Academy of Management Review 2004, Vol. 29, No. 3, 341358.

THE COMPLEX RESOURCE-BASED VIEW: IMPLICATIONS FOR THEORY AND PRACTICE IN STRATEGIC HUMAN RESOURCE MANAGEMENT
BARRY A. COLBERT York University
I consider the implications for research and practice in strategic human resource management (SHRM) of a complex, living-systems extension of the resource-based view (RBV). I do so by demonstrating that concepts from complexity align well with the RBV, and I extend the RBV by considering critical but difficult aspects commonly identified in the RBV strategy literature. An integrated framework for SHRM is presented, allowing an application of complexity principles at the appropriate level of abstraction in the HR system.

Much of the writing in the field of SHRM has been concerned with either practical advice or presentation of empirical data. Without good theory, the field of SHRM could be characterized as a plethora of statements regarding empirical relationships and/or prescriptions for practice that fail to explain why these relationships exist or should exist. If, in fact, the criticism that the field of SHRM lacks a strong theoretical foundation is true, then this could undermine the ability of both practitioners and researchers to fully use human resources in support of firm strategy (Wright & McMahan, 1992: 297).

Made over a decade ago, this call for theory in strategic human resource management (SHRM) continues to ring through the literature in the field (Delery, 1998; Snell, Youndt, & Wright, 1996; Ulrich, 1997a). Rich, integrated theoretical frameworks will help focus and organize research efforts and will enable the practice of HR management to become a truly strategic discipline (Ulrich, 1997b). SHRM is predicated on two fundamental assertions. First is the idea that an organizations human resources are of critical strategic importancethat the skills, behaviors, and interactions of employees have the potential to provide both the foundation for strategy formulation and the means for strategy imple-

I thank Elizabeth Kurucz and Ellen Auster for helpful comments on earlier drafts of this paper, and Brenda Zimmerman for her many insights on complexity. Funding support for the writing of this article came from the Social Sciences and Humanities Research Councils Initiative in the New Economy. Thanks to Albert Cannella and three AMR reviewers for helping to shape and improve the manuscript. 341

mentation. Second is the belief that a firms HRM practices are instrumental in developing the strategic capability of its pool of human resources. A stronger theoretical foundation will help to affirm the first assertion, connect it to the second, and improve the focus and effectiveness of HRM research and practice, and it will help organizations to thrive more effectively in their particular operating contexts. The basic precepts of SHRM have a natural affinity with the resource-based view (RBV) of competitive advantage in the strategy field (Barney, 1991; Grant, 1991; Wernerfelt, 1984). Proponents of the RBV argue that sustained competitive advantage can originate in a firms resource base, and thereby draw attention to the internal workings of an organization. This view places more emphasis on the role of managers in the selection, development, combination, and deployment of a firms resources, and not merely on selecting its competitive position in the operating environment. The RBV has formed an integrating ground or backdrop for most of the work in SHRM over the past decade (Delery, 1998; Wright, Dunford, & Snell, 2001). While the RBV has been helpful and relevant to the field of SHRM, there are aspects of the view that scholars have deemed critical but that are difficult to deal with in research and practice. This paper extends the RBV by considering some of its difficult aspects through the lens of complexity (Kauffman, 1992; Kelly, 1994). Complexity as a research field includes the study of complex adaptive systems, in the many

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forms in which they appear: economies, ecosystems, thermodynamical systems, or computergenerated genetic algorithms, for example. The defining characteristics of such systems are that they are composed of large numbers of agents in linear and nonlinear relationships, and they exhibit emergent properties and order. My purpose in this paper is to consider the implications for research and practice in SHRM of a complex, living-systems extension of the RBV. I do so by demonstrating that concepts from complexity align well with many of the critical but difficult aspects of the RBV. Several of these difficult aspects, such as causal ambiguity, social complexity, and system-level resources, explicitly invite a more complex, less reductive view of organizations. This is useful for two reasons. First, it allows us to reframe the RBV in a way that admits some of its more important strategic aspects. Second, it sets the ground for the integration of a complexity view into the major modes of theorizing in SHRM. I present an integrated framework for SHRM that allows an application of complexity principles at the appropriate level of abstraction in the HR system. ESSENTIAL CONTRIBUTIONS OF THE PAPER Wright et al. (2001) point out that the RBV has played a key role in legitimating the relevance of HRM to strategy research. By extending the RBV via a complexity lens, this article offers two conclusions that are relevant to SHRM. First, it suggests that some of the difficult aspects of RBV/SHRM research are made difficult by the way we approach them. Causal ambiguity, for example, is only problematic when we endeavor to disentangle the complex causal interactions in an organizations social system. If we accept that unpredictability and emergent properties are key features of complex systems, our focus shifts away from testing the effects of discrete HR practices (e.g., recruitment tactics, pay schemes) and toward consideration of processes by which the elements of the social system (e.g., the intentions, choices, and actions of people in the system) mingle and interact. Second, this paper opens a potential avenue of research in SHRM through a focus on the HR system as a coherent whole, with managerial leverage points centered mainly at the HR principles level of the HR architecture.

The paper proceeds as follows. First is an overview of the key questions in SHRM, including the role of the RBV as an integrating ground for HRM research. I then present a framework to describe the general shape of existing research in SHRM and the potential opportunities for extending the conceptual range of the field. Some critical but difficult aspects of the RBV are outlined to demonstrate consonance with a complexity view in order to make a case for applying complexity to SHRM. After this, I describe some key features of complexity and use livingsystems principles from complexity to inform the principles level of the HR system architecture. The paper closes with some ideas for future research. APPLIED DOMAIN: SHRM In this section I outline some of the key questions in SHRM against the integrating ground of the RBV in strategy. I then draw together two concepts put forward independently in SHRM specifically, the ideas of modes of theorizing in HRM research and the levels of abstraction in the HR system addressed by researchers. Integration of these two concepts will set the ground for extending both the RBV and SHRM research via complexity. Key Questions in SHRM Research on the contribution of human resources (people) and HRM (practices) to organizational effectiveness has addressed a wide array of questions: What is the effect of HR practices on the development of a firms human resources? Which HR practices lead to greater organizational performance? To what degree does that depend on firm strategy? How does a firm ensure that its HR practices fit with its strategy? How does it ensure that its individual HR practices fit with one another, or does fit even matter in HR practice? Must the attributes of a firms base of human resources always align with an a priori strategy, or can its stock of skills, knowledge, and interactions drive strategic direction? The key constructs and central debates in SHRM have grown out of the above questions: best practices versus fit (Becker & Gerhart, 1996), horizontal and vertical fit (Schuler & Jackson, 1987), fit versus flexibility (Wright & Snell, 1998), control-exerting

