RBT) posits that firms leverage valuable, rare, inimitable, and non-
substitutable (VRIN) resources to create competitive advantage (Barney, 1991). RBT researchers examine the 
link between human capital as an internal, heterogeneous resource and firm strategy (Barney & Wright, 1988), 
assuming that individual human capital is normally distributed in organizations and labor supply, and demand 



 

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is heterogeneous. Human capital is rare (high ability levels are rare), inimitable (contextually linked to historical 
conditions), causally ambiguous, and rooted in social complexity (Wright et al., 1994).  

The core tenants of RBT that are presented throughout this paper follow Conner and Prahalad's (1996) 
conceptualization which suggests that RBT is knowledge-based versus opportunism-based, which is based 
strictly on transaction-cost. Firms make strategic decisions (such as where to locate, what labor pools are 
available, etc.) and are proactive in their intent. When firms are more opportunism-based, or transaction-cost 
focused, they engage in reactive behaviors. Rather than apply the knowledge that they bring to the firm and 
using this knowledge to inform decisions which proactively identify locations with access to a qualified 
workforce (including labor pools, pipelines, and other workforce characteristics), they look simply to the most 
cost-effective choices and try to fit the rest of the pieces into the puzzle.  
 
Resource Orchestration  

Other resources identified within RBT include both tangible assets such as land, building, and financial 
capital, and intangible assets such as brand, reputation, and trademarks (Priem & Butler, 2001).  Traditionally, 
these resources were viewed as static, but recent refinements include the introduction of resource 
orchestration, changing the view to a more active employment of firm resources by managers. Resource 
orchestration is described as process-oriented actions taken by mangers to create value by actively structuring, 
bundling, and leveraging resources within the firm portfolio (Sirmon et al., 2011). This, in turn, allows 
managers to synchronize processes to pursue competitive advantage in dynamic and complex environments. 
Whereas the view of firm resources as static answers the “what,” examining resource orchestration answers 
the “how.” Firms establish processes for how to (re)configure their resources to meet changing environments 
including reconfigurations of entire labor forces (Wright et al., 2001).  

Sirmon et al. (2007) offer a framework wherein firms use resource orchestration to structure their 
resources through acquisition, accumulation, or divestment; bundle resources through stabilizing, enriching, 
or pioneering; and leverage their resources through mobilization, coordination, and deployment. These 
processes are synchronized to leverage firm resources and environmental factors to create and sustain value 
for the firm.  Synchronization goes beyond component resource management (acquisition, accumulation, 
bundling, and divestment of individual resource types) to take a holistic look at how these resources are 
structured, bundled, and employed across resource categories (financial, physical, human, etc.) in different 
contexts.  

Prior research has shown that these three processes (structuring, bundling, and leveraging) link to 
organizational outcomes when synchronized and are separate from the actual resources being managed 
(Sirmon et al., 2011). Additionally, different strategies and life cycles of firms require different actions related 
to resource orchestration within these three process domains, and resource orchestration requires collective 
action from different levels within the firm. However, unlike other forms of resources, a firm’s human capital 
is not inherently owned by the firm but rather by the individual employees (e.g., financial capital and physical 
assets can be wholly bought and owned by individual firms). Instead, firms match wages to individuals’ 
education, experience, and other characteristics in an attempt to obtain and increase value from human capital 
(Chadwick, 2017). Additionally, managers maximize value when they coordinate resource structuring, 
bundling, and leveraging with HR systems designed for specific types of human capital (Chadwick & 
Flinchbaugh, 2020).  

The different processes within resource orchestration interact with the different elements of HR systems 
to yield different organizational outcomes. The development and deployment of human capital often 
complements structuring, bundling, and leveraging of other resources, creating complex interdependencies 
(Kor & Leblebici, 2005). Structuring tangible and intangible resources requires simultaneous selection, 
promotion, and cross-training of human capital to create building blocks for bundling and reconfiguration of 
idiosyncratic firm resources. However, doing so requires managers to identify their markets, correctly identify 
complementarities within the resource bundles, and build network positions that create advantages from the 
resource orchestration (Schmidt & Keil, 2013). As noted by Dierickx and Cool (1989), bundles of 



 

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complementary resources must be acquired and/or built together to create value, especially when individual 
resources take time to develop (i.e., human capital). Additionally, Hitt and colleagues (2006) noted that 
managers coordinate their resource deployment and reconfigure human capital to successfully implement 
organizational strategies.  

Extending this dynamic perspective, Sirmon et al., (2008) explored the role resource management has 
on performance through active bundling and deployment of resources. Specifically, they examined human 
capital on major league baseball teams and how different KSAOs related to batting, pitching, and fielding 
affects organizational outcomes. Similarly, Monks and Loughnane (2006) found that specific HR bundles 
create building blocks that fit within the greater strategic determination of resource orchestration, noting that 
configurations of HR systems with other firm resources matter for firm-level outcomes. Extending these 
findings, recent research shows that commitment-based HR systems are a crucial mediator between top 
management attitudes and resource orchestration to organizational learning and firm performance (Chadwick, 
Super, and Kwon, 2015).  

