Drivers of Collective Human Capital Flow: The Impact of Reputation and Labor Market Conditions

Abstract

An emerging body of research examines collective human capital flow via context-emergent turnover (CET) theory, which builds on resource-based theory and the literature on human capital. CET theory indicates that collective human capital flow—or employee movement into and out of organizations—is of growing significance to scholars and practitioners given the effects that it has on important organizational outcomes. Yet, a better understanding of what drives systematic variance in collective outflows and inflows is needed so that employers can strategize and plan ways to manage human capital flow. We use CET theory to highlight the role of a firm’s reputation as an antecedent to human capital flow. Moreover, because CET theory emphasizes the significance of context, we consider how labor market conditions change the nature of these relationships. We predict and find that a positive reputation helps employers reduce several types of collective human capital flow, yet more reputable employers are better able to do so in slack, rather than tight, labor markets. These results shed light on the importance of context on collective human capital flow and indicate the potential of CET theory to understand not only the consequences but also the drivers of collective movement in and out of organizations.