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versus creativity-enhancing aspects of HR systems (Snell et al., 1996), univariate and multivariate effects (Doty, Glick, & Huber, 1993), and appropriate theoretical frames (Delery, 1998; Delery & Doty, 1996; Lepak & Snell, 1999; Wright & McMahan, 1992). What is common to all of this work is a focus on the links among HR practices, the human resource pool, and organizational outcomes. At its heart, the key strategic questions for HRM research and HR practice are process questions, which tie practices to resource characteristics to organizational outcomes:
How does a firm ensure resources are aligned to support current strategies, are adaptable to new strategies, and are able to influence new strategic directions? How does a firm actively build and continuously renew strategic human and organizational resources to fuel competitive advantage?

employees or organizational resources control systems, routines, and learning mechanisms that are products of complex social structures built over time and, thus, are difficult to understand and imitate (Amit & Schoemaker, 1993; Barney, 1991, 1992; Conner, 1991; Mahoney & Pandian, 1992; Oliver, 1997; Peteraf, 1993). The strong and obvious connection to the RBV serves the SHRM field in two ways: (1) it foregrounds the role of human resources in questions of strategy, raising the importance of research and practice in SHRM, and (2) it encourages a more relevant focus for HRM, away from the HR practices themselves and toward their effect on firm resources (Delery, 1998; Wright et al., 2001). Following an examination of two theoretical frameworks in SHRM, I highlight particular aspects of the RBV that suggest complexity concepts could help in reframing some difficulties with the approach. Dimensions for Theory in SHRM The framework constructed here draws together two useful concepts presented in the SHRM literature. The first is the idea of implicit modes of theorizing embedded in the SHRM field. Delery and Doty (1996) have identified three modes universalistic, contingency, and configurational discernible across a broad body of research, although not always explicitly acknowledged by the respective authors. The second concept is one of the levels of abstraction in the HR system, including principles, policies, and practices, over which theoretical constructs are often arrayed, also typically unacknowledged by the respective authors (Becker & Gerhart, 1996; Schuler, 1987; Wright, 1998). By bringing these two concepts together against the backdrop of the RBV, we can identify the room for contribution of ideas from complexity. It should be noted at the outset that this framework is most useful in delineating the general contours of the research in the field and identifying opportunities for advancement; I do not assert that every piece of research fits uniquely into one cell or another of framework. Modes of Theorizing in HR Research Delery and Doty (1996) have identified and contrasted universalistic, contingency, and configurational explanations of the effect of HR practices on organizational performance, with a

The RBV: An Integrating Ground for SHRM These essential questions have been examined using a variety of perspectives drawn from organization theory, including institutional theory (Wright & McMahan, 1992), contingency theory (Lengnick-Hall & Lengnick-Hall, 1988), configurational approaches (Doty et al., 1993), transaction cost analysis (Jones, 1984), behavioral perspectives (Schuler & Jackson, 1987), and organizational learning (Snell et al., 1996). Some of these approaches are used centrally and frequently and others more tangentially and infrequently. The most prevalent perspective, often applied in conjunction with other frameworks, is the RBV of the firm (Barney, 1991, 1992; Barney & Wright, 1998; Lado & Wilson, 1994; Snell et al., 1996; Wright, McMahan, & McWilliams, 1994). The RBV has helped to build a productive theoretical bridge between the fields of strategy and HRM (Wright et al., 2001), and it serves as a backdrop (Delery, 1998) or integrating ground against which much of SHRM theory and research is presented. The RBV states that a firm develops competitive advantage by not only acquiring but also developing, combining, and effectively deploying its physical, human, and organizational resources in ways that add unique value and are difficult for competitors to imitate (Barney, 1991). Most resource-based arguments are rooted in human resourcesthe skills, knowledge, and behavior of

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slightly varying definition of strategic HR practices under each. The main differentiating characteristic across these categories is the level of system complexity assumed by the researcher and the capacity of various research approaches for modeling system complexity. Universalistic approaches pay little attention to interaction effects among organizational variables, a contingency perspective begins to allow for such effects, and the configurational school sees system interaction effects as critically important. Universalistic perspective. Universalistic or best-practice approaches assert that certain independent-dependent variable relationships hold across whole populations of organizationsthat is, some HR practices are always better than others, and all organizations should adopt them (Miles & Snow, 1984; Pfeffer, 1994). Under a universalistic approach, strategic HR practices are those that are found to consistently lead to higher organizational performance, independent of an organizations strategy. Examples are such practices as formal training systems, profit sharing, voice mechanisms, and job definition. One might argue that these are not strategic in the sense used elsewhere in the SHRM literature (i.e., contingent on strategy or explicitly aligned with specific strategy) and may simply be termed prudent, in the sense that they have been shown to consistently enable a given firm to perform better than it might otherwise. Work in the universalistic perspective is largely unconcerned with interaction effects among organizational variables and implicitly assumes that the effects of HR variables are additive (e.g., Gerhart & Milkovich, 1990). Such a reductive, linear view of an organizational system ignores the notion of system-level resourcesan important factor in the RBV. That is not to say that the insights provided by such approaches are not valuable; rather, they are only limited. Delery and Doty (1996) found strong empirical support for the universalistic perspective for some of their hypothesized variables. Research under this perspective has been useful in identifying discrete HR practices that are universally sensible, but it has not contributed much to HRM in the strategic sense, if we take strategic to mean practices that differentiate the firm in its industry and that lead to sustainable competitive advantage. Practices