 
Conceptual Model of HR Systems and Resource Orchestration 

With an understanding of the seminal theories as a foundation, we provide a more narrowly focused 
discernment of what specific tenants of SHRM and RBT are relevant to our propositions. Resource 
orchestration focuses on the role that the individual manager plays within the organization. Past theory in 
strategic management understudied this crucial role. According to Sirmon et al. (2011: 1391), “the role of 
managers is the most underdeveloped element in RBT…in terms of the resource-related processes or actions 
they initiate and oversee.” Hansen, Perry, and Reese (2004: 1280) “conclude that what a firm does with its 
resources is at least as important as which resources it possesses.” The current paper uses a resource 
orchestration lens to unpack the black box on how possessed resources and managerial decisions about those 
resources are combined and leveraged to increase organizational learning and performance. We use key 
tenants of both RBT and SHRM research following the framework set forth by Sirmon et al. (2007). We focus 
on large scale resources that are in direct control of the top management team (such as land selection, building 
design, production processes, and branding) and how they are leveraged with more intimate resources (human 
capital) through effective HR systems to increase organizational learning and firm performance (see figure 1). 
The key is bundling and leveraging, not the resources themselves. This follows a call from Sirmon et al. (2011: 
1391), which suggests that “possessing resources alone does not guarantee the development of competitive 
advantage; instead, resources must be accumulated, bundled, and leveraged, meaning that the full value of 
resources for creating competitive advantages is realized only when resources are managed effectively.” This 
suggestion is both practical and relevant and provides a starting position for the current paper. As we discuss, 
one way to manage, bundle, and leverage these resources is by combining them with effective HR practices 
which align perfectly with the Sirmon et al. (2007) framework. 
 
Figure 1 – Model of Firm HR Systems and Resource Orchestration 
 
 
 

 
 
 
 
 
 
 
 



 

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Though outside the scope of this paper, we must also mention dynamic capabilities in relation to our 
propositions. Much of the foundation of resource orchestration relies upon understanding dynamic 
capabilities or “the capacity of an organization to purposefully create, extend, and modify its resource base” 
(Helfat et al., 2007: 4). Understanding this in the current context lies within our choices of resources to 
formulate the forthcoming propositions. Similar to resource orchestration, research on dynamic capabilities 
has maintained a premise that is rather general in form. Helfat et al. (2007) explain that this is intentional. The 
simplicity of the definition allows room for the researcher to define and characterize the particular resources 
and capabilities under investigation, as long as they are specific and clearly defined. 

 
Organizational Learning and Firm Performance. Organizational learning is a measure of 

“acquisition, interpretation, storage, and implementation of new knowledge” (Kocoglu et al., 2011: 74). 
Conceptualized as a firm outcome, it provides an indication of how well the organization is able to learn from 
and adapt to dynamic, external environments (Namada, 2017). In our paper, we use organizational learning as 
a measure of how well HR systems interact with resource orchestration via tangible resources such as land 
selection, R&D efforts, and firm production processes.  

While parallel and related to organizational learning, firm performance is also key in understanding the 
interaction effects of HR systems and resource orchestration, albeit different conceptually from organizational 
learning. We use firm performance as a measure of market performance or financial health. Evidence suggests 
that firm performance and organizational learning are related (see Namada, 2017), but it is important to note 
the differences. Both can be conceptualized as measures of overall organizational performance, but firm 
performance is specifically capturing how resource orchestration interacts with HR systems to promote the 
overall market or financial health of the organization via aspects such as superior person-organization fit and 
increased employee interdependence. While past research has suggested both direct and indirect relationships 
between organizational learning and firm performance, the two concepts are distinct. While organizational 
learning is linked to many key organizational processes, such as knowledge acquisition, knowledge sharing, 
and innovation, this does not always translate into market performance. For example, in 1998, McDonald’s 
Corporation implemented the highly innovative “Made for You” program in an effort to provide a fresher 
product to consumers, successfully remodeling and training employees in nearly all of the 13,500 kitchens in 
the United States. However, this significant innovation and knowledge sharing did not match McDonald’s 
efficiency-based business strategy and ultimately led to a $1 billion loss and poor financial performance (Hess 
& Modica, 2009). Thus, while organizational learning was high, the financial health of the company was 
significantly hampered.       

