Investing in general human capital as a relational strategy: Evidence on flexible arrangements with contract workers

Abstract

AbstractResearch SummaryThis article examines a firm's investment in the general skills of contract workers in flexible work arrangements. It theorizes that this investment may prolong a productive firm‐worker collaboration even when workers’ mobility barriers are low. It also proposes that achieving such benefits requires that the firm frames the relational benefits of the investments both to managers and workers. Such a “relational framing” mitigates worker concerns about subsequent productivity demands and manager concerns about worker mobility. Experimental and non‐experimental studies conducted in a multinational cosmetics direct sales company support the theory. Investments in the general skills of workers—even those in flexible work arrangements—can benefit both firms and workers by deepening the firm‐worker relationship while increasing value creation.Managerial SummaryShould companies train workers in general skills if the workers can easily leave and transfer productivity gains to competing firms? A common answer to this question is “no,” especially when targeting workers hired under flexible arrangements, such as gig workers and direct sales representatives. This article offers a different perspective. It predicts that these investments signal a company's commitment to nurture workers’ development. In turn, workers reciprocate by prolonging a more productive collaboration. Training thus benefits workers and companies. Using relational terms to frame training programs enables the promotion by managers of training opportunities, and uptake by workers. This framing overcomes managerial concerns about worker exit and worker concerns about subsequent productivity demands. Studies conducted in a multinational cosmetics direct sales company support these arguments.