Rethinking Firm Specific Human Capital: An Empirical Test of Employee Mobility

Abstract

Firm-specific human capital has long been held to be a source of competitive advantage as it constrains employee mobility. However, current research suggests that an individual’s prior firm-specific investments may actually signal value to hiring firms, and thus increase the likelihood of employees leaving their current firms to work for another. In an empirical analysis of Major League Baseball franchises between 1988 and 2011, we find that an individual’s investments in firm-specific human capital increases mobility. We also explore whether the relationship between firm-specific human capital and mobility is moderated by occupational level.