Business Strategies and Skills

This chapter examines the link between business strategies and skill in the context of the the latter being regarded as key to economic growth and competitive advantage. A high-skilled workforce is viewed both as a driver of this approach and one of its outcomes. A number of countries have attempted to create more high-skilled jobs through raising the qualification levels of their workforces. The idea behind this supply-side intervention is that a high-skilled workforce will attract businesses that wish to or already do compete on quality and/or innovation or will encourage existing organisations to make better use of these skills and improve organisational performance. The problem is increasing evidence of growing levels of over-qualification amongst these workforces as too few high skilled jobs are created. Moreover many firms have remained successful operating with low skilled jobs competing on cost. Drawing on existing research, this chapter explores these developments and issues. It starts by making an important contextual distinction between skill levels and skill use, how they feature in firm business strategies, and their relevance to governments, employers and employees. It then presents the two key theories of skill and business strategies: the HRM Approach and the Institutional/Comparative Approaches. Questioning the determinism of these approaches, the chapter then seeks to move debate beyond assumptions of direct relationships between strategy and skill. The conclusion presents an alternative approach to developing the relationship between business strategies and skill that incorporates managerial agency.