Raise the Bar: Job Qualification vs Job Experience in BPO Industry

Theoretical Framework

Resource-Base View Theory

The Resource-Based View Theory proposed by Barney in 1991 is a theory of long-term

competitive advantage based on the premise that successful business rely on unique resource
combinations to create greater value. According to the theory, the calibre of the people employed
and the quality of their working and relationships, account for most of the firm’s success or
weakness (Barney, 1991). This theory argues that resources are essential to compete in markets.
A firm’s resources must be both valuable and rare/imitable for a firm to achieve sustained
competitive advantage. These resources include tangible assets and intangible assets, comprising
of new products and processes, supplier relationships, employees’ skill and motivation,
complementary resources such as physical facilities, human capital and reputation that are
contributed by markets. Of all the resources that a firm may acquire, human resource is the most
crucial, as a ready pool of highly qualified and motivated employees are extremely difficult to
obtain (Sparrow et al., 2002). Burley (2022) claimed that effective recruiting and selection
processes leads to better company results.

According to the resource-based theory, a competitive advantage may be supplied to an

organization when it is able to use its resources in a more distinctive and useful manner than its
competitors (Colbert 2004). Thus, this theory explains that all businesses that have achieved
exceptional competence have done so because of the firm's remarkable and non-substitutable slot
of resources. The diagram below describes the formulation process of the resource-based theory
in-line with the BPO industry:

STRATEGY

Determine the best strategy that can bring highly qualified and motivated employees in
BPO firms. (e.g. whether the company should focus on the applicant's job experience or job
qualifications or both, employment of appropriate recruitment and selection criteria).

COMPETITIVE ADVANTAGE

Access the potentiality of the resources as per capabilities.

CAPABILITIES

Identify the capabilities of the BPO firm.

RESOURCES

Identify the resources. (e.g. Human Resource)

Figure 2. A Resource-Based Approach to Strategy Analysis

 Figure 2 depicts two factors that are inter-dependent terms: resource and capability,
which are integrated concurrently (Das & Bing-Sheng 2000). The definition of the factors is
given below:

 Resources can be divided into tangible and intangible resources, and both are
necessary for the organization’s successful operation (Wu, 2010). As per the
current situation, the major resource used in the BPO industry is Human
resources.
 Capabilities are defined as the capability of the firm’s available resources and
strategies used to carry out the firm’s tasks (Kozlenkova et al., 2014).

Both factors are crucial for determining the firm’s market competitive advantages.

The theory’s primary idea is that instead of seeking to the competitive business
environment for a market niche or an advantage over competitors and threats, the organization
should look within at the resources and potential it currently has. Thus, firms should continually
assess their workforce to ensure that they have the appropriate people with the right skills in the
right positions to maintain a competitive edge in the industry (Barney, 2001), and when this is
not the case, firms should raise their bar and employ appropriate recruitment and selection
criteria.

The important component of the Resource-Base View process in BPO industry involves
viewing the firm as a set of resources that create a competitive advantage (Gorovaia &
Windsperger, 2018; Mageto, Prinsloo, & Rose, 2018). In addition, increasing understanding of
the competitive environment and identifying qualities and capabilities to improve performance
will enable BPO companies to formulate appropriate strategies to compete efficiently and
effectively in the market as well as to satisfy client needs as service providers.

References:

Colbert, B.A., 2004. The Complex Resource-Based View: Implications for Theory and
Practice in Strategic Human Resource Management. Academy of Management Review, 29,
pp.341–358. Retrieved from https://www.jstor.org/stable/20159047?seq=1

Das, T.K. & Bing-Sheng, T., 2000. A Resource-Based Theory of Strategic Alliances. Journal
of Management, 26, pp.31–62. Retrieved from
https://doi.org/10.1177%2F014920630002600105
Kozlenkova, I. V., Samaha, S.A. & Palmatier, R.W., 2014. Resource-based theory in
marketing. Journal of the Academy of Marketing Science, 42, pp.1–21.

Wu, L.Y., 2010. Applicability of the resource-based and dynamic-capability views under
environmental volatility. Journal of Business Research, 63, pp.27–31.
Gorovaia, N., & Windsperger, J. (2018). The choice of contract duration in franchising networks:
A transaction cost and resource-based view. Industrial Marketing Management. Retrieved from
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3171525

Mageto, J., Prinsloo, G., & Rose, L. (2018). Logistics outsourcing and performance of
manufacturing small and medium-sized enterprises in Nairobi. The South African Journal of
Entrepreneurship and Small Business Management, 10(1), 1-11. Retrieved from
https://sajesbm.co.za/index.php/sajesbm/article/view/162

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of

Management, 17 (1), 99-120. Retrieved from
https://journals.sagepub.com/doi/abs/10.1177/014920639101700108

Barney, J. B. (2001). Resource-based theories of competitive advantage: a ten-year retrospective

on the resource-based view. Journal of Management, 27(6), 643-650. Retrieved from
https://journals.sagepub.com/doi/10.1177/014920630102700602

Burley, K. (2022). How Recruitment and Selection Affect Organization Structures. Retrieved
from https://smallbusiness.chron.com/recruitment-selection-affect-organization-structures-
20904.html

Sparrow, P., Schuler, R.S. and Jackson, S.E. (1994), “Convergence or divergence: human

resource practices and policies for competitive advantage worldwide”, The International Journal
of Human Resource Management, Vol. 5 No. 2, pp. 267-299. Retrieved from
https://doi.org/10.1080/09585199400000019