that are universally adopted would have isomorphic rather than differentiating effects on competing firms. As such, the organization theory that best frames the best-practice approach is institutional theory (Baum, 1996; DiMaggio & Powell, 1983), which describes forces leading to a tendency to sameness across firms. Contingency perspective. The contingency perspective goes beyond the simple, linear, causal relationships explored in universal theories and allows for interaction effects and varying relationships depending on the presence of a contingent variablemost often firm strategy. The task of the researcher is to select a theory of firm strategy and then specify how individual HR practices will interact with that strategy to result in higher organizational performance (e.g., see Fombrun, Tichy, & DeVanna, 1984, and Schuler & Jackson, 1987). Effectiveness of HR practices is contingent on how well they mesh with other aspects of the organization (e.g., what discrete HR policies would be most appropriate if an organization were to pursue a low-cost strategy or wanted to encourage new product innovation). A contingency perspective draws a causal line from the HR policies and practices to the organizational performance metrics, and it allows for the moderating effects of strategy. The primary concern is with vertical fit (alignment with strategy) rather than horizontal fit (HR practices hanging together as a coherent, selfreinforcing system). While this mode directs attention toward effects among variables, internal system interaction effects are not a central concern. Configurational perspective. The configurational school in organization studies follows a holistic principle of inquiry and is concerned with how patterns of multiple interdependent variables relate to a given dependent variable (Meyer, Tsui, & Hinings, 1993; Miller & Friesen, 1984). Researchers gather multiple dimensions of organizations, such as strategies, structures, cultures, and processes, into typologies of ideal types and treat the types as independent variables. This goes beyond the contingency approach, in which researchers have been preoccupied with abstracting a limited set of structural concepts centralization and formalization, for exampleand measuring their relationships with a limited set of abstracted situational concepts, such as size, and technological uncertainty (Meyer et al., 1993: 1175). A configura-

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tional view focuses on patterns of HR practices that together form an internally consistent whole (i.e., their effects are mutually reinforcing) and draws a correlation between those patterns and organizational performance (Doty & Glick, 1994). The purported advantage of the configurational perspective is that it acknowledges system interaction effectsthat the whole may be more or less than the sum of its parts. One significant shortcoming is that it is typically unmanageable to construct and test more than a few configurations, which understates the real-world complexity of organizational systems. Levels of Abstraction in the HR System Becker and Gerhart (1996) have argued for clarity on the level of policy under examinationHR principles, HR policies, or HR practices, for instanceand proposed that an architectural approach be taken to understand the effects of HR system components on organizationlevel outcomes. Wright (1998) termed this distinction the level of abstraction at which HR is conceptualized and added the product level to capture the intended effects of the other three, usually in terms of the behavior of individuals, groups, or the organization. The notion of levels of abstraction differs from the notion of levels of analysis in organization studies, although both are grounds for caution and care by researchers. Where the latter normally denotes the structural level of a theoretical construct, such as individual, group, organization, or industry (Rousseau, 1985), the former is concerned with the level of thought abstraction under consideration and the associated construct definitions. Becker and Gerhart (1996) suggest that perhaps the mixed and conflicting results in HRM research are attributable to confusion in construct definition across the levels of abstraction. An illustrative example makes this concept clear. A firm might adopt the guiding HR principle that employee participation in all aspects of the business is critical to our success. In an architectural approach, this principle would serve as a guidepost to align lower, less abstract policies and practices. The next level holds the various HR policy alternatives capable of enacting the guiding principles, which in this example might be team-based work systems, problem-solving mechanisms, open book

management, incentive pay, comprehensive communication processes, or suggestion systems. Once the appropriate policies are selected, the firm chooses from the available array of HR practices, or specific tools, to execute the policies. Quality circles or TQM teams; variable compensation schemes, profit sharing, or piecework (all types of incentive pay); newsletters, learning fairs, or town hall meetings to communicateall are HR practices the firm can implement and align with the policy level and guiding principle in this example. The product is the metric that describes behavior, or the effect of the behavior, induced by the practices. Behavior in this case might be assessed by the general level of cooperation, participation levels in problem-solving exercises, or demonstration of business knowledge by employees; the effects of the behavior could be measured by the number of problems solved, productivity, waste, or compensation payouts resulting from corporate performance. The menu of new practices available to a given firm depends on its unique context and history; the existing practices, management style, and the labor relations climate are factors that will likely expand or constrict the list of options. If, for example, an organization had an antagonistic relationship with its workforce, built over a long history of tough bargaining with the union, it is unlikely that the firm could successfully implement cooperative problem-solving teams, at least not without first taking steps to repair the organizational climate. Considerations of unique firm contexts and path dependence are critical features of the RBV. Levels of Abstraction and Modes of Theorizing: Limitations and Opportunities The framework offered in this article draws together the concepts of levels of abstraction and modes of theorizing in order to consider the typical levels addressed by each mode and to identify opportunities for extending these ideas. The universalistic approach is primarily concerned with individual practices and, thus, is most often focused on the level of HR practices, with little consideration of system interaction effects. Contingency research deals with multiple practices and their vertical interaction effects with contingent variables and, thus, is implicitly

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concerned with HR policies and the related practices. Interaction effects are deemed important, but only one or two variables are considered at once, and, typically, the contingent variable is limited to firm strategy. Configurational approaches emphasize the importance of overall system interactions and effects and, thus, include the HR principles level as a critical cohesive force for the overall system. The limiting facet of the configurational approach is that complex organizational systems are reduced to a few possible configurations for the sake of manageability and are cast as typologies. For example, Miles and Snows (1978) theory of strategy, structure, and process has been used to cast and test organizational types (prospector, analyzer, defender) and related sets of HR practices (Delery & Doty, 1996). Limiting the rich complexity of organizations to a few possible configurations constrains the range of possible combinations and interaction effects and understates both the creative and adaptive potential of a complex system. While configurational approaches come closest to modeling the complexity of organizations, they must stop short for analytical manageability. These two concepts in SHRMmodes of theorizing and levels of abstractionform a useful framework for considering future opportunities in SHRM research. In particular, they help to highlight the difficulty of acknowledging and dealing with (rather than artificially reducing) system complexity in SHRM, as well as highlight the idea of separating the principles level of the HR system from the focus on discrete practices as a means of accessing issues of dynamic complexity. To relate ideas from the field of complexity to SHRM, it is helpful to first consider some of the opportunities for extension of the RBV in strategy, especially since the RBV is central to and has been called a backdrop of SHRM research. Opportunities for Extending the RBV and SHRM While the RBV has focused attention on organizational resources and has served as an integrating ground for research and theory, its main limitations are serious for the field: it offers little, in an explicit sense, in the way of prescriptions for managers, thus not answering the how questions central to SHRM. In assessing

