Specific Human Capital Research Articles

Understanding the Process of Knowledge Spillovers: Learning to Become Social Enterprises

Through analyzing in-depth interview data obtained from representatives of U.K.-based social enterprises, we explore how traditional third-sector organizations acquire entrepreneurial knowledge via knowledge spillover and use this to transform themselves into more market-driven, businesslike social enterprises. An integrated framework for knowledge spillover is developed to highlight the connection with organizational efforts at each stage of the knowledge spillover process; this framework assists organizations in collecting leaked knowledge and turning it into both organizational action and specific social and human capital that can play an important role in facilitating these connections. This research contributes toward our further understanding of the knowledge spillover phenomenon.

"Governance and Firm-Specific Human Capital: Human Assets, Competitive Advantage, and HR Dilemmas"

Drawing on human capital theory, strategy scholars often emphasize the importance of firm-specific human capital as a source of competitive advantage (Hatch and Dyer, 2004; Mayer, Somaya, and Williamson, 2012; Wang, He, and Mahoney, 2009). A key reason for this focus is that, in theory, when employees have skills that are less valuable outside of the firm, this creates a gap between value they create and their opportunity cost at another firm. These gains are assumed to be shared between employees and firms and, in turn, can penalize workers for moving to another firm in the form of lower wages (Becker, 1993; Williamson, 1975). An obvious, if simplistic, recommendation for firms might be to invest in firm- specific human capital. However, this ignores the many human resource management dilemmas associated with firm-specific human capital. First, a key paradox of firm-specific human capital is that workers may systematically under-invest in such skills. However, there are many other challenges associated with firm-specific human capital. The stylized economic model does not take seriously heterogeneity of resources across firms, imperfect information about firm specificity, how firm specific knowledge and skills are accumulated, the relational context in which such investments are made or management implications at the upper echelons of the firm. All of these pose challenges on HR systems that must be addressed for firms to achieve a competitive advantage. In this symposium, we bring together a set of papers that explore dilemmas arising from investments in firm-specific human capital. Collectively, these papers suggest a set of problems that are best explored in both the HR and strategy literatures. When do Employees Acquire Firm-Specific Human Capital? A Relational Approach Presenter: Seo-Young Byun; U. of Wisconsin, Madison Firm-specific Human Capital and Competitive Disadvantage: Negative Sorting and Worker Quality Presenter: Sangyun Kim; U. of Wisconsin, Madison The Stone the Builders Rejected: Gaining Competitive Advantage from General Human Capital Presenter: Olubukunola Akinsanmi-Oyedeji; U. of Wisconsin, Madison Firm-Specific Knowledge Assets and CEO Dismissal Presenter: Heli Wang; Singapore Management U. Resource Accumulation Lags and the Value of Strategic Human Capital Presenter: Kenneth Younge; Purdue U. Presenter: Benjamin A. Campbell; The Ohio State U.

Is More Always Better? Re-Assessing the Role of Human Capital in Entrepreneurship

Entrepreneurship research mainly focused on linear effects of human capital on venture performance, while recent publications have pointed towards non-linear effects. We investigate non-linear effects of both general and specific human capital on nascent venture performance. Based on data from PSED II, we study U-shaped relationships between general education, management, industry, and startup experience and nascent venture progress. We find that while general education, management experience, and startup experience have an inverse U-shaped relationship, industry experience has a U-shaped relationship with venture progress. Our findings have implications for theory and practice.

Study on Relationship between Officers’ Education Background and Performance of Listed Companies on Growth Enterprise Board

For the purpose of supporting SMEs with vigorous growth and innovativeness, listed companies on GEM (growth enterprise board) offer a financing platform for China’s self-dependent innovation strategies, enriching the multi-level capital market system. Against the background that nationwide enterprise-starting is encouraged, listing on GEM becomes the ultimate goal sought by numerous entrepreneurs and their teams; under this circumstance, relationship between entrepreneurs’ education background and operation performance of their companies came up as a hot topic. According to the human capital theory, the education is an important approach and means creating and improving human capital. Education degree reflects the education background one undergoes; therefore, it may be considered as an indicator showing the human capital investment via education. For the officer team of any enterprise, specific human capital may not only affect interaction among the officer team, but also significantly influence the company performance. Based on the human capital theory, this paper, by use of data about 406 listed companies on GEM in 2014 and taking company size and officer’s compensation as control variable, makes a study on the relationship between the officers’ education background and company performance of listed companies on GEM. Through studying, it is revealed that there exists no correlation between the officer’ education background and performance of listed companies on GEM. As a result, it is recommended that great importance should be attached to ability development while improving education degree. In recruiting, a company shall focus on the applicants’ ability.

