Paauwe proposed a sustainable HRM model called the "Context Based Human Resource Theory" (CBHRT) that accounts for tensions between economic rationality focused on efficiency and effectiveness, and relational rationality focused on legitimacy and fairness. The model shows tensions between competitive market demands (PMT) and the social, political, and legal context (SCL) that influence strategic choices for HRM. Paauwe's model emphasizes balancing these tensions to integrate social legitimacy as a critical objective for sustainable strategic HRM.

1. Paauwe’s Sustainable HRM Model
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management,
Hyderabad - 500005

2. Sustainable HRM Model
 The first key objective of Sustainable HRM, is to
contribute to organisational performance by efficient
deployment of human resources.
 The interests served are those of the shareholders & in
some HRM models key stakeholders.
 The second key objective of Sustainable HRM is to
contribute to attracting and retaining its most
important resource: the human resource.
 HRM contributes to a company’s long-term viability.
 If sustainability is taken into account as an
objective, paradoxical tensions need to be reconciled.

3. Paauwe’s Sustainable HRM Model
 Paauwe proposed a framework for a ‘‘Context Based
Human Resource Theory’’ (CBHRT).
 The ‘‘Human Resource Based Theory of the firm’’ is
built on the Resource Based View (RBV):
- people are valuable, rare, inimitable & non-
substitutable &
- meet the requirements of RBV demands for resources
that contribute to sustained competitive advantage.
 The CBHRT is conceptualised in the tension of:
- economic rationality (based on criteria - efficiency and
effectiveness) and
- relational rationality (based on criteria - legitimacy and
fairness).

4. Paauwe’s Sustainable HRM Model

5. Paauwe’s Sustainable HRM Model
 Paauwe defines relational rationality as ‘‘establishing
sustainable and trustworthy relationships with both
internal and external stakeholders’’.
 The model shows the tension between competitive-driven
market-based demands (called PMT) and the socio-
political, cultural, and legal context of the firm (called
SCL).
 The proactive element in Paauwe’s model is the
understanding of a room for manoeuvre (or for strategic
choices) for the dominant coalition (i.e. those actors
involved in the PMT and SCL dimension and in the
company itself).

6. Paauwe’s Sustainable HRM Model
 This room for HRM for strategic choices is not very
large because of the contextual influence.
 The contribution of the CBHRT model is the
emphasis of the tensions between PMT and SCL as
prior HRM models focus on the right hand side of
the model only
 With his model, Paauwe tries to integrate ‘‘social
legitimacy’’ as a critical objective for Strategic
HRM.