the issues of fit in SHRM, Delery notes that while the resource based view provides a nice backdrop, explaining the importance of human resources to firm competitiveness, it does not specifically deal with how an organization can develop and support the human resources it needs for competitive advantage (1998: 290). This is due, in large measure, to the somewhat paradoxical internal logic of the RBV, at least as it has been framed to date: the strategic value of firm resources lies in their inherent complexity, and attempts to causally unravel that complexity are counterproductive, if not futile. In a recent review of the contribution of the RBV to SHRM research, Wright et al. concluded that taking RBV deeper into SHRM research requires recognizing that the inimitability of [organizational] competencies may stem from unobservability (e.g., causal ambiguity), complexity (e.g., social complexity), and/or time compression diseconomies (e.g., path dependence) (2001: 709). The challenge to researchers and managers is to find a level of prescription that preserves the strategic value of the RBV without compromising its essence. Throughout the large body of scholarly writing in the RBVin strategy and with specific respect to SHRMthere have been a few key aspects widely acknowledged to be both critically important and exceedingly difficult to adequately represent. I identify four aspects here: (1) a focus on the creative as well as the adaptive aspects of the RBV; (2) the centrality of complexity and causal ambiguity to its logic; (3) the importance of disequilibrium, dynamism, and path dependence; and (4) the idea of systemlevel characteristics. It is with these four critical but difficult aspects of the RBV, generally and as applied to SHRM, that concepts from complexity best align. In the following sections I briefly elaborate on each of these aspects to set the ground for integrating ideas from the study of complex systems. Focus on creativity and adaptivity. The strategic nature of HRM has often been characterized in the SHRM literature as an adaptive concept in terms of fit or flexibility (Wright, McMahan, McCormick, & Sherman, 1998; Wright & Snell, 1998): firms have an a priori strategy, or chosen market position, and the main challenges lie in strategy implementation. But limiting the discussion to adaptive concepts limits the range and power of the RBV as originally

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articulated by Penrose, who was interested in the process of firm growth and its relation to sustained advantage. She proposed that
the availability of unused productive services within it create the productive opportunity of a given firm. Unused productive services are, for the enterprising firm, at the same time a challenge to innovate, an incentive to expand, and a source of competitive advantage (1959: 85).

Thus, in its original conception, the RBV held that a firms resource base contains not only adaptive potential but also creative potential. The unused productive services, which in SHRM terms means the knowledge, skill, and behavioral dynamics of individuals and groups, are forces for creativity, innovation, growth, and relative industry advantage. To be of strategic value, HRM practices should be focused on building and leveraging both creative and adaptive sources of competitive advantage: the latent creative potential in the organizations human resource pool and the idiosyncratic capabilities that serve to realize that potential and that help the organization adapt to and thrive in its operating environment. There have been relatively few attempts to explore the creative aspect of the RBV in SHRM. Snell et al. did explore the processes of knowledge creation through organizational learning processes and urged emphasis on creativity over control in SHRM research:
In the context of achieving sustained competitive advantage, we need less research on the control attributes of SHRM and more research on how participative systems can increase the potential value of and impact of employees on firm performance. If human capital is valuable, we have to learn how to unleash that value (1996: 65).

stood only retrospectively ex ante irreducible/ex post reducible causal ambiguity (Mosakowski, 1997). Although both of these types serve to protect against competitors discerning and reverse engineering an organizations strategic resources, the former does so more than the latter. This feature of the RBV has been difficult to operationalize, however, because under fundamentally irreducible causal ambiguity, even the firm possessing the advantage must be uncertain of its source, or else diffusion to competitors will result (Lippman & Rumelt, 1982). This prime criticism of the RBVthat is, that it is tautological (Priem & Butler, 2001)is related to its ex ante irreducibility. Ambiguity arises from complexity as a byproduct of the complex nature of organizational interaction. It comes from technical complexity and, more significant, from social complexity in the way that a firms inputsphysical, human, and organizational are combined (Barney, 1991). Social complexity as a source of ambiguity, and therefore competitive advantage, is a common theme throughout the RBV literature (Barney, 1986; Grant, 1991; Nelson & Winter, 1982; Reed & DeFillippi, 1990; Schoemaker, 1990; Wright et al., 1994). While the socially complex phenomena that give rise to ambiguity do change over time, deliberately orchestrating those changes is often beyond management control (Barney, 1992). Still, scholars in SHRM have pointed specifically to the advantages inherent in organizational complexity and to the distributed nature of the source of advantage:
It is difficult to grasp the precise mechanisms by which the interplay of human resource practices and policies generates value. To imitate a complex system, it is necessary to understand how the elements interact. Are the effects additive or multiplicative, or do they involve complex nonlinearities? . . . It is even difficult for a competing firm to imitate a valuable HR system by hiring away one or a few top executives because the understanding of the system is an organizational capability that is spread across many (not just a few) people in the firm (Becker & Gerhart, 1996: 787).

Holding the RBV as an explicit frame suggests that the HR system can help create advantage by recruiting, developing, and leveraging both creative and adaptive sources of competitive advantage. Centrality of complexity and causal ambiguity. Under the RBV, inimitable competitive advantage is protected by the interrelated conditions of causal ambiguity and complexity . Causal ambiguity is the basic uncertainty surrounding the causal relationship between actions and results (Lippman & Rumelt, 1982; Reed & DeFillippi, 1990). Such uncertainty may be irreducible ex ante and ex postfundamentally irreducible causal ambiguity or may be under-

Constructive, socially embedded resources are highly strategically important (in the sense that they are inscrutable to competitors) because of their inherent complexity, but they are difficult to deliberately build for precisely the same reason. The question for managers is how to act within that complexity so that the organi-