 The following sections delve into how interactions between resource orchestration and HR systems 
influence organizational level outcomes together. These specific resource orchestration processes were chosen 
as they are theoretically interesting (incorporating multiple interdisciplinary literature streams), able to be 
empirically investigated for future studies, and offer practically relevant starting points. The resources and 
capabilities were chosen in line with Sirmon et al. (2007). The researchers highlight the need for research to 
demonstrate how SHRM is combined with RBT to accomplish effective resource orchestration. To date, the 
link between strategy and firm outcomes has had a weak theoretical basis (Batt, 2002), inhibiting empirical 
examinations. We propose that the interaction with resource orchestration provides the mediating effect 
between HR strategy and firm outcomes, and that this effect is most clear during major development 
milestones. Thus we chose early developmental orchestration activities, including land selection, building 
design, branding, and R&D systems, as they are known to have the strongest effect. As will be addressed more 
fully in the decision section, one of the assumptions that we make in the current research is a temporal one. 
The propositions in this paper are focusing on the front-end but are not limited to the early stages of 
organizational development. As such, our propositions delve deep into the structuring and bundling aspects 
of Sirmon et al. (2007) framework and set the stage for empirical testing of the leveraging aspect.  

 It is imperative for our propositions to have a solid understanding of the Sirmon et al. (2007) 
framework within which the components of our propositions are nicely aligned. The framework includes 



 

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structuring, bundling, and leveraging. Structuring is defined as the managing of the firm’s resources and 
includes acquiring, accumulating, and divesting. Bundling considers how the firm’s resources are combined 
and includes stabilizing, enriching, and pioneering. Finally, leveraging focuses on how the firm’s capabilities 
create value for customers and wealth for stakeholders. Leveraging consists of mobilizing, coordinating, and 
deploying.  

 
Land Selection. Where a firm chooses to locate its headquarters, plants, and other physical structures 

depends on a variety of contingencies. Often, new firms are limited in selection based on financial constraints, 
human capital availability, and other startup limitations. Once established, and after unlocking new resources, 
firms have the opportunity to remain in their initial location, move to a new headquarters, or purchase a 
second headquarters.  

 Land selection has been viewed in operations research, specifically in terms of supply chain 
management, as a critical process that increases a firm’s ability to respond to dynamic environments and 
facilitate competitive actions to increase organizational financial performance by optimizing firm logistical 
requirements (Chou et al., 2008).  

 Additionally, marketing researchers study land selection related to retail management in terms of 
population movement to and from retail outlets, traffic flows near retail centers, changes in transportation 
mechanisms, neighborhood decay and regeneration, obsolescence of technologies, and overall change. 
Successfully managing these factors allow retailers to increase economic efficiency and social comfort for 
customers increasing interchange of business. Ultimately, retail selection is a function of markets, labor, supply 
chains, and raw material management (Nelson, 1958), demonstrating the need to theoretically view this 
resource more holistically and dynamically.  

While historically land selection in management research is usually viewed as a post-hoc, static resource 
(Miller & Shamsie, 1996) within the framework of RBT, practitioners have noted that firms who utilize a 
dynamic process approach similar to those in operations and marketing when selecting a new location for a 
headquarters or facilities can unlock potential synergies in their HR systems (Kimberly, 2013). Firms that view 
their location as static and limit their land choice due to financial constraints, regulatory restrictions, or only 
considering their current market, restrict their ability to expand and respond to ever-changing global markets. 
Infrastructure in terms of transportation, educational systems, and other desirable aspects within land choice 
increases a firm’s access to a more diverse and utilitarian labor force. Specifically, mass transit systems and 
major airport proximity allow firms to quickly and effectively access supply chains and customers as well as 
provide a desirable location based on ease of travel for employees. A well-established and operational 
secondary and higher education system provides a two-fold benefit in terms of desirability for employees with 
school-age children and access to more highly educated labor pools. Locations also have significant variance 
in the “friendliness” to larger firms. More business-friendly locations provide firms with tangible benefits such 
as tax breaks and access to infrastructure as well as intangible benefits such as acceptance in the community. 
These contextual factors are dynamic with shifting infrastructure systems (e.g., age, new construction), 
changing demographics (e.g., increasing education rates), and shifting economic centers.  

Properly configured HR systems exploit resource availability by enabling firms to recruit, train, and 
retain the best fit employees for the organization. This process increases performance and organizational 
learning by putting the best people in the best positions and leveraging unique KSAOs throughout the firm. 
HR systems are configured for available labor pools (Jiang et al., 2012b) and labor pipelines (Brymer et al., 
2014) to exploit these dynamic processes and produce increases in firm performance and organizational 
learning by attracting, selecting, and retaining employees with the best fit KSAOs. Similar to retail selection 
above, land selection that incorporates consideration of available labor pools and pipelines will increase 
recruitment efficiency and optimize hiring logistics by increasing visibility, reducing transportation costs, and 
increasing opportunities for interchange between candidates and firms.  Complementary HR systems use 
configurations of rigorous selection procedures, internal merit-based promotions, grievance procedures, 
cross-functional and cross-trained teams, high levels of training, information sharing, participatory 



 

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mechanisms, group-based rewards, and skill-based pay to maximize KSAO development and alignment with 
firm resources to increase organizational learning and financial performance.  

