Human Capital and Agency Theory

J.‐C. Spender

in The Oxford Handbook of Human Capital

Published in print January 2011 | ISBN: 9780199532162
Published online May 2011 | | DOI:

Series: Oxford Handbooks in Business and Management

Human Capital and Agency Theory

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  • Business and Management
  • Organizational Theory and Behaviour
  • Business Strategy



This article considers the ‘obvious’ relationship between human capital (HC) and agency theory (AT) with two goals in mind. First, to show how principal–agent theory (PAT) – the AT variant most understood by agency theory – clarifies HC as a way of describing individuals in the organizational context. Second, to explore how PAT's own shortcomings illuminate possibilities implicit but underexplored in the HC literature; for while a workplace relationship between PAT and HC seems obvious, it is conceptually complicated. The article begins with a review of the two concepts' history and the research programs from which they emerged. After considering the PAT–HC interaction, it shows how HC might contribute to the theory of the firm. Many see the firm as a socioeconomic context in which HC and agency issues collide under management's direction as other forms of capital enter the mix.

Keywords: human capital; agency theory; principal–agent theory; PAT–HC interaction; agency issues

Article.  14910 words. 

Subjects: Business and Management ; Organizational Theory and Behaviour ; Business Strategy

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