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zation is encouraged to thrive, without having to unravel and codify the myriad causal effects at play in the social dynamic of the firm. Importance of disequilibrium, dynamism, and path dependence. Rather than attempt to reduce and unbundle complex resources and capabilities in an effort to manage and control, managements task under the RBV is to create uncertaintyto continually reinvest in the factors that create the ambiguity and barriers to imitation for competitors (Reed & DeFillippi, 1990: 97). Strategy is a continuous competitive interaction, in which models should be built on ideas of disequilibria rather than static efficiency (Reed & DeFillippi, 1990). Similarly, Amit and Schoemaker have argued that, for strategy to be conceived more dynamically, disequilibrium and process dynamics loom primary (1993: 42). Growth and rent creation are driven by creative disequilibrium at both the firm and industry levels. Early explications of the RBV included dynamic factors in their static descriptions of resource characteristics. Historical dependence, rate of decay, embedded in complexity over timeare all dynamic concepts referencing the processes by which strategic resources emerge, are created, or are destroyed (Barney, 1991; Grant, 1991). Dierickx and Cool (1989) focused particular attention on the process of accumulating strategic assets with their concept of the time compression diseconomies faced by imitators. Some strategic assetsreputation, for example cannot be bought on the factor markets but must be accrued over time. Recently, attempts have been made to identify and examine the effects of dynamic capabilities. Dynamic capabilities are the organizational and strategic processes through which managers convert resources into new productive assets in the context of changing markets (Galunic & Eisenhardt, 2001). Researchers have made several efforts to identify and prescribe dynamic capabilities in theoretical terms (Luo, 2000; Teece, Pisano, & Shuen, 1997), through empirical studies (Griffith & Harvey, 2001; Helfat, 1997, 2000; Rindova & Kotha, 2001), and through historical studies of response to technological change (Rosenbloom, 2000). Scholars have explored the factors contributing to the development of dynamic capabilities and have found that the effectiveness of capability-building mechanisms is contingent on features of the task to be

learned, such as task frequency, homogeneity, and causal ambiguity (Zollo & Winter, 2002). The dynamic capabilities view is useful in making the RBV operational by identifying specific organizational processes that build clearly identifiable valuable resources (Eisenhardt & Martin, 2000). While it has potential to contribute to SHRM research, the dynamic capabilities view has not, to date, been conceived to allow for complex system interaction effects, and is therefore more limited than the focus of this article. An overly reductive approach to examining system dynamics (i.e., attempting to reduce what is inherently not reducible) ignores the notion that irreducible system complexity and the resultant ambiguity are key to the RBV argument. Beyond this paper, there is opportunity to apply a dynamic capabilities approach using the insights offered herean issue I discuss in the conclusion. Idea of system-level characteristics. Throughout the RBV strategy literature, there is reference to the importance of system-level, intangible resources. Such resources have been variously conceived as organizational routines (Grant, 1991; Nelson & Winter, 1982), cultural resources (Wernerfelt, 1989), core competencies (Prahalad & Hamel, 1990), organizational capabilities (Barney, 1992; Collis, 1994; Lado & Wilson, 1994; Ulrich & Lake, 1991), and system-level resources (Black & Boal, 1994). System-level resources are those organizational capabilities that exist only in relationshipsin the interactions between things. In conceptual and empirical work, researchers have described the importance of the relationships between and among resources that display cogency, complementarity, or cospecialization or that generate rents at the system level or organization level (Amit & Schoemaker, 1993; Barnard, 1938; Black & Boal, 1994; Brumagim, 1994; Collis, 1994; Grant, 1991; Teece, 1986). Since such resources are system specific (and therefore firm specific, if the firm is the system under consideration), they are arguably the most imperfectly mobile type of resources within a given firm. Imperfect mobility is key to sustaining economic rent, and one of the cornerstones of competitive advantage identified by Peteraf (1993). A few writers in SHRM have focused on the importance of system-level resourcesthose organizational qualities that only exist in relationship, rather than as self-contained, discrete en-

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tities. For instance, Brass (1995) took a social network perspective of HRM and focused not on the attributes of discrete human resources but on the benefit accruing from the relationships among them. Similarly, Snell (1999) reflected on the concept of human capital, regarding human resources from an investment and capital accumulation perspective, and allowed that there may be new insight found in the concept of social capital, which focuses on the value of relationships. However, less attention has been paid to this idea in SHRM than in the broader RBV strategy literature. With a focus on these aspects of the RBV and SHRM that are ripe for extensiona focus on the creative as well as the adaptive; the centrality of complexity and causal ambiguity; the importance of disequilibrium, dynamism, and path dependence; and the idea of system-level characteristicswe can consider ideas offered from the field of complexity.

COMPLEXITY AS AN EXTENSION OF THE RBV These four critical but difficult aspects of the RBV are, in fact, central features of complex systems. This theoretical congruence between complexity and the RBV (and, by extension, SHRM) suggests that transferring ideas from one domain to the other via abstract analogical reasoning is not only legitimate but implicitly called for within the RBV literature. In this section I present key features of complexity as they align with those of the RBV. I close the article with principles from the field of complexity aimed at nurturing living systems and thoughts on how those principles might be integrated usefully into the HR system architecture.

(Holland, 1975; Langton, 1989; Zimmerman, Lindberg, & Plsek, 1998). Each word in the phrase complex adaptive system is significant (Waldrop, 1992). Complex means more than just complicated; it describes a system in which the component agents operate with some measure of autonomy, as well as in relation to other system components that is, independently and interdependently. That interaction gives rise to emergent properties that are irreduciblethat exist only in relationship. (As Cilliers [1998] has noted, an airliner is merely complicated; a mayonnaise is complex. He describes these as relational properties to avoid the mystical qualities associated with emergence.) Adaptive means that each agent, as well as the collective system, actively responds to whatever pushes it and works to turn events to its advantage and survival. System implies dynamisman alive kind of dynamism that arises from the many linear and nonlinear (i.e., with amplifying and dampening interaction effects) interrelationships among system agents. Because of this adaptive, unpredictable dynamism, CAS have also been termed living systems by some writers in the field (Capra, 1996; Holland, 1995; Kelly, 1994). In general terms, a CAS is composed of
a large number of agents, each of which behaves according to its own principles of local interaction. No individual agent, or group of agents, determines the patterns of behavior that the system as a whole displays, or how those patterns evolve, and neither does anything outside the system (Stacey, Griffin, & Shaw, 2000: 106).

