T he commentary on our article “Radi- cal HRM Innovation and Competi- tive Advantage: The Moneyball Story” by Drs. Dick Bryan and Michael Raf- ferty provides a welcome opportunity to further explore the ideas we originally presented. The purpose of our article was “to investigate the Moneyball story to glean what lessons are contained therein . . . concerning innovation, resistance to change, and com- petitive advantage” (p. 112). The commenta- tors’ points focus on the particular innova- tion that was implemented by the Oakland A’s—sabermetrics. Our response, therefore, also focuses on this aspect of our article. While Dr. Bryan’s and Dr. Rafferty’s points were not laid out in a point-by-point manner, our reading indicates that they focus on three areas: generalizability, the criterion problem, and pricing. We address each of these independently. Generalizability An underlying theme that runs through the Bryan and Rafferty commentary addresses the important issue of the generalizability of sabermetrics to the practice of HRM. The commentators question: whether sabermetrics is useful or just a diversion in HRM. Certainly, the clean lines of competition in sports make for clear data. . . . These repetitions are not so obvious or consistent in many other workplaces. Drs. Bryan and Rafferty are certainly correct that baseball, both as sport and as industry, differs greatly from the competitive envi- ronment and HRM issues faced by most or- ganizations. It is important to note, how- ever, that generalizability concerns often constrain radical innovation. Consider the Moneyball story, wherein those working within the established paradigm used the generalizability/applicability criticism to ignore the value of an outside perspective. Sabermetrics resulted from challenging baseball’s extant paradigm by providing significant evidence that (1) the extant par- adigm focused on the wrong player statis- tics and (2) different statistics and charac- teristics could be used for price and team performance advantages. Those within the establishment, however, ignored sabermet- rics. Their criticism could easily be con- strued as arguing that the logic of deriva- tives could not be generalized to baseball. Obviously, this criticism among the base- ball establishment was wrong. The same basic logic that underlies de- rivative pricing is now being applied to strategic decision making through “real op- tions” theory (Bowman & Hurry, 1993; Dixit & Pindyck, 1994, McGrath, 1997, 1999; Kogut & Kulatilaka, 2001). Real op- tions logic is now also being generalized with regard to human resource investments (Bhattacharya & Wright, 2005; Cottom- Clark, Badders, & Wright, 2005). These ap- plications generalize the logic of real op- tions to HRM decisions. RESPONSE TO EDITORIAL BY BRYAN AND RAFFERTY RICHARD WOLFE, PATRICK M. WRIGHT, AND DENNIS L. SMART Human Resource Management, Winter 2006, Vol. 45, No. 4, Pp. 673–676 © 2006 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hrm.20140 Correspondence to: Richard Wolfe, Associate Professor, Sport Management, Division of Kinesiology, University of Michigan, Ann Arbor, MI 48109-2214, tel.: 734.615.5218, e-mail: wolfer@umich.edu