A firm capability is a company’s ability to manage resources, such as employees, effectively to gain an advantage over competitors Ohno (2006). The firm’s capabilities must focus on the business’s ability to meet customer demand. In addition, Firm capabilities must be unique to the organization to prevent replication by competitors. Firm capabilities are anything a company does well that improves business and differentiates the business in the market. Developing and cultivating firm capabilities can help the firm gain an advantage in a competitive environment by focusing on the areas where they excel.
The term “capabilities” is often used, its implication in different contexts may not be similar. Generally speaking, by reviewing previous empirical studies, it can be said that there are three types of capabilities specific or individual, processes, and organisational capabilities. Capabilities are characterised as the skills or expertise of employees, or as intangible resources such as reputation or culture Carmeli & Tishler, 2004; Hadjimanolis, (2000), that seem to be quite specific or individual. In this sense, capabilities are only considered the basic inputs equivalent to the specific resources or parts of overall resources in Grant’s (2002) definition (Galbreath, 2005; Grant, 2002; Hall, 1992).
On the other hand, in the most recently emerging trend related to the RBV, scholars have been more likely to emphasise the capabilities of a firms rather than its processes. Although many researchers have used different terms, such as “combinative capabilities” (Kogut & Zander, 1992), capabilities (Amit & Schoemaker, 1993), “architectural competence” (Henderson & Cockburn, 1994), and “dynamic capabilities” (Eisenhardt & Martin, 2000), the definitions for these terms all have to do with firm processes that use specific resources, integrate these resources together, reconfigure them and release new resources of competitive advantage.
Porter (1980) argues that competitive advantage grows fundamentally out of the value a firm is able to create for its buyers that exceed the firm’s cost of creating it. Competitive advantage also occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors (Porter, 1985; Barney, 2001). The Resource Based View (RBV) by Barney (1984) argues that firms have resources which enable them to achieve competitive advantage and superior performance. Resources that are valuable and rare can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution (Barney, 1991; 1995; 2001). Competitive advantage is obtained when an organization develops or acquires a set of attributes that allow it to outperform its competitors (Wang, 2014). Resource-based view (RBV) posits that tangible organizational resources are vital for superior business performance and sustainable competitive advantage (Galbreath, 2014; Fahy, 2012). Lippman and Rumelt (2013) asserted that firms’ financial or physical assets can generate high value for competitive advantage with minimal threat from replication. Firms should focus on identifying and exploiting resources to neutralize threats (Fahy, 2012; Galbreath, 2014; Lippman & Rumelt, 2013; Wang, 2014).
Competitive advantage is the ability of a firm to out-compete other firms in its industry. Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it (Porter, 1985). Peteraf and Barney (2003) define competitive advantage as superior differentiation and/or lower costs by comparison with the marginal (breakeven) competitor in the product market. An enterprise has a competitive advantage if it is able to create more economic value than the marginal (breakeven) competitor. The economic value created by an enterprise in the course of providing a good or service is the difference between the perceived benefits gained by the purchasers of the good and the economic cost of the enterprise (Peteraf & Barney, 2003). Superior value (what buyers are willing to pay) stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset the higher price (Porter, 1985). The enduring competitive advantage in global economy lies increasingly in local things like knowledge, relationships, and motivation that distant rivals cannot match.
For a company to sustain long-term profitability and a competitive advantage, the company must respond strategically to competition. This will involve the formulation and implementation of strategies that will be superior to competitors and that are sustainable. A strategy is about the direction in which an organisation is trying to get in the long-term and how it intends to get there competitively putting into consideration the values and expectations of its stakeholders. Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations Johnson, Scholes and Whittington, (2008).
Talent management has been effective in industries like manufacturing, medicine, and engineering because it affects knowledge related positions. There are lingering questions about whether it is effective in the hospitality industry. This is due to the concerns that the hospitality industry is heavily labour intensive and reliant on low skilled or unskilled workers (Kaewsaeng-on, 2017). Against this backdrop, this section is set to determine whether TM can be operationalized in the hospitality industry. According to Gallardo- Gallardo et al. (2013), there are different definitions of TM and they appear according to industries. The question that needs to be posed therefore is which of the different definitions of TM apply to the hospitality industry? The answers to this question helped unravel how TM is conceptualized in the industry. The definitions of ‘talent’ and ‘talent management’ formed the basis of demystifying the gap in question.
Despite submissions by Leng (2013); Kaewsaeng-on (2017); Putra et al., (2017) that the hospitality industry is highly labour intensive and heavily reliant on low skilled or unskilled workers; Mohannadi (2017) claims that the industry’s competitiveness is now driven by
knowledge and intellectual capabilities. This implies that there are jobs in the industry that require exceptional KSAs to an extent that they become competitive assets. These exceptional KSAs reside in people considered a talent. CIPD (2015); Kichuk (2017); Torres and Mejia (2017) observed that; globally, the industry is struggling to fill knowledge positions because talent is scarce. What is talent? Scholars have not come up with a unanimous definition of what talent is. For instance, Gallardo-Gallardo et al. (2013) acknowledged that despite the widespread research on the concept of talent, there is a difficulty defining talent. Moreover, Holland (2017) claimed that relatively little is known about the characteristics of such individuals considered talent.
Gallardo-Gallardo et al. (2013) wrote that talent can be conceptualized as object (talent as characteristics of people) and subject (talent as people). The object approach was conceptualized as; talent as exceptional characteristics demonstrated by individual employees. The object approach was further classified as; talent as natural ability, talent as mastery, talent as commitment, and talent as fit. Talent as natural ability is a belief that talent is innate, or a unique mix of innate intelligence or brainpower, with a degree of creativity or the capacity to go beyond established stereotypes and provide innovative solutions to problems in their everyday world. Proponents of this approach believe that talent pertains to characteristics that are much more enduring and unique.