Key Features of Complex Systems There is no one unified theory of complexity. Complexity theory generally denotes a wideranging body of work built on such fields as chaos theory (Gleick, 1987; Lorenz, 1963), cybernetics (Ashby, 1956; Weiner, 1948), and dynamic systems theory (Jantsch, 1980; Kauffman, 1992; Prigogine & Stengers, 1984). Complexity science includes, but is not limited to, the study of complex adaptive systems (CAS)systems characterized by networks of relationships that are independent, interdependent, and layered

Difficult to concisely define, but easy to recognize (like organizations), complex systems are generally characterized by these two features: (1) a large number of interacting agents and (2) the presence of stable, observable emergent propertiesthe appearance of patterns due to the collective behavior of the components of the system (Morel & Ramanujam, 1999). Order emerges as the system under observation evolves and adapts with its contextual environment, although system boundaries are always somewhat arbitrarily drawn. Characteristics of CAS are recognizable across diverse domains, including ecologies, brains, ant colonies, political parties, economies, and corporations (Holland, 1995). Such living systems
are integrated wholes whose properties cannot be reduced to those of smaller parts. Their essen-

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tial, or systemic, properties are properties of the whole, which none of the parts have. They arise from the organizing relations of the partsthat is, from a configuration of ordered relationships that is characteristic of that particular class of organisms, or systems. Systemic properties are destroyed when a system is dissected into isolated elements (Capra, 1996: 36).

The key features of complex systems resonate with the critical but difficult aspects of the RBV outlined earlier. They are creatively adaptive in that they seek novel means to evolve, by random mutation, self-organization, transformation of their internal models of the environment, and natural selection (Goldstein, 1999). Any attempt to reduce organizational complexity in order to exert control and adapt to the operating environment (i.e., to act as managers are taught to act) is counterproductive. In complex adaptive systems, it is the process of adaptation that builds complexity, and from that complexity emerges perpetual novelty (Holland, 1995). Such systems reach their creative state at far-from-equilibrium conditions, be they economies (Arthur, 1990), Boolean (binary) networks of lightbulbs wired together that move to stable order based on localized blinking rules (Kauffman, 1995), or dissipative structures in thermodynamics that build up as energy moves through the system, in defiance of the second law of thermodynamics (Prigogene & Stengers, 1984). A CAS never reaches equilibrium; if it is not creating to adapt, it is dead (Holland, 1995). As complex adaptive systems evolve through time, they do so irreversibly. Their steps cannot be retraced,

because the arrow of time only moves forward through the evolutionary creative process (Prigogene & Stengers, 1984); processes of emergence are path dependent. By definition, emergent properties are unpredictable (i.e., fundamentally causally ambiguous), displaying what Goldstein (1999) terms radical novelty; they have features not previously evident in the complex system under observation and that are not able to be anticipated in their full richness before they actually show themselves. Emergence is
the arising of novel and coherent structures, patterns, and properties during the process of selforganization in complex systems. Emergent phenomena are conceptualized as occurring on the macro level, in contrast to the micro level components and processes out of which they arise (Goldstein, 1999: 49).

The notion of coherent structures, patterns, and properties sounds very much like the intangible, system-level resources deemed important by RBV writers. Table 1 arrays the critical but difficult features of the RBV (call it complex RBV) alongside some of the key features of complex systems. This similarity suggests that concepts from the study of complex living systems are well poised to inform and extend the RBV and, by extension, SHRM. Complex RBV: Heuristics for Building SystemLevel Resources Proponents of the RBV say that competitive advantage flows from latent creative potential

TABLE 1 Complex RBV: Critical but Difficult Features of the RBV and Key Features of Complex Systems
Key Features Creativity/adaptivity RBV Competitive advantage grows from latent creative potential embedded in firm resources Inimitability arises from social complexity and causal ambiguity Complex relationships build over time and are historically dependent; disequilibrium is the creative state; dynamism and process issues are paramount Some key strategic resources are intangible and exist only at the system level, in relationships Complexity Complex adaptive systems learn and create new responses to their contextual environment Living systems are composed of complex interrelationships that are nonlinear, nondeterministic, and unpredictable Systems thrive and create at far-fromequilibrium states; equilibrium leads to stagnation, decline, and death; history matters; paths unfold irreversibly through time Some elements only exist at the system level, in the dynamic relationships between things

Complexity and ambiguity

Disequilibrium, dynamism, path dependence

System-level resources

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and idiosyncratic capabilities (synchronous with the specific context) and that strategic resources must be valuable, rare, inimitable, and organizationally leveraged (Barney & Wright, 1998). Complex RBV focuses on the complex processes that build system-level resources over time. The value of such resources is grounded in their synchronicity with the firms operating context; their inimitability is secured because they are inscrutably embedded in the complex interactions within the organization. Management heuristics drawn from complexity can influence the organizational system toward building and leveraging strategic resources. The notion of self-organization in the complexity frame asks us to think of an organization in a less control-oriented manner and acknowledges that an organizations social system is constructed out of the interplay among the intentions, choices, and actions of all organizational actors (Stacey et al., 2000). With an appropriate degree of humility (i.e., abandoning the objective of control, the most we intend is influence), we acknowledge the forces for creativity and adaptation inevitably embedded in a complex social system and offer guiding principles consonant with that view. This is consistent with the RBV literature, which asserts that management is, at its core, a heuristic discipline, and calls for the development of useful heuristics to deal with organizational complexity (Amit & Schoemaker, 1993; Schoemaker, 1990). Heuristics are, according to Chambers Concise Dictionary, principles used in making decisions when all possibilities cannot be fully explored.

COMPLEXITY APPLIED IN SHRM The purpose of illustrating these points of congruence is that they strongly suggest there is something to be learned from a complexity view in order to extend the RBV. The critical but difficult aspects of the RBV in strategy mark an opportunity to bring in ideas from complexity, and SHRM, with its natural affinity to the RBV, is a particularly useful means of operationalizing those insights. Because the framework constructed in this article is built along the dimensions of the levels of abstraction in the HR system and degrees of concern for system interaction effects in the modes of theorizing,