Higher Education Research Productivity: The Influences of Different Forms of Human Capital

This article reports on a study that tested the theory that predicts the potential influence of different manifestations of experience on higher education research productivity in the context of a large South African research university. The differential contribution of different forms of experience to research productivity was tested using correlation analysis, partial correlation analysis and hierarchical linear regression analysis. The results suggested that research productivity is relatively robust to forms of work experience other than that of being a researcher; that membership of professional associations is positively related to research productivity; and that years of formal education are not. It is concluded that research productivity may represent specific human capital; a form of tacit learning that may primarily be accessible only through a process of 'learning by doing'. Implications arising from these findings are considered.

A Percepção de Oportunidades de Negócios por Imigrantes na Espanha: o impacto do capital humano geral e específico

Perceiving business opportunities is an important part of entrepreneurship. This study analyzes how immigrants’ general and specific human capital influences their likelihood of perceiving business opportunities. Analysis focuses on comparison between a group of immigrants and a group of Spanish citizens. Data from the 2008 Global Entrepreneurship Monitor (GEM) was used. Logistic regression was used to analyze data. Results revealed that both immigrants’ and Spanish citizens’ human capital such as education is not significant to perceiving opportunities. Much to the contrary: the impact of specific human capital on perceiving opportunities is in general significant to both groups. This research reveals which specific types of human capital are relevant in the process of perceiving opportunities amongst immigrants. This paper is a novelty because it introduces a theoretical approach to the perception of opportunities within the universe of new businesses established by immigrants in Spain.

Unemployment and house price crises: Lessons for Fiscal Policy from the Dutch Recession

Since the beginning of the financial crisis in 2008, the Dutch economy lost 6% of gdp relative to Germany, even though the Netherlands (unlike the GIPSI countries) did not face serious problems to finance its sovereign debt. This bad performance is explained by the interaction of fiscal policy and the housing market. This makes the Netherlands an interesting case because these effects can be analyzed in isolation of stress on financial markets. We sketch a simple overlapping generation framework. House price declines lead to a temporary drop in consumption, forcing a reallocation of labour from domestic to tradable industries. This leads to a loss in industry specific human capital, causing a jump in unemployment. The analysis yields a number of lessons for fiscal policy in the aftermath of a financial crisis and for the current EU framework for the evaluation of member states’ fiscal policy. Fiscal policy provided too little intergenerational insurance and the EU framework is an obstacle to do that.

Wage premia for newly hired employees

We investigate wage differences between newly hired and incumbent employees in identical functions using detailed personnel data from a large number of banks. We first show in a formal model of job switching that (i) incumbents earn less than new recruits when human capital is mostly general but (ii) the opposite is the case if specific human capital is sufficiently important. In the empirical analysis we find that, on average, new hires earn more than comparable incumbents but – using a novel measure for the importance of specific human capital – these wage premia indeed strongly depend on human capital specificity.

New implications of Lazear's skill-weights approach

A new approach to the theory of specific human capital, proposed by Lazear (2009), assumes that all skills are general but that firms use them with different weights attached. In Lazear's analysis, the decision to invest in the worker's acquisition of various skills is assumed to maximize the expected net joint surplus of the worker and the employer. This paper explores new implications of the skill-weights approach when the worker and the firm independently and non-cooperatively invest in the worker's skills.

