Human capital in the new economy: devil's bargain?

Abstract

The burgeoning literature about the knowledge economy has marginalised its most important dimension – people. The development of human capital and its role in the competitive advantage of business is discussed in relation to the changed nature of the employment relationship. In particular Drucker's concerns about the threat to business of attenuated relationships between workers and their organisations are examined. Contextual factors such as the dynamic nature of labour markets, the centrality of profit making and the definitional difficulties inherent in the new and old economy dichotomy are acknowledged. A transitional model of human capital in the new economy is suggested as a way of modernising traditional thinking. An analysis of the capabilities required by new economy workers leads to a discussion of the corresponding competencies necessary for managers. The paper concludes that changed employment relationships do not spell death to people development. Rather it makes managing talent different and more challenging.