Research Summary
Scholars have long recognized the theoretical and practical implications of firm‐specific human capital. However, we highlight that firm‐specific incentives (i.e., worker incentives ...that provide more utility to workers in the focal firm than similar incentives available at other employers) provide an important pathway to competitive advantages that has not been comprehensively examined in the extant organizational research. We address this gap by (a) defining firm‐specific incentives and showing why they are different from incentive conceptualizations and typologies in the extant literature, (b) articulating potential origins of firm‐specific incentives, and (c) formally proposing the conditions under which firm‐specific incentives facilitate human capital‐based competitive advantages. In so doing, we develop a cohesive theoretical framework of incentive‐based competitive advantage that integrates across multiple literatures.
Managerial Summary
Just as companies differentiate their products by creating unique value for customers, they also create unique value for their employees. Some companies do this by offering employee incentives, perks, and benefits that are highly unique to the company and difficult for other companies to imitate. These unique incentives, perks, and benefits can help these companies to attract, motivate, and retain top talent at a financial discount and, accordingly, can help these companies realize competitive advantages over their rivals.
Using a unique historical dataset for 20 OECD economies from 1870 to 2014, we study whether human capital accumulation is associated with improvements in environmental quality via reductions in CO2 ...emissions. Our preferred long-run point estimates, which account for cross-sectional dependence and structural breaks, suggest that advanced human capital, in the form of additional tertiary schooling, is linked to CO2 emissions and that an additional year of tertiary schooling is associated with a reduction in CO2 emissions between 50.1% and 65.8%, depending on the specification. When we estimate the relationship between human capital and CO2 emissions non-parametrically, we find that the association between human capital and CO2 emissions is time-varying, that it switched from positive to negative in the 1950s and became more strongly negative thereafter. The time-varying estimates reflect heterogeneity in the relationship between different levels of human capital and CO2 emissions and the growth in investment in higher education in the OECD since the 1950s. Our findings provide evidence of the social benefits of investing in advanced human capital and suggest a promising avenue for addressing climate change without impeding economic growth.
•We examine wheather human capital accumulation reduces CO2 emissions.•We focus on 20 OECD countries from 1870 to 2014.•Parametric resutls show advnaced human capital is associated with a reduction in CO2 emissions.•Non-parametric resutls show a time-varying relationship between CO2 emissions and human capital.•Our findings provide evidence of the social benefits of investing in advanced human capital.
We summarize the estimates from over 200 recent studies of active labor market programs. We classify the estimates by type of program and participant group, and distinguish between three different ...post-program time horizons. Using regression models for the estimated program effect (for studies that model the probability of employment) and for the sign and significance of the estimated effect (for all the studies in our sample) we conclude that: (1) average impacts are close to zero in the short run, but become more positive 2–3 years after completion of the program; (2) the time profile of impacts varies by type of program, with larger average gains for programs that emphasize human capital accumulation; (3) there is systematic heterogeneity across participant groups, with larger impacts for females and participants who enter from long term unemployment; (4) active labor market programs are more likely to show positive impacts in a recession.
Dynamic Managerial Capabilities Helfat, Constance E.; Martin, Jeffrey A.
Journal of Management,
07/2015, Volume:
41, Issue:
5
Book Review, Journal Article
Peer reviewed
The dynamic managerial capabilities literature has developed over the past decade to the point where a review and synthesis of relevant literature can move the scholarly conversation forward. The ...concept of dynamic managerial capabilities—the capabilities with which managers create, extend, and modify the ways in which firms make a living—helps to explain the relationship between the quality of managerial decisions, strategic change, and organizational performance. We clarify theoretical constructs and their relationships, review and synthesize empirical research on the role and impact of managerial capabilities directed toward strategic change, and suggest avenues for future research. Our review begins with an overview of theoretical conceptions of dynamic managerial capabilities. Then we organize the remainder of the review around the three core underpinnings of dynamic managerial capabilities: managerial cognition, managerial social capital, and managerial human capital. In our review, we examine evidence from studies of dynamic managerial capabilities and reinterpret evidence prior to the introduction of the dynamic managerial capabilities concept through that lens. Consistent with the dynamic managerial capabilities concept, empirical research shows that managers differ in their impact on strategic change and firm performance and that differences in managerial cognition, social capital, and human capital lead to different outcomes.
•Although workers in Germany often change jobs between industries in different sectors, inter-industry labor flows are highly structured.•Inter-industry labor flows span a sparse network: on average, ...industries representing 5% of national employment absorb 62% of labor-outflows.•This network, which can be seen as a reflection of industries’ skill relatedness, is similar for different worker types and barely changes over time.•Related employment defined by skill relatedness is a better predictor of local industry growth than by value chain or colocation based relatedness.•Because skill-related industries have uncorrelated growth rates, local employment shocks can be accommodated in skill-preserving ways.
