Human Resource Management and Intra-Industry Trade

Abstract

Purpose - The purpose of this paper is to develop a tractable general-equilibrium model of examining the impact of human resource management on intra-industry trade. Commonly, managers of Korean firms are promoted internally. It necessitates a study of human resource management and its impact on an industrial equilibrium. Design/methodology - This paper relies on theoretical analysis. We build a model in firms are hierarchical; an entrepreneur, managers, and workers. All individuals have heterogeneous managerial talents, which are the main source of managerial quality. Firms search talents for prospect managers, and eventually delegate them to supervise workers. The searching incurs a sunk cost. Findings - Our finding is as follows. Country 1, relatively abundant of managerial talents, can gain more from trade than Country 2, relatively scarce of managerial talents. This is because the higher searching cost leads to the lower survival rate of firms in Country 2. Implicatively, good jobs are destroyed, and aggregate income falls in Country 2. Originality/value - According to our study, relative abundance of managerial talents affects distribution of firm size and determines trade gain. This study can contribute to the literature of organization management and trade.