By Hamed Armesh 1082200034

Over the last decade, there has been steady progress in better

understanding the predictors of firm competitive behavior. This line of inquiry has focused on firm-related (e.g., Chen & MacMillan, 1992; Chen & Miller, 1994),network-related (Gnyawali & Madhavan, 2001), and industry-related (Young, Smith, & Grimm, 1996) drivers of firm competitive behavior. Firm-related factors commonly examined are age (Miller & Chen, 1996), size (Chen & Hambrick, 1995), prior performance (Miller & Chen, 1994), and market and resource commonality between a pair of competing firms (Chen, 1996). While other strategy research streams examine the importance of strategic human assets within the firm, such as the chief executive officer (Daily & Johnson, 1997), the top management team (Wiersema & Bantel, 1992), and board of directors (Westphal & Zajac, 1995), research on firm competitive behavior pays only limited attention to their influence. Given this theoretical gap and recent calls by scholars to better understand the role of strategic choice as a driver of firm competitive behavior (Smith, Ferrier, & Ndofor, 2001),

 Based on prior literature, we examine three of the most

critical aspects of competitive behaviorthe volume, variety, and magnitude of competitive moves.In building the strategic human resource (SHR) model, we make an effort to account for both human assets and human resource practices and their resulting influence on a firms competitive behavior. The strategic human assets that we examine are the CEO and the TMT, which in line with previous research (Hambrick & Mason, 1984), we term the upper-echelon. In addition, we also call attention to the impact of the board of directors (BOD) as a driver of firm competitive behavior. In terms of HR practice, we begin to build the model around executive compensation, one of the most controversial topics, as well as, substantive investments a firm can make (Gerhart & Milkovich, 1990;Gomez-Mejia & Balkin, 1992).

 To construct the theoretical lattice around this SHR

model of competitive behavior, we rely on three distinct research streams. In particular, we draw on th the intra-firm perspective of social capital, which suggests that relationships between people inside the firm leads to creation and use of knowledge and other valuable resources that facilitates collective action (Leana & Van Buren, 1999; Nahapiet & Ghoshal, 1998). e human capital perspective Finally, we examine how executive compensation practices designed to influence,and motivate individual and group behavior (Gomez-Mejia & Balkin, 1992)

1.conceptual background The central tenet of the SHR model is that firm competitive behavior is a function of the decisions and actions of its upper echelon and BOD. our SHR model, social capital exists in the embedded, complex, and on-going relationships among the members of the upper echelon and the BOD, which make it difficult for competitors to imitate or replicatehallmarks of a firm resource this resource advantage results in a firm competitive advantage within the marketplace. Porter (1991, p. 108),

. In particular, we specify, more clearly, how a firms internal human assets and human resource practices help drive the specific competitive activities that result in market advantage. ) According to the SHR model, firms with superior stores of human and social capital are in a better position to launch a high volume of complex and forceful competitive moves within the marketplace

 SHR model assume that firms must possess three

defining characteristics to engage in a high volume of complex and forceful moves. These three characteristics of awareness (A), motivation (M), and capability (C) were first introduced in Chens (1996) AMC model of firm rivalry.

 Accordingly, we investigate how a firms own

strategic human assets and human resource practices, particularly the human and social capital of its upper echelon and BOD along with the compensation systems of the senior executive team, improve awareness, motivation and capability of the firms decision makers, which spur and allow the firm to undertake a high volume of complex and forceful competitive moves.

2. Human capital, social capital, and executive compensation : Human capital refers to the full range of knowledge, skills, and abilities an individual can use to produce a given set of outcomes (Becker, 1962, 1964, 1993; ). General human capital refers to the knowledge, skills, and abilities to deal with the larger organiza-tional environment. Knowledge of ones competitors, suppliers, customers, and other significant external stakeholders as well as ones abilities and skills in dealing with them represent important components of general human capital.

 Social capital refers to the linkages between social actors, the strength of those linkages, and the resources that flow through them (Nahapiet & Ghoshal, 1998). Most of the strategy research examining social capital has focused on linkages between firms and the networks that develop from them.