Using German social security data, we study inter-industry labor mobility to assess how industry-specific human capital is and to determine which industries have similar human capital requirements. We find that inter-industry labor flows are highly concentrated in just a handful of industry pairs. Consequently, labor flows connect industries in a sparse network. We interpret this network as an expression of industries similarities in human capital requirements, or skill relatedness. This skill-relatedness network is stable over time, similar for different types of workers and independent of whether workers switch jobs locally or over larger distances. Moreover, in an application to regional diversification and local industry growth, skill relatedness proves to be more predictive than colocation or value chain relations. To facilitate future research, we make detailed inter-industry relatedness matrices online available.
Extending human capital approaches to entrepreneurship, an entrepreneur's "inputs" relating to their general (i.e. education and work experience) and entrepreneurshipspecific human capital profile ...(i.e. business ownership experience, managerial capabilities, entrepreneurial capabilities and technical capabilities) are presumed to be related to entrepreneurial "outputs" in the form of business opportunity identification and pursuit. Valid and reliable independent variables were gathered from a stratified random sample of 588 owners of private firms. Ordered logit analysis was used to test several theoretically derived hypotheses. With regard to the number of business opportunities identified and pursued, entrepreneurship-specific rather than general human capital variables "explained" more of the variance. Entrepreneurs reporting higher information search intensity identified significantly more business opportunities, but they did not pursue markedly more or less opportunities. The use of publications as a source of information was positively associated with the probability of identifying more opportunities, while information emanating from personal, professional and business networks was not. Implications for practitioners and researchers are discussed.
We estimate the aggregate productivity gains from reducing barriers to internal labor migration in Indonesia, accounting for worker selection and spatial differences in human capital. We distinguish ...between movement costs, which mean workers will move only if they expect higher wages, and amenity differences, which mean some locations must pay more to attract workers. We find modest but important aggregate impacts. We estimate a 22 percent increase in labor productivity from removing all barriers. Reducing migration costs to the US level, a high-mobility benchmark, leads to a 7.1 percent productivity boost. These figures hide substantial heterogeneity. The origin population that benefits most sees a 104 percent increase in average earnings from a complete barrier removal, or a 25 percent gain from moving to the US benchmark.
Research summary: We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively ...isolate individual human capital, ultimately changing the firm's make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present, employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms' human capital management practices toward internal development of human capital relative to acquisition on the external market. Managerial summary: In the face of frictions to employee mobility both within and across industries, which we capture empirically using measures of noncompete enforceability and limited skill transferability across industries, firms tend to hire less experienced workers, such workers exhibit longer tenures, and firms invest more in their training, particularly in the development of new skills. Our findings imply that for firms operating under such complementary frictions, better hiring and internal development capabilities are particularly important for performance, while those firms without such capabilities may benefit from considering ways to circumvent the mobility frictions, including moving out of the focal state or lobbying for different noncompete laws.
Why do more educated workers experience lower unemployment rates and lower employment volatility? Empirically, these workers have similar job finding rates but much lower and less volatile separation ...rates than their less educated peers. We argue that on-the-job training, being complementary to formal education, is the reason for this pattern. Using a search and matching model with endogenous separations, we show that investments in match-specific human capital reduce incentives to separate but leave the job finding rate essentially unaffected. The model generates unemployment dynamics quantitatively consistent with the data. Finally, we provide novel empirical evidence supporting the mechanism studied in the article.
We study the internationalization of digital service multinational enterprises (SMNCs), focusing on how digitalization alters internalization theory’s assumptions about the nature of firm-specific ...assets (FSAs) and the theory’s predictions about governance choices in cross-border transactions. We invoke Simon’s (Proc Am Philos Soc 106(6):467–482, 1962) near-decomposability concept to explain how digitalization enables two distinct types of FSAs – technology and human capital. Applying the ideas of modularity and skill complexity, we further distinguish between core versus peripheral technology FSAs and between generic versus advanced human capital FSAs. Building on the transferability and appropriability of these strategic assets, we theorize on the FSAs’ internalization propensity in the digital age. We propose that with rising digitalization, the network plays a dual role–as a governance mode and as a strategic resource. Integrating insights from network economics, particularly increasing returns to scale, we propose that network advantages (On) emerge as a distinct strategic resource that merits separate investigation from the traditional asset-based (Oₐ) and transaction-based (Ot) advantages.
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