Another aspect important to consider in land selection is workforce characteristics. Workforce 
characteristics incorporates KSAOs but is more inclusive. It is a broad term that is widely used in SHRM 
research. While some studies choose which specific characteristics are measured, many studies use it as an 
umbrella term. To better understand the propositions set forth in the current paper, workforce characteristics 
can be understood as any of the following: qualifications of the job (Galindo-Rueda & Haskel, 2005), 
education (Dunton et al., 2007), and demographic diversity (Galindo-Rueda & Haskel, 2005). Workforce 
characteristics also introduce a boundary condition to the current paper. The overarching objectives of the 
forthcoming propositions are not solely to set the stage for testable hypotheses for each proposition 
component and subcomponent, but rather to provide an adequate area for open discussion crossing the 
boundaries between SHRM and RBT using resource orchestration. This will offer an opportunity for 
collaboration between these two conversations, which will allow researchers to formulate testable hypotheses 
and more adequately inform practice.  

Another boundary condition and assumption that is being made in the forthcoming propositions is a 
focus on the synergistic effects of bundling. As was mentioned earlier, the objective of the current paper is 
not strictly to present a list of testable hypotheses, but to begin a conversation which involves both SHRM 
and RBT. As such, all propositions offered in the current work focus on how research in both areas can 
inform one another. This is accomplished through understanding the synergistic effects that take place when 
practices in each area are strategically bundled. While SHRM research has informed us that workforce 
characteristics are important alone, it is the unique leveraging and bundling of all resources that provides the 
strongest impact. As stated in Sirmon et al.,  (2007: 275), using the combination of resources that an 
organization has at its disposal, and using them effectively, “is at least as important as owning them.” This 
illuminates the need for not only possessing resources (i.e., a strong labor pool, pipeline, and workforce 
characteristics), but also being able to employ efficacious HR procedures (i.e., rigorous selection, training, 
compensation) to use the combination of resources effectively. As such, when any one resource or 
characteristic is eliminated from the bundling, it would be expected that any interaction effects will likely still 
be present, but reduced. Furthermore, bundling and leveraging multiple resources available to the organization 
is critical because it provides the organization with a better opportunity to match the “firm’s internal 
capabilities with conditions in the external environment” (Sirmon et al., 2007: 284). This aids in the 
organization’s ability to match its capabilities to the dynamic needs of customers and the market as a whole.  

The reduction in synergistic effects of bundling holds true with eliminating any of the bundled resources. 
To further emphasize this point, consider what would happen if a firm only focuses on workforce 
characteristics bundled with rigorous selection procedures but does not factor in the labor pool or pipeline in 
their choice of location. Revisiting the diversity discussion above, having rigorous selection procedures will 
only increase firm performance and learning if the firm has access to a diverse labor pool. If the organization 
chooses to locate in an area with a limited labor pool and pipeline, they will not necessarily have access to the 
employees needed. In fact, if an organization does not choose a location with a sufficient labor pool and 
pipeline, it may have no choice but to outsource some of its activities (Graf & Mudambi, 2005). While this 
may be an attractive option in some industries, outsourcing is outside the scope of this paper and is not the 
end all be all best option for all industries. Rather, what we are considering here are domestic companies that 
are maintaining domestic operations.  

To further understand the potential role that incorporating land selection with labor pool, pipeline, and 
workforce characteristics can have on organizational learning and firm performance, it is imperative to 
consider that “using resources is at least as important as possessing or owning them” (Sirmon et al., 2007: 
275). When a company has access to better labor pools, and greater selection potential in workforce, this will 
increase their ability for organizational learning. To further understand organizational learning, it is necessary 
to consider diversity. While a full discussion of diversity research is outside the scope of this paper, diversity 
plays a role in the importance of a large labor pool, pipeline, and workforce characteristics. In order for 



 

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organizations to improve their organizational learning, they need to remain proactive. One way to remain 
proactive is to allow the organization access to a diverse set of employees who provide the organization with 
unique combinations of KSAOs, and have the capability of connecting to a diverse set of customers. Diversity 
is a key factor in organizational learning and performance from both a micro and macro perspective. 
Therefore, having access to an organizationally (or industry) appropriate labor pool, pipeline, and other 
workforce characteristics, gives the organization the ability to engage in rigorous selection procedures by 
having more options at their disposal. With a limited labor pool, pipeline, and access to other workforce 
characteristics, the organization is not able to focus on more minute aspects of employee selection (such as 
diversity in thought, experiences, and demographics). As such, “the strategic response to learning is to be 
proactive” (Kim, 2006: 81). Proactive in this sense would be to make strategic decisions about where to locate 
the business to have access to the diverse labor pool, pipeline, and other workforce characteristics. In turn, 
the organization, by locating as such, will have increased firm performance. The access to a better labor pool, 
pipeline, and other workforce characteristics “provides firms with a potential capacity for strategic flexibility 
and the degrees of freedom to adapt and evolve” (Sirmon et al., 2007: 275). This strategic flexibility will allow 
the organization to adapt to the evolving customer needs and demands, therefore increasing firm performance 
as it is able to remain relevant at a faster speed as compared to those organizations who are not able to adapt 
their strategy as quickly based on limited access to labor pools, pipelines, and other workforce characteristics.  