Top Corporate Officers as Board Members: The Impact on Nonprofit Executive Compensation

The apparent weakness in nonprofit executive pay-for-performance links and perceived excessiveness of pay are two key reasons cited by critics demanding greater board action. Agency theorists assert that boards address potentially misaligned managerial incentives by strengthening pay-for-performance links. Hence, if board members are experienced with financial monitoring, then the link between financials-based metrics and executive pay will be stronger. Further, resource dependency theorists purport that nonprofits rely on board members in part to provide scarce and/or specific human capital. Hence, if board members provide expertise in organizational management, then executive pay raises will be smaller. To test these predictions, we identify ‘top corporate officers as board members’ as nonprofit board members who are also named top executives in the SP and smaller changes in pay. These results are economically significant, and robust to possible correlated omitted variables, potential self-selection bias, and two alternative explanations: top corporate officers as board members in small boards or who may be major donors. Our findings highlight how board members playing both oversight and operational roles impact executive pay practices.

The significance of firm and occupation specific human capital for hiring and promotions

This paper analyzes firms' hiring and promotion patterns, and infers the relative significance of the firm- and occupation-specific human capital required for each job rank. The results suggest that firm-specific skills are just as valuable as occupation-specific skills, and that the value of these specific skills increases in job rank. However, there is great heterogeneity across occupations. This paper also shows that the lengths of firm- and occupation-tenure are noisy measures of firm- and occupation-specific human capital, and contrasts our results with those of other recent studies on the returns to firm- and occupation-tenure for wages.

Human Capital-Intensive Firms and Symbolic Value Creation

AbstractThe aim of this paper is to study the process of symbolic value creation of human capital-intensive firms. Human capital is a critical resource for firms’ activities. Nevertheless, this dimension is often obscured by industrial economists. In the light of critical resource theory, we analyze how taking into account the inalienable and inimitable nature of specific human capital entails a reconsideration of the role and boundaries of the firm. We show that the firm seeks to coordinate the specialization of its key partners within the frame of its economic boundaries to ensure the long-term optimization of its potential of value. Therefore, the value of the firm depends on all the resources that the firm coordinates. Then we focus on the way HCIF can create different values. We suggest that the firm builds its competitive advantage on different forms of values, in particular the symbolic value incorporated in human capital. Finally, on the basis of these considerations, we identify the wealth included in the critical resources of the firm and to bring to light the process of symbolic value creation associated with it. We suggest that the firm is the value creating entity and the customer both recognizes and derives the value created from whatever it is that the firm provides. We propose a definition of this value and a schema of its creation process based on management works attempts. We conclude by proposing paths of research that could fruitfully be explored to further develop this new subject.

Development and gender: Longitudinal entrepreneurial gender effects of the inner-city Johannesburg street-trading context

An empirical investigation was undertaken into entrepreneurial gender effects within the inner-city street-trading context of Johannesburg, a large South African city. A cross-sectional non-parametric quantitative research design was applied in each of three consecutive years, 2008, 2009 and 2010, and a longitudinal investigation was enabled. Differences in earnings, rental stand operation, and the effects of specific and general human capital by gender were tested using non-parametric Kruskal–Wallis methods. Further testing of the non-parametric associations of each factor by gender was undertaken using non-parametric Spearman rho and Kendall tau measures. Male traders are found to earn more. However, a return on specific and general human capital is found for female traders. Security threats in this context might have a disproportionate effect on female street traders, and most specifically on female street traders of foreign origin.

How Do Teachers Improve? The Relative Importance of Specific and General Human Capital

One of the most consistent findings in the literature on teacher quality is that teachers improve with experience, especially in the first several years. This study extends this research by separately identifying the benefits of general teaching experience and specific curriculum familiarity. I find that both specific and general human capital contribute to teacher improvement and that recent specific experience is more valuable than distant specific experience. This paper also contributes to a broader literature on human capital acquisition, as it is among the first to examine human capital specificity using a direct measure of productivity. (JEL H75, I21, J24, J45)

Human capital intensity in technology-based firms located in Portugal: Does foreign ownership matter?