there is a clear point of entry for complexity principles. Figure 1 illustrates the integrated framework for SHRM described earlier. The modes of theorizing, with the addition of the complexity frame, are arrayed against the levels of abstraction. The RBV serves well as an integrating ground for the various modes of theorizing. Articulated within the RBV are the higher-order (more general, more abstract) objectives of unleashing latent creative potential and developing idiosyncratic capabilities that are common to all modes, and more fully realized as we move from left to right on the spectrum. The ovals in the figure depict the typical prescriptive range of each mode along the levels of abstraction, and they are labeled with the most relevant theory of organization for each mode. As we move from left to right across the figure, there is greater concern for the interaction effects among system variables and for systemlevel characteristics. The complexity perspective acknowledges that agent interactions are abundant and critical to system evolution and that there is a self-organizing aspect to them. In the context of the HR system architecture, this means that process principles reflecting a complexity perspective can be prescribed and that the policies, practices, and products will selforganize, which can mean that they flow in concert with the particular idiosyncratic context of the firm, guided by the heuristics for growing CAS. The heuristics as HR principles can help to guide the dialogue processes in the organization: the interplay of the intent, choices, and actions of organizational actors (Stacey et al., 2000). From a strategic perspective, organizational resources will be positioned to create maximum value when we expand the system boundaries to include the intent, choices, and actions of the firms stakeholder base customers, suppliers, shareholders, employees, operating communities, governments, and competitors, for example. Dynamism and complex interaction among system components are issues of organizational process, which is consistent with the initial conception of the RBV. Penrose (1959) was concerned with the process of growthin the ways that organizations growin contrast with economic theory of the time, which only addressed the pros and cons of being one size or another. Process issues have also been identified as impor-

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FIGURE 1 Dimensions of Theory in SHRM with the Addition of a Complexity Perspective

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tant in SHRM, especially in the ways that HR system fit emerges over time:
We would encourage researchers to examine the processes that lead to internal fit. Like other elements of the organizations infrastructure, creating internal fit among HR practices probably has an intentional as well as an emergent component. Researchers might try to sort out the extent to which HR systems are integrated rationally through a priori decision processes versus emerging over time as practices are adjusted incrementally. SHRM, in general, is an area that has focused far too exclusively on content issues to the exclusion of more process-oriented concerns (Snell et al., 1996: 80).

plexity research. The set of seven below is adapted from the nine offered in his wide-ranging work:
Distribute being: Allow that systems are not contained in discrete bodies; living systems are distributed over a multitude of smaller units. All the mysteries we find most interestinglife, intelligence, evolutionare found in the soil of large distributed systems. Control from the bottom up: When everything is connected to everything in a distributed network, wide and fast-moving problems route around any central authority. Overall governance must arise from interdependent acts done locally in parallel and not from a central command. Cultivate increasing returns: Each time you use an idea, a language, or a skill, you strengthen it, reinforce it, and make it more likely to be used again. That is known as positive feedback or snowballing. Anything that alters its environment to increase production of itself is playing the game of increasing returns. Grow by chunking: Allow complex systems to emerge out of the links among simple systems that work well and are capable of operating independently. Attempts to install highly complex organization, without growing it, inevitably lead to failure. Complexity is created by assembling it incrementally from simple modules that can operate independently. Maximize the fringes: A diverse, heterogeneous entity can adapt to the world in a thousand daily minirevolutions, staying in a state of permanent but never fatal churning. In economic, ecological, evolutionary, and institutional models, a healthy fringe speeds adaptation, increases resilience, and is almost always the source of innovations. Honor your errors: The process of going outside the usual method, game, or territory is indistinguishable from error. Even the most brilliant act of human genius is an act of trial and error. System evolution can be thought of as systematic error management. Pursue multiple goals:. Survival is a manypointed goal. A complicated structure has many masters, and none of them can be served exclusively. An adaptive system must trade off between exploiting a known path of success (optimizing a current strategy) and diverting energy to exploring new paths (thereby wasting energy and reducing efficiency).

The background shading in Figure 1 indicates the primary range of prescription available under each mode of theorizing. Adding a complexity view to the framework extends consideration of the HR system out to a domain where system interaction effects are accepted as critical and allows that the properties and dynamics of the system are complex, unpredictable, and often irreducible to their component parts. Doing so via analogical abstractions will allow us to enter the framework at the appropriate level of abstractionin this case, the principles level. Prescription here is focused on process principles: management heuristics for nurturing complex living systems. Abstract Analogical Reasoning: Transferring Insights Across Knowledge Domains Rather than employ one concept or another from specific areas of study in complexity (e.g., fitness landscapes, cellular automata, nonequilibrium thermodynamics, dissipative structures, bifurcation points), we can consider living systems generally and abstractlythat is, take a set of abstract concepts generally observable across complex living systems and transfer them to the principles level of the HR architectural framework. Tsoukas suggests that such abstractions are particularly useful for theory building:
From a theory-building point of view, abstractions are very important because they operate at a high level of generality, reveal the generic properties of a variety of phenomena, and can thus be used to explain phenomena across widely different domains (1993: 338).

Kelly (1994) put forward a set of abstract principlesa list of laws for growing living systems, synthesized from diverse streams of com-

These principles can be directed toward addressing the how questions central to HR research set out earlier: How does a firm encourage alignment of resources to strategy, and how

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does it continually build human and organizational (i.e., system-level) resources to fuel competitive advantage? As a prescription for managers, a complex RBV, living-systems view suggests that these principles be integrated into the HR architecture. Table 2 offers an example of how such principles for nurturing living systems might translate to HR principles that are oriented toward process, focused on appropriately stirring the stew of creative forces embedded in the organizations social systemthe intentions, choices, and actions at play. How these principles translate to HR policies

and practices will depend on the historical experience of the organization and the nature and quality of the human relationships within the system. The third and fourth columns of Table 2 offer some possibilities of which HR practices might come into play, but they are only possibilities. Complex, system-level, path-dependent resources and capabilities only emerge out of the dynamic interplay within a given system and with its operating environment; it is beyond our prescriptive capacity to list what could, or should, be the particular actions of each organization. A complex systems view allows for the creation of valuable

TABLE 2 Living-Systems Coherence: Translating Complexity Heuristics to the HR System

Heuristics for Nurturing Possible Translation to HR Complex Living Systems Principles Possible Translation to HR Policies Possible Effect on HR Processes

3 Distribute being Eradicate arbitrary borders Encourage movement across Work assignments (postings, departmental and organizaprojects) deliberately crosstional boundaries functional Explicitly incorporate For example, recruitment, identity-building values into training, leadership HR systems development, performance management processes Encourage formal and informal employee participation wherever possible Take time to create an understanding of the business; coach at all levels Work structure design with a strong bias to full engagement Leadership development, internal communications

Build broad-based identity and capability

Control from the bottom up

Democratize the workplace

Feed information to all levels Cultivate increasing returns Seek opportunities to create positive reinforcement in the system Be deliberate with language and symbols Encourage local innovation Build learning capacity Maximize the fringes Embrace debate Experiment Honor your errors