Within the Sirmon et al. (2007) framework, land selection links to orchestration through acquisition of 
resources by accessing desirable labor pools and creating localized human capital pipelines. However, 
accessing this resource also requires properly configuring HR systems that unlock the potential 
complementarities in the local environment. Thus, when managers orchestrate land selection with specific 
HPWS (including rigorous selection procedures, cross-functional and cross-trained teams, high levels of 
training, and information sharing), firms are able to increase organizational learning through knowledge 
substitution and knowledge flexibility (Conner & Prahalad, 1996). Firms are also able to utilize sustainable 
sourcing in the local environment to complement land selection and increase firm performance (Pullman et 
al., 2009).  Amazon provides an illustrative example. On September 7, 2017, Amazon announced a search for 
a second headquarters to be known as Amazon HQ2 and requested bids from major US Cities that met 
specific criteria. These include metropolitan areas of at least 1 million residents, international airport proximity, 
access to mass transit systems, a higher education infrastructure, high level of education in the workforce, 
business-friendly operating environment, and features that would allow Amazon to “attract and retain” a 
technical and high-quality workforce (Turner, 2017).  To maximize increases in organizational learning and 
firm performance, Amazon’s HR system focuses on selection, training, and retention efforts on educated 
employees who desire the same components described in the search criteria. By maximizing the person-
organization fit, Amazon maximizes their organizational learning and financial performance.  

 
Proposition 1a: Land selection processes that incorporate labor pools, pipelines, and workforce 
characteristics interact with HR systems configured using HPWS practices to increase 
organizational learning.  
 
Proposition 1b: Land selection processes that incorporate labor pools, pipelines, and workforce 
characteristics interact with HR systems configured using HPWS practices to increase firm 
financial performance.  
 
Physical Building Design. The physical building and configurations of a workspace provide an 

interesting and understudied area of organizational resource orchestration. Physical configurations can 
influence collaboration when they are open, inspire cooperative interactions, and increase team process gains. 
A full discussion of both team processes and collaboration is outside the scope of this paper, but the physical 
structures that drive these processes represent a firm resource within the scope of management influence. 



 

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Organizations that encourage collaboration in the workplace use open concepts that allow employees to 
proximally interact with those on whom they are task interdependent (spatial proximity) (Brown, 2008).   

When designing HR systems to interact with physical building spaces, managers have two primary 
choices: design systems that select, train, and retain employees who can work in collaborative environments 
or select, train, and retain those who are more apt for non-cooperative work environments. Each of these two 
designs are useful depending on the level and type of task interdependence of the employees. There are several 
specific types of interdependence to bear in mind when considering which design to choose. Pooled 
interdependence is when work is completed separately then compiled to create a finished product, service, 
etc. Sequential interdependence occurs when work is completed in succession, or in consecutive steps. 
Independent tasks require little to no interdependence. All three of these are best suited for non-cooperative 
environments. On the other hand, reciprocal interdependence, where team members work on their portion 
of a task and consult subgroups within the team, and comprehensive interdependence, where tasks are 
interrelated, both thrive in collaborative environments (Avolio et al., 2009). As not all employees can succeed 
in both environments, firms that employ HR systems that maximally utilize their employees’ abilities to work 
in environments characterized by different types of interdependence will yield the strongest outcomes. 

 Whereas land selection represents the acquisition sub-process of structuring, the building design 
process reflects accumulating within Sirmon et al. (2007) framework. Land selection provides general human 
capital for the firm through targeted labor pools and pipelines, but firms must first “build” what they have 
“bought” from the labor market.  

Zappos provides an illustrative example of how building design layout interacts with HR systems to 
maximize organizational outcomes, as the company used an open office concept to foster collaboration at 
their headquarters in Las Vegas, NV. From their core values, Zappos emphasized open and honest 
relationships through communication, team spirit, creativity, and a change-focused environment. 
Demonstrating these values, Zappos designed their office space to minimize personal space and emphasize 
common areas to increase workplace interactions and foster collaboration. Desks are mobile and ethernet 
drops plentiful to facilitate employees working in multiple spaces with different collaborative partners. 
Zappos’ workspace density is only 70 feet per employee (Searer, 2013). HR systems that select, train, and 
retain employees suited for reciprocal and comprehensive task interdependence realize the strongest increases 
in the relationship with organizational outcomes when using similar building design concepts to Zappos.  

 
Proposition 2a: Firm physical building design processes focused on collaborative environments 
interacts with HR systems configured to develop collective KSAOs to increase firm 
performance by promoting reciprocal or comprehensive interdependence 
 
Proposition 2b: Firm physical building design processes focused on non-cooperative 
environments interacts with HR systems configured to develop individual KSAOs to increase 
firm performance by promoting pooled interdependence, sequential interdependence, or task 
independence 
 
R&D. Research and development (R&D) provides a significant strategic risk and reward system for 

firms. R&D is part of the firm’s innovation processes and involves the study of future products, services, and 
capabilities with a focus on product/service improvement. Based on this, R&D is an innovation effort that 
increases exploratory organizational learning. With ever increasing R&D intensity, managing this resource is 
a prime driver of innovation (Kotha & Vadlamani, 1995) and thus organizational learning.  