. While our conceptualization of social capital includes all of these characteristics, we focus on intra-firm social capital, which is the nature of relationships that exist within the organization (Leana & Van Buren, 1999). Our model builds on this notion of firm-specific social capital by focusing on the linkages between the members of the upper echelon and also the BOD, the strength of those relationships, the potential of resource flows through them (e.g., information, advice, and trust), and the processes social capital makes possible (e.g., problem solving, decision-making, and coordination). In our view, even if a firms strategic human assets possess a wealth of human and other productive forms of capital, they need to have strong social capital involving deep trust and willingness to effectively work with each other in a manner that contributes to the collective goal of firm.

2.3. Executive compensation The motivation of top executives to use their human and social capital comes from a variety of extrinsic and intrinsic sources. Executive compensation, however, has commanded the attention of both professionals and academicians (GomezMejia & Balkin, 1992; Calian, 2002). Their attention is driven by the belief that various forms of compensation will drive the kinds of executive actions that will lead to competitive firm behavior (Craig, Dugan, Kelly, & Cohen, 2003; Gomez-Mejia & Balkin, 1992). In our model, we distinguish between the effects of fixed and variable pay. Variable pay is composed of bonus and longerterm incentives used by the organization to direct its executive agents to pursue specific outcomes or, sometimes, engage in specific behaviors desired by the owners. Thus, variable pay is important to the CEO and TMT for its motivational properties.

 Firm competitive behavior Better understanding firm competitive behavior is of

critical importance to strategic management research for several reason .most notably some scholars suggest that competitive behavior is strategy since a firms action are the building blocks of strategy (Mintzberg 1973). Next, and closely related to the last point, is that it is difficult to understand firm competitive rivalry without first understanding the why and how of firm competitive behavior (Chen, 1996; Smith et al., 2001). Here we focus on three critical aspects of firm competitive behavior : competitive propensity ,complexity and magnitude.

3.1. Competitive propensity Competitive propensity is a firms tendency to engage in a number of competitive moves and indicates how status assertive and roils market environments to the confusion and disadvantage of competitors (DAveni, 1994) 3.2. Competitive complexity Competitive complexity refers to the range of different kinds of competitive actions taken by a firm (Ferrier et al.,1999; Nayyar & Bantel, 1994). 3.3. Competitive magnitude
Competitive magnitude refers to how significant a competitive action

or series of actions is (Hambrick et al., 1996). The magnitude or significance of a competitive move is tied to the amount of financial and other firm resources that are needed to undertake the action. As such, competitive moves with great magnitude affect a larger number of firm operations .

 4. Model and related propositions

In the sections below, we develop and specify a number of propositions connecting the independent and dependent constructs defined above and depicted in Fig. 1.( In so doing we assume factors such as firms size, age, physical resources, and markets to be constant). In fact, our specification of the model and its propositions is intentionally limited. We do so in keeping with recommendations that issues of parsimony, boundary conditions, and conceptual scope be considered in all theory building (Pedhazur & Schmelkin, 1991). Thus, an exhaustive development of a SHR ( model of competitive behavior in a single conceptual model is neither possible nor appropriate. Indeed, it is our hope that the SHR model will serve as a theoretical launching point and will attract a broader set of scholars to improve and build upon this model. With these caveats in mind, we develop propositions related to the use of human and social capital of the upper echelon and BOD and the effects of executive compensation on those uses.)

 4.1. Upper echelon human capital and firm competitive propensity

A competitive action emerges as the upper echelon notices trends in the competitive environment and contemplates the competitive marketplace and its own firms abilities to initiate actions within it.
The upper echelon is also the command and control center for the

execution of competitive moves (Hambrick et al., 1996). Throughout the process of planning and executing a competitive action, the upper echelon sets the agendas, conducts the planning, processes the information, and makes the strategic decisions (Simons, Pelled, & Smith, 1999) that result in the change and performance outcomes (Boeker, 1997). Therefore, the higher the level of human capital within the upper echelon, the greater the likelihood that the upper echelon can initiate, execute, and drive competitive moves into the market. Proposition 1. The higher the level of human capital within the upper echelon of a firm, the greater will be the competitive propensity of the firm.

4.2. BOD human capital and competitive magnitude

bring unique external knowledge from varied and multiple industries, access to financial and other critical resources, and provide the overall framework for the firm to undertake bold and forceful competitive moves. Furthermore, high human capital among the BOD also attract support from significant external stakeholders whose support is necessary ,if not essential to lunch the more strategic and substantive competitive moves. For these reasons, we propose that:
within the BOD of a firm, the greater will be the competitive magnitude of the firm.