This paper contributes to the scarce empirical literature on the impact of foreign ownership on human capital intensity. New evidence is provided, based on a comprehensive, large-scale survey of technology-based firms located in Portugal. The key findings are that: (1) foreign ownership directly (and significantly) impacts a firm's general human capital (education); (2) foreign ownership indirectly (and significantly) impacts a firm's specific human capital (skills); (3) the total impact of foreign ownership on a firm's human capital intensity is higher for education- (general) than for skills- (specific) related human capital intensity. Giving the critical importance of both FDI and human capital development for an ‘intermediate’ economy like Portugal (lagging behind in terms of human capital stock, and seeming to have lost part of its attractiveness as an FDI location), the paper discusses related policy implications. It is believed that our results and conclusions may be useful for other countries facing similar challenges.

Does Founders' Human Capital Matter for Innovation? Evidence from Japanese Start‐ups

Using an original questionnaire survey, this paper explores whether and how founders' human capital affects the innovation outcomes of start‐ups. We found that founders with greater human capital are more likely to yield innovation outcomes. Because certain types of human capital may boost research and development () investment, which possibly results in innovation outcomes, we estimate the determinants of innovation outcomes by an instrumental variable probit model. Our findings suggest that specific human capital for innovation, such as prior innovation experience, is directly associated with innovation outcomes, whereas generic human capital, such as educational background, indirectly affects innovation outcomes through investment.

Is CEO Human Capital Related to Firm Performance?

The global economy experienced continuous growth from 2002 to 2007 until the U.S. subprime mortgage crisis caused instability in worldwide stock markets. Simultaneously, global CEO turnover continued to fall to 13.8 percent in 2007. In contrast, the CEO turnover rate in Australia increased to 18 percent in 2007. The purpose of this paper is to determine whether the type of CEO human capital investment is associated with firm distress which sequentially is associated with firm performance. The empirical study of Australian listed firms (2005-2008) shows that the probability of bankruptcy is negatively associated with CEO’s general human capital and that firm distress is a significant determinant of CEO turnover. A CEO with more valuable firm specific human capital is less likely to be replaced/leave which in turn is associated increasing subsequent financial performance. Increasing financial performance is associated with decreasing investment in general human capital. These results are important because they imply that CEO firm specific experience is more important for increasing firm performance than general managerial skills despite the fact that recent research suggests that general human capital has increased in importance over firm-specific human capital.

Specific and General Human Capital in an Endogenous Growth Model

In this paper, we define specific (general) human capital in terms of the occupations whose use is spread in a limited (wide) set of industries. We analyze the growth impact of an economy's composition of specific and general human capital, in a model where education and R&D are costly and complementary activities. The model suggests that a declining share of specific human capital, as observed in the Czech Republic, can be associated with a lower rate of long run growth. We also discuss optimal educational policies in the presence of market frictions.

The Effect of Specific Human Capital on Unit Performance – A Panel Data Analysis of Basketball Teams

Despite the interest in the influence of (specific) human capital on unit performance, scholars still find the relationship ambiguous. One reason for this is that few studies acknowledge that emplo...

Human capital depreciation and education level

Purpose– The purpose of this paper is to investigate the link between human capital depreciation and education level, with an emphasis on potential differences between general and specific education.Design/methodology/approach– A nonlinear wage equation, based on Arrazola and de Hevia's (2004) model, is estimated using data from the Swiss Labor Force Survey (SLFS) over the period 1998-2008, in order to estimate a human capital depreciation rate for several education groups.Findings– Human capital depreciation is significantly related to education type. Academic (“concept-based”) education protects workers more effectively against depreciation than vocational (“skill-specific”) education.Research limitations/implications– The SLFS survey is a rotating panel of five years and no retrospective data on earnings and employment are provided. A study of lifecycle earnings like the one proposed here would clearly benefit from a longer individual observation period.Practical implications– In all educational tracks, even vocational ones, a substantial time share should be devoted to the acquisition of general skills. Moreover, it is necessary to manage lifelong learning carefully in order not to waste initial investments in education.Originality/value– Instead of using a purely quantitative approach to separate workers by years of education, qualitative aspects of educational system are taken into account. Taking advantage of the Swiss educational system characteristics, workers are separated on the basis of their education type. Workers with vocational education (apprenticeships, professional and technical schools and universities of applied sciences) are assumed to possess a relatively specific human capital, compared to those with academic education (high schools and universities).