a commodity’ (ibid.: 39 ). The reliance on labor for operational eYciency, with all
its reputational eVects, is ignored. While low-skilled labor may or may not be
readily replaced—dependent on the state of the external labor market—there is a
constant need on a daily basis to ensure that incumbent staVare motivated and
working in the interests of the client organization and cooperating in many cases
with other parts of the production chain. These requirements often go beyond the
compliance with rules and regulations speciWed by Lepak and Snell (Marchington
et al. 2005 ). There is thus a danger that by incorporating mainstream economic
reasoning into the HR area, the insights into the complexity of managing human
resources that derive from the traditions of industrial relations or personnel
management may be discarded.
These problems are perhaps more successfully avoided in Baron and Krep’s
( 1999 ) textbook on strategic HRM, a collaboration between an economist and an
HR specialist. Baron and Kreps accept a high level of indeterminacy in HR
outcomes as ‘the employment transaction will be incomplete a priori to beWlled
in as contingencies arise; and when theWlling in takes place subsequently, the
discipline of the market will be dulled’ (ibid.: 81 ). They move beyond the notion of
economic rationality and self-interest as the only issue motivating behavior and
assert:
that the management of human resources is complex because the basic element is the
behaviour of people, whose perceptions and expectations are coloured by their perceptual
abilities and by their social experiences, and whose objectives mix (to varying degrees) pure
self interest, comparisons with others, and social obligation. Moreover, because the issues
involved are so important to individuals, society has an enormous stake in the outcome,
and society will express its interests in the outcome thorough social and legal constraints on
organisations and their relationship with employees. (Baron and Kreps 1999 : 8 )
This more complex approach is evidenced in their identiWcation of six factors
associated with outsourcing, including the strategic nature of the task and the
degree of speciWc human capital required, cited by Lepak and Snell, but adding the
degree of interdependency with the core tasks, the need for staVto internalize the
Wrm’s welfare, the open-endedness of the task requirement, and the social distance
between the internal workforce and the type of workers who are to be outsourced.
Thus, this list is expanded to include complexities in production organization, the
scope for even low-skilled workers to disrupt or damage production systems if they
do not ‘internalize theWrm’s welfare’, and the role of social or labor market
segmentation in promoting outsourcing and fragmentation of production systems.
The consequence of this broader interdisciplinary approach is, from an economics
perspective, a loss of theoretical elegance and explanatory power. But the force of
this criticism depends upon whether the purpose, or indeed likely outcome, of
social science is to explain complex behavior and social organization by one uniWed
theory.
78 damian grimshaw and jill rubery