HR systems that focus on knowledge building, creativity, and innovation to drive organizational learning 
will see the largest increases from interaction with a robust R&D system. HR systems that create human 
capital pipelines, or repeated interorganizational hiring create focused acquisition of resources by reducing 
search requirements, simplifying socialization, and integrating employees (Brymer et al., 2014). These human 



 

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capital pipelines are essential for competitive strategies based on innovation, product diversification, and 
continual improvement as they provide a continual source of new employees skilled in innovation.  

Within the Sirmon et al. (2007) framework, R&D represents bundling through the sub-components of 
stabilizing and enriching. R&D processes focus on improvements and innovation, which encapsulates both 
minor improvements (stabilizing) and extending current capabilities that reach well beyond training employees 
to do new things (enriching). When combined with production processes and branding, R&D can also be 
representative of the pioneering subcomponent of bundling. Pioneering involves creating new capabilities to 
allow the firm to both remain and gain in its competitive position.   

Volkswagen ranks as a top R&D firm worldwide, spending more than $13.5 billion dollars on R&D in 
2013 (5.2% of annual revenue) (Casey & Hackett, 2014). These R&D efforts focus on product differentiation, 
environmental and safety research, and product improvement in an industry that introduces new models and 
concepts annually. The relationship between Volkswagen’s HR system and their exploratory organizational 
learning will be maximized by a strong emphasis on R&D as they hire from pipelines that are known for R&D 
focus. 

 
Proposition 3a: HR systems configured to promote knowledge building, creativity, and 
innovation through HPWS practices interact with firm R&D efforts to increase exploratory 
organizational learning. 
 
Production Processes. Production process improvement signifies the other branch of innovation: 

exploitive innovation. This includes both incremental and substantial process improvements with the ultimate 
goal of reducing defect rates, creating higher quality products or services, reducing waste of other resources, 
and improving turnaround times to increase efficient use of resources. Quality assurance processes include 
those that detect defective products or poor service deliveries, improve efficiency, or increase the effectiveness 
of production or service delivery (Sinha & Noble, 2008).  

Successful process improvement yields higher value (and higher satisfaction rates) for customers and 
efficient flow of resources through supply chains. The increased efficient and effective use of resources lowers 
operating costs creating a virtuous cycle of efficiency in production. This allows firms to exploit their current 
resources as a strategic advantage, and these improved processes reduce environmental impacts by reducing 
wasted resources.  

HR systems that focus recruitment, selection, training, and retention on KSAOs related to commitment 
building, detail-orientation, and maximum output will see the strongest increases in the relationship with firm-
level outcomes in firms that continually improve production processes. Innovative creativity is still important 
in process improvement as in R&D, but the creativity is more focused on exploiting current processes over 
exploring new areas. 

Ford provides an illustrative example of a firm that maximized exploitive innovation as a means of 
increasing both financial performance and organizational learning. Ford has been known as a leader in 
production process improvement since the early 1900s when Henry Ford introduced and employed 
standardization of work, formal assembly lines, and other innovative processes to increase the efficiency of 
manufacturing.  Modern Ford process improvements include the use of a balanced scorecard system to 
continually track manufacturing with the ultimate goals of cost reduction, customer satisfaction improvement, 
and lower impact on the environment. Ford exploits its previous innovations by continually improving and 
changing processes to meet these goals (Jacobsen, 2011).  

Ford uses HR systems that focus on recruitment, selection, training, and retention of employees whose 
KSAOs align with manufacturing process improvement. These include selecting and employing high numbers 
of Lean Six Sigma Black Belts and Green Belts, employees who have KSAOs related to process improvement, 
pushing process controls to the lowest level, and sharing successes across the organization as a whole 
(Jacobsen, 2011). This interaction of focused HR systems with continual process improvement increases 



 

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Ford’s organizational learning capacity as well as its financial performance as a global leading automotive 
manufacturer.  

 
Proposition 3b: HR systems configured to promote commitment building, detail-orientation, 
and maximum output through internal HPWS practices interact with firm production processes 
to increase exploitive organizational learning. 
 
