Article

Maximizing Value from Human Capital

Russell Coff

in The Oxford Handbook of Human Capital

Published in print January 2011 | ISBN: 9780199532162
Published online May 2011 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199532162.003.0015

Series: Oxford Handbooks in Business and Management

Maximizing Value from Human Capital

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This article describes two dilemmas for organizations seeking to derive a competitive advantage from human capital (HC). First, the very qualities such as knowledge tacitness and causal ambiguity that make employees' HC valuable, inimitable, and a source of competitive advantage to firms, make it difficult for firms to acquire, organize, retain, and motivate those employees. Second, employees will inevitably seek to maximize their share of the rents accruing from organizational use of their capital through wages, expenses, and benefits, thus only a portion of the rents may flow to shareholders. Strategies to reduce dependency on employees' idiosyncratic HC through knowledge codification and routinization risk increasing imitability. Firms must therefore address these HC dilemmas directly. The article proceeds to analyse issues associated with gaining a competitive advantage from HC. It proposes several ‘coping’ strategies to address turnover and information dilemmas

Keywords: human capital; shareholders; knowledge codification; routinization risk; HC dilemmas

Article.  9263 words. 

Subjects: Business and Management ; Human Resource Management ; Organizational Theory and Behaviour

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