While previous research has focused on the performance outcomes of human resource
practices (Blundell et al. 1999; Huselid 1995; Delaney/Huselid 1996), less effort
has been devoted to understanding why firms invest in such practices in the first
place (Ethiraj et al. 2005; Gooderham et al. 1999; Larsen 1994). Likewise the resourcebased
view of the firm focuses on the quality of resources owned or controlled by the
firm, rather than on the firm’s investment in capacity to manage such resources. Both
from a practical and a theoretical point of view there is a relative dearth of knowledge
about the firm-specific preconditions enabling or encouraging the firm to invest in
HRP. While the growing body of empirical evidence regarding HRM practices and
policies offers clear managerial implications, HRM is merely one of several functional
areas competing for scarce resources such as time, attention and money
. Accordingly, a more complete picture of HRM in a wider
organizational context requires that the costs involved in implementing specific HRP
and the constraints on the firm’s allocation of resources to HRP are taken into account.