Branding. Branding is one of the most important aspects of organizational marketing, as brand 

recognition is a powerful mechanism for attracting and retaining customers. The brand itself is an intangible 
resource, but successful branding processes build trust and credibility. This increases firm financial 
performance as people are more likely to purchase goods and services from an organization that they trust 
(Zentes et al., 2011). Highly effective branding processes create quintessential brands known as “the” 
something (Google as “the search engine”) or a brand that becomes synonymous with the product or service 
(e.g., Band-Aid for a sterile bandage). Additionally, successful branding creates additional value by attracting 
more potential employees allowing the firm to use selective processes for whom they want to employ (Allen 
et al., 2007).  
 Brands that successfully achieve a high level of status take on similar qualities to transformational leaders 
in that employees admire, trust, and respect the leader. Employees in an organization with a strong brand 
development process take actions to maintain high levels of enthusiasm and commitment to the brand. This 
can lead to innovation and creativity through intellectual stimulation to continually try new ideas and improve 
the brand for customers. The interaction between HR systems and branding processes will be strongest when 
the HR system attracts, selects, trains, and retains employees who both identify with and are committed to the 
brand. Specifically, employees must have KSAOs that fit with the brand and must be willing to work with the 
domain of the brand.   
 Southwest Airlines provides a well-known example of successful branding and an illustrative example 
of the interaction between HR systems and branding as a dynamic capability. Southwest’s guiding principle is 
to be “THE low fare airline” while maintaining a secondary principle of fun at work for employees (Thomas, 
2015).  Southwest maintains its position as one of the most well-liked airlines in the United States due to its 
fun and relaxed atmosphere and focus on people first (both customers and employees). Southwest’s heart 
symbol represents its branding efforts to remind customers and employees of the human element in the 
industry and is a major inclusion in marketing and recruitment efforts for the firm.  
 Southwest’s HR systems focus on attraction, selection, training, and retention of employees whose 
KSAOs match the organizational strategy of people first. Southwest ranks employees higher in importance 
than customers and shareholders, which has led to high levels of employee satisfaction. Additionally, this has 
had a pipeline effect passed onto customers as well as the bottom line yielding higher levels of customer 
satisfaction and financial performance.  
 

Proposition 4: Branding processes interact with firm HR Systems configured using effective 
HPWS practices to attract and retain employees with strengthened identity with the brand, 
increase commitment, and decrease turnover rates to increase financial performance. 
 

Discussion and Future Research 
 The interaction between firm resources and resource orchestration provides an interesting and 
innovative area for study within the SHRM and SHC literature. While traditionally human capital is viewed as 
a standalone resource, the mechanisms for recruiting, training, retaining, and configuring human capital 
interact with firm resource orchestration including land selection, physical building design processes, 
production processes, research and development, and branding processes to increase firm financial 
performance and organizational learning. As the world increasingly becomes more global, firms face operating 
environments with ever increasing levels of complexity and dynamism. By leveraging the firm’s internal 



 

30 
 

environment (through resource orchestration), firms can create synergies through the configuration of their 
HR systems and attract, select, train, retain, and employ the best people to respond to these challenges.  
 While researchers have examined human capital interactions with other resources, our focus on resource 
orchestration, the inherent active employment of resources, expands our understanding of how synergies are 
unlocked by integrating and configuring HR systems with these capabilities. This holistic view of how firms 
structure, bundle, and employ their resources, including their internal and external labor pools, provides a 
more complex look at how firms respond to complex and dynamic environments.  
 Our propositions follow the framework set forth by Sirmon et al. (2007). What remains unexplored in 
this framework allows for a fruitful area of future research. The components in our propositions appropriately 
lay the foundation for empirically exploring the accumulating and bundling aspects of that framework. This 
paper has left the final component, leveraging, relatively untouched. It is our stance that leveraging would be 
firm- or industry-specific and entail sustained performance and readjustments over time. As such, leveraging 
would be a promising area for future research, especially through the use of several case studies.  
 It is important to note that several boundary conditions exist in this paper. In addition to the boundary 
conditions discussed in presenting the propositions, there is also a temporal focus here. As an organization 
ages, it becomes better at spotting opportunities (Sirmon et al., 2007). While the bundling of resources is 
always important, it is most crucial for newer organizations. The more resources that new organizations have 
at their disposal (including labor pool, pipelines, and workforce characteristics), the better positioned they will 
be to bundle these resources effectively to result in organizational learning and firm performance. However, 
as time passes, the organization will have accumulated a significant amount of knowledge and at that point, 
mobilization and land selection will be key to driving new business. In addition, SHRM theory asserts that “as 
the organization grows and develops, human resource management programs, practices, and procedures must 
change and develop to meet its needs” (Baird & Meshoulam, 1988: 116). Even though past research has 
provided steps or stages to follow as an organization adapts HR procedures to match growth, these steps are 
anecdotal and provide little consideration to how the needed resources can be orchestrated to enable the 
adaptation. Therefore, by combining RBT and SHRM theory and considerations, the firm is able to 
simultaneously utilize both lenses to make external decisions that will match internal HR policies and 
procedures to allow for this growth and change over time. By ignoring the RBT view of the firm, the 
organization will be transaction-cost focused and potentially miss the opportunity to provide itself with the 
external factors (location, labor pool, pipeline, workforce characteristics, reputation, and brand) that will allow 
it to adapt HRM changes over time. Without allowing HRM programs, practices, and procedures to change 
over time, critical customer needs and emerging opportunities will be overlooked, and the organization is not 
likely to sustain growth and/or profitability.  
 As will be discussed in further detail below, the propositions included in this paper are not all-inclusive 
or representative of a “one right way” to merge RBT and SHRM theory and practice. Rather, what we have 
offered is a way to go beyond the simple main effects of each theory and truly integrate and synthesize core 
tenants of each. In this paper, we have deeply focused on the synergistic effects when resources are bundled 
and leveraged with effective HR practices. The simple effects and relationships between each subcomponent 
of the propositions can be found as standalone hypotheses that have been given statistical significance in other 
research (see Mackey et al., 2014; Messersmith et al., 2011; Datta et al., 2005; Denrell et al., 2003; Hitt et al., 
2000; and Teece et al., 1997). Our major contribution is the attention being paid to the combination of two 
theoretically different lenses: RBT and SHRM. As research and practice in the field of management currently 
stands, there appears to be two different conversations occurring. One is at the micro, organizationally-
internal level, within SHRM. This conversation focuses on decisions, policies, and procedures that happen 
internal to the firm and include hiring, firing, training, and organizing of personnel. The other conversation is 
at the macro, organizationally-external level, within strategic management as a whole. This conversation 
focuses on external resources (such as location and labor pools) and answers the question of why firms exist 
and how they operate amongst one another in the competitive environment. There are very few instances 
where RBT and SHRM researchers invite one another to the same table for conversation and integration (for 