Proposition 2. The greater the levels of human capital

 4.3. Upper echelon social capital and competitive complexity

Our interest in social capital focuses on the strategic social networks within the upper echelon and the BOD.Concern centers on how social capital brings the human capital assets together and how it facilitates concerted efforts of the upper echelon and BOD, and, as a result, increases the type or range of competitive actions undertaken by the firm. First, we explore and establish the general relationship between the upper echelon and the competitive complexity dimension of competitive behavior.
Proposition 3. The higher the levels of social capital within the

upper echelon of a firm, the greater will be the competitive complexity of firm.

4.4. BOD social capital and competitive complexity The relationship, or amount of social capital, between directors and members of the upper-echelon can also impact the variety of moves a firm launches. As mentioned earlier, directors are hybrids in respect to their internal and external orientation to the firm. While a BOD affects the internal functioning of the firm (Lorsch, 1989), most of a directors time is spent outside the firm on which they sit. By linking the firm to the environment, directors with strong and rich relationships to an organizations upper echelon, particularly that with the CEO, can improve the information-processing and environmental scanning capabilities of the upper echelon. In particular, directors may be more willing to share key and critical information from the environment only with members of the upper echelon whom they trust. Predictably, willingness to share is tightly related to the amount of social capital that exists between two parties (Kanter, 1988). When the upper echelon cannot properly process information or scan the environment, the overall organizational information- processing capability is diminished. Proposition 4. The higher the level of social capital on the BOD of a firm, the greater will be the competitive complexity of the firm.

5. Moderating effects of executive compensation .As noted earlier, we identify two important aspects of upper echelon compensation that impact firm competitive behavior: incentives that help motivate the upper echelon to engage in competitive actions and fixed pay that serves largely as a hygiene factor. We now examine how these two aspects of executive compensation moderate the effects of human and social capital on firm competitive behavior. 5.1. Variable pay effects Proposition 5. The greater the levels of variable pay offered to the upper echelon, the stronger the effects of human capital on the firms competitive propensity 5.2. Fixed pay effects Proposition 6. The greater the pay dispersion within the upper echelon (excluding the CEO), the weaker the effects of upper echelon social capital on competitive complexity.

 Conclusion We have argued that a firms human capital and social capital, primarily at the upper echelon and BOD, improve the firms awareness, motivation, and capability to vigorously compete. In addition, we put forth that a firms executive compensation policies primarily motivate these human assets to

engage in competitive actions. According to the SHR model then, differences in one or more of the followingstrategic human assets, the relationships between those assets, and specific HRM practices and systemsare likely to generate competitive consequences. Previous examination into the predictors of competitive behavior has examined firm characteristics that are quite static and stable. For example, organizational age or organizational size remain relatively constant or change at predictable rates. Further, these characteristics are less prone to manipulation and managerial influence. Human and social capital are less constrained in this regard. In fact, firms can affect and improve upon their stores of both human and social capital. For instance, more rigorous selection or promotion criteria will ensure that those individuals with lower human capital are screened out at earlier stages. Such mechanisms as team training or the fostering of an organizational culture conducive for open dialogue may also influence social capital. For these reasons and unlike previously studied predictors of competitive behavior (e.g., firm size, firm performance, slack resources, or market commonality), the constructs put forth in the SHR model of competitive behavior can adapt and change more quickly to meet the demands of the competitive moment.

Research Gap
Research on firm competitive behavior play only limited attention to their

influence of human assets .

the impact of human and social capital among the broader workforce and
the role of other HR systems in influencing the kind and type of competitive moves a firm can undertake. First, for parsimony, we only pursued the relationships between the human assets at the pinnacle of an organizationas the upper echelon perspective is firmly rooted in theoretical (e.g., Hambrick & Mason, 1984) and empirical strategy literatures (e.g., Wiersema & Bantel, 1992). However, it is quite likely that characteristics of the labor force impact the competitive posture and behavior of a firm. Using typical variables and measures of human capital, such as education and experience, one could examine how a firm with low turnover and higher education levels of their employees competes compared to firms with lower marks in these areas

 Thank you