Assessing Firm Human Capital Based on Labor Mobility Network

Abstract

Accurately assessing a firm's human capital and its relative position compared to other firms is critical, as it has strong implications for many stakeholders to understand the firm's strategic competitiveness. The traditional way of assessing firm human capital is mostly based on survey method and the accuracy depends on a large group of survey respondents. In this article, we propose to adopt the PageRank algorithm in the context of a firm network formed by actual flow of employees among firms. The PageRank score obtained provides a good assessment of the firm's human capital, which is validated by both the regression model and the random forest model. Our work contributes to the literature by proposing a more accurate, faster, and more cost-effective assessment approach for measuring firm's human capital. This novel approach is also friendly to real-time and big data of the current business world and provides important implications for the development of a more effective third-party ranking system regarding human capital of firms.