 

31 
 

an exception, see Colbert, 2004). Therefore, the propositions suggested above provide a foundation in which 
both research areas can begin to speak the same language and gain a more developed understanding of how 
they can inform one another. By informing one another, the two research streams will be synergistically 
working together to improve organization learning and performance.  
 This paper is by no means inclusive of the entire relationship and has its limitations. The exemplar 
resource orchestration processes included here are only a few of the many processes used by firms to create, 
allocate, and integrate resources to respond to dynamic and complex environments and were selected due to 
their being theoretically interesting, able to be empirically investigated, and practically relevant. They also offer 
the unique benefit of spanning both disciplinary (within the realm of academia) and departmental (within the 
realm of the organization as a whole) boundaries. Additional resource orchestration processes include those 
internal and external features that allow firms to integrate, build, or reconfigure resources to achieve maximal 
organizational outcomes. Next, we detail a few of these as possible areas of future research and focus.  
 Technological capabilities. Firms employ new technologies with significant variance in approach and 
levels of success. These technologies increase the need to reevaluate HR systems, especially when technologies 
replace human KSAOs.  
 One specific example of technological capabilities is the increasing use of social media in organizations. 
While traditionally, communication systems were heavily structured, social media fundamentally changes 
communication networks, processes, and interactions. Social media provides the ability for firms to create 
user-generated content and provide voice to the entire organization (Leonardi & Vaast, 2017). HR systems in 
this context must focus on KSAOs related to technological savvy, collaboration, and restraint.  
 Communicative processes and network management. The communicative interactions within a 
firm also represent a resource within the management sphere of influence that is causally complex and 
ambiguous in terms of organizational outcomes. Often firms’ tacit knowledge diffuses throughout the 
organization through interactions that are complex and inimitable. HR systems in this context must focus on 
KSAOs that foster open communication and conscious management of individual communication networks 
in the organization.  
 Intellectual property management. One of the most important resources in an organization is the 
process for developing and protecting intellectual property. Intellectual property helps firms create and 
maintain competitive advantage and is strongly linked to financial performance. HR systems in this context 
must focus on KSAOs related to discretion, secrecy, and commitment to prevent disclosures of intellectual 
property to competitors.  

Another area of future research draws on the Upper Echelons theory to examine how top 
management teams implement strategies in coordination with HR systems and resource orchestration to 
maximize financial performance and organizational learning. Historically, SHRM research viewed HR strategy 
as derivative to firm competitive strategy, however with the increasing number of human resource executives 
in firms and the recognition of their contributions to firm performance (Chadwick et al., 2016), future research 
should examine how HR system development is integrated into strategy development by top managers.  

Finally, empirical studies of HR system interactions with resource orchestration should employ a 
variety of methods that match the interdisciplinary studies of SHRM and SHC. Given the causal complexity 
and assumptions of equifinality in HR systems, configurational techniques, including qualitative comparative 
analysis using fuzzy sets, should be employed to examine configurations of HR systems and resource 
orchestration.  
 
Practical Implications 
 As firms face increasingly complex and dynamic challenges, those who successfully configure their HR 
systems in conjunction with bundling, managing, and leveraging internal resources are able to attract, retain, 
and employ the best people for the job. Managers must recognize the important relationships between their 
capabilities and the HR system to unlock this synergy. By employing recruitment, retention, and incentive 



 

32 
 

programs in HR systems focused on complementarities with their internal firm resource management, 
managers can respond to these challenges.  
 Additionally, managers within organizations must recognize the importance of identifying these 
complementarities across the organization and leveraging all functional areas in the integration of the HR 
system with the resource orchestration. This collaboration will help firms attract, select, and retain employees 
most likely to synchronize with their dynamic processes. 

 

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