Make or Buy? Professional Designations, Human Capital and Sustainable Competitive Advantage

Abstract

Over the last two decades, the use of professional designations as selection criteria has increased. In order to develop selection criteria, recruiters assess candidates from both job and organizational perspectives (Kristof-Brown 2000). No research exists that examines the degree to which organizational objectives, rooted in considerations that are not job-specific, may be affecting the increase in demand for these designations. This research attempts to close that gap by exploring the relationships among organizational objectives, the design of selection criteria, and the use of voluntary professional designations. The study explores the degree to which organizations use voluntary professional designations to assess person-organization (P-O) fit in environments emphasizing two objectives related to superior firm performance: the acquisition of competencies related to sustainable competitive advantages (SCAs) (Barney 1991; Porter 1985), and the development of characteristics associated with a high performance workplace culture (Huselid and Becker 1997). It also explores the extent to which a needs-supplies selection perspective is related to conceptualizations of P-O fit that are separate from notions of person-job (P-J) fit (Kristof 1996). Data were obtained from a sample of 292 HR professionals, representing a cross section of industries, who completed a Web-based survey. Confirmatory factor analysis revealed the presence of positive and significant relationships between each of three organizational contingencies (i.e., a needs-supplies perspective, a high performance workplace system culture, the desire to acquire competencies perceived to be sustainable competitive advantages) and the construct of P-O fit. Perceptions that the competencies were inimitable had the strongest relationship to P-O fit. As well, a positive and significant relationship was found between the construct of P-O fit and the use of a professional designation. However, study results also indicated that only two dimensions of SCA were positively and significantly related to the use of a professional designation: perceptions that the competencies represented by the designation are rare, and perceptions that they add long-term value.