Deliberately link reputation, External and internal external image, and internal communication practices identity in a virtuous cycle Use and reuse consistent Traininghigh models and language in customization of T&D development programs programs (vs. outsourcing) Allow inconsistencies across Flexible interpretation of HR departments rules Foster knowledge exchange Learning forums, across organizational units communities of practice Invite dialogue on alternate approaches Create space for experimentation Electronic discussion groups on pros/cons of HR systems HR skunkworkstrials of new practices/processes Reward systemshonor greatest learning experiences

Grow by chunking

Encourage reflective practice Close learning loop on experimentation Incorporate stakeholder perspectives/aspirations Tolerate multiple aims

Pursue multiple goals

Assess HR system impact on HR measuresbuild in all stakeholders stakeholder metrics Create value on many fronts Solicit definition of value at once from diverse stakeholders

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resources by encouraging an attitude of inclusiveness and humility on the part of managers: inclusiveness toward all system agents (stakeholders) and humility in that they are encouraged to relinquish the idea of tight control and focus on building generative relationships (Lane & Maxfield, 1996). Coherence in the HR System In reference to Figure 1, there are single, discrete HR practices that researchers have identified as universally beneficial for organizations to adopt, there are HR practices that make sense in relation to particular firm strategies, and there are typological configurations of practices that work well together. Moving from configurational approaches to complexity approaches means loosening the coupling between conceptions of strategic types and full sets of related HR practices. It means introducing complexity principles at the appropriate level of the HR architecture and letting the system follow what Daneke (1997) calls its unique geometries which is what complex systems will do, despite managerial efforts at total control. The aim here is not to generate radical new ideas for HR practices in a discrete sense; each of the practices listed in Table 2 is at work in some organization today. Rather, the purpose of such a framework is to provide a measure of coherence and purpose to the HR system architecture, informed by complexity. What the overlapping aspects of the RBV and complexity suggest is that a set of principles drawn from the study of complex, living, thriving systems could serve well to nurture the creative and adaptive capabilities of the organization. Implications for SHRM Research The framework offered in this article suggests a number of interesting research questions. What HR principles are most consistent with a complexity perspective? Some principles are offered here, but that list is by no means exhaustive. What range of HR policies and associated practices flows from complexity-based principles? How do the dialogic processes in organizations contribute to the development of HR policies and practices, and what role do HR principles play in moving to overall system coherence? Snell et al. (1996) observed that some HR practices emerge over time

and are not thought out a priori. Investigation into those processes from a complex RBV perspective means focusing qualitatively on the human relationships in the system and on the processes of dialogue that lead to transformative change (Stacey et al., 2000). Are the modes of theorizing compatible? That is, can we employ insights from a universalistic approach while at the same time injecting complexity principles to encourage emergent adaptive behavior of the whole system? What specific sources of advantage do organizational members attribute to the complex interactions encouraged by the HR principles? Is a complexity approach more appropriate for certain strategies, in certain industries? How does a complexity approach reframe the way we think of the concepts of fit and flexibility in SHRM research? Perhaps it asks us to accept that fit emerges out of ongoing, decentralized dialogic processes, and flexibility means adherence to a principles-driven view of the HR system. This might mean a continual, deliberate reinterpretation of HR policies and practices in the context of the organization, in the way that Holland (1995) describes complex systems as constantly revising and rearranging their building blocks as they gain experience. If the principles guiding the system are drawn from living-systems theory, versus a mechanistic organizational view, perhaps the prosperity odds are better. One way to approach some of these questions would be to construct some high-level, exploratory hypotheses tying a complexity approach in the HR architecture to perceived strategic resources to organizational outcomes. One could construct a proposition regarding the significance of a complexity view, and another pertaining to the degree of institutionalization of the principles, covering the intention and execution of integration. For instance:
Complex RBV advantage flows from complexity principles embedded in the HR architecture. Greater institutionalization of complexity principles in the HR system is associated with greater relative industry performance.

A possible method for exploring these propositions might be to select comparator companies, who occupy relatively equal strategic positions in the same industry, and collect qualitative data on their respective HR architectural

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schemes, along with supporting documentation. Principles may be explicit or implied, depending on the relative sophistication of the firms HR system. The principles in action could be assessed for complexity content against the frameworks suggested in this paper to determine the relative presence of conditions for emergence and adaptive behavior. Qualitative data from actors inside the firm could be used to gather collective perceptions of strategic resources and their value to firm performance, their rarity, and conditions contributing to their inimitability, without trying to analytically break down causal ambiguity. Quantitative and qualitative comparisons of high- and lowperforming firms in the same industry could be constructed to test the general propositions and to aid in the construction of others more specific. Most significant and perhaps generalizable out of such a study would be not just the particular principles themselves but the process within the firm of drafting such principles (e.g., who is involved, over what time frames, through what dialogic processes, and based on which inputs) and the further process of consistently translating those principles to HR policies and practices. The dynamic capabilities view, highlighted earlier, could be usefully applied using the framework offered here. With a focus on HR principles, researchers could document the principles drafting and interpretation processes as strategic dynamic capabilities. Those processes that combine the intentions, choices, and actions of agents within and outside the organization will guide the development of the HR system over time, along paths that are unique and idiosyncratic to its operation environmenta complex RBV approach to addressing the how questions so important to SHRM. CONCLUSION My aim in this article has been to offer a general framework for extending the field of SHRM via a principles-based complexity approach. I have rationalized connecting these two fields of study based on congruence of key features of the RBV, a common strategic frame for SHRM, and key features from the study of complex living systems. While this article focuses on the particular relevance of these ideas to SHRM, extending the RBV via complexity may also have implications for strategy generally. Further work along this line

could include a complex, principles-level view of strategy formulation and of the dynamics of strategy implementation. The framework constructed here allows for the introduction of complexity principles at the appropriate (principles) level of abstraction in the HR system. Pursuing a line of research in SHRM that focuses on coherence in the HR system, infused with a living-systems perspective, could help to inform the way organizations are studied and to improve the way they are managed.

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Barry A. Colbert is completing his Ph.D. in strategic management in the E. K. Haub Program in Business and Sustainability at the Schulich School of Business, following twenty years of work in the Canadian steel industry. His current research explores organizational leadership in moving toward more sustainable business practices.