Rediscovering the “Human” in strategic human capital

https://doi.org/10.1016/j.hrmr.2020.100781Get rights and content

Highlights

  • The paper argues economic thinking dominates the field of Strategic Human Capital and limits the research questions that can be asked.

  • The paper explores the impact of the concepts of free will, identity, meaning/purpose, community, and value on people's decisions regarding investments in human capital

  • The paper suggests new research questions that might better merge economic-based and psychological-based perspectives.

Abstract

While the field of strategic human capital (SHC) was created as a platform for dialogue between economics-based strategy researchers and psychology-based human resources (HR) researchers, it has increasingly become dominated by the economics-based logic. This paper argues that while such logic is not wrong, it is incomplete. By ignoring aspects of human nature such as free will, identity, meaning/purpose, community, and intrinsic value, it has unnecessarily limited the phenomenon to be studied and the research questions to be asked. I describe these concepts and how they might expand the SHC literature's view of determinants of employees' behavior, particularly their choices to invest in human capital. Finally, I discuss implications for research questions that might bridge the economics and psychology perspectives.

Introduction

The progress of any discipline comes as new ideas, frameworks, and theories build on, and sometimes replace older ideas, frameworks and theories. This often occurs through the importation or integration of one discipline with another, both of which attempt to explore and explain similar phenomena. The field of Strategic Human Capital (SHC) exemplifies such a process.

SHC evolved as an attempt to integrate two disparate literatures that were both studying the characteristics of people in organizations, and how those characteristics impacted firm performance (Wright, Coff, & Moliterno, 2014). In the Strategic Human Resource Management area, a number of largely psychology-trained scholars sought to examine theoretically (Lado & Wilson, 1994; Wright & McMahan, 1992) and empirically (Huselid, 1995; Delery and Doty, 1995; MacDuffie, 1995) how aspects of the workforce and the human resource (HR) practices used to manage them might drive performance. These efforts spawned a vast literature on how HR practices might impact psychologically-based processes such as turnover (Huselid, 1995) organizational commitment (Kehoe & Wright, 2013), organizational citizenship behaviors (Takeuchi, Lepak, Wang, & Takeuchi, 2007) and other variables that could be linked to firm performance. These researchers relied on two economic theories, the resource-based view (RBV) of the firm and human capital theory (HCT), as overarching frameworks, but still leaned heavily on psychological explanations for how HR practices and the firm's human resources could impact firm performance.

Simultaneously, a somewhat parallel literature was emerging among more economics-trained scholars looking at similar types of issues. These researchers examined “star” employees (Groysberg, 2009), mobility of employees (Aime, Johnson, Ridge, & Hill, 2010), and the aspects of human capital that could be sources of competitive advantage (Campbell, Coff, & Kryscynski, 2012; Coff, 1997). These researchers also grounded many of their analyses in the RBV and HCT, but provided much more depth of analysis of the economic concepts inherent in these theories such as rents, value capture, firm specific and general human capital, and rigorous definition of the concept of competitive advantage.

A group of scholars from both disciplines sought to create the field of SHC as a platform to bring together researchers from difference disciplines, particularly with the advent of the SHC Interest Group within the Strategic Management Society. The goal was to get these researchers to collaborate across disciplines in order to provide a more robust exploration of the role of human capital in organizations. A number of conferences have been held to encourage conversation and a few special issues of journals such as Journal of Management (Wright et al., 2014) and Academy of Management Perspectives (Nyberg & Wright, 2015) have been published. The purpose of this paper is not to document or expand upon the challenges in conducting such interdisciplinary research which have been covered elsewhere (Molloy, Ployhart, & Wright, 2011; Wright et al., 2014). Rather in this paper I argue that the field has become so dominated by economics-based thinking that it has lost track of the “human” aspect of SHC. While an economics-based approach to studying SHC phenomena has helped in answering some questions, ignoring the fundamental aspects of human nature has left additional questions completely unanswered. I believe that the field of SHC cannot maximize its explanatory value without rediscovering what it means to be human.

Section snippets

Strategic human capital

The SHC field has emerged and grown immensely over the past 10 years. While it has evolved, three main constructs seem to dominate the literature. First, human capital refers to “…the knowledge, information, ideas, skills, and health of individuals' (Becker, 2002: 1). Others within the SHC field have more narrowly focused their treatment of human capital to be those characteristics of people (knowledge, skills, abilities and other characteristics) that provide value to organizations (Lepak &

Assumptions of the economic approach

A number of explicit or implicit assumptions have emerged within the economics-based SHC literature. These assumptions are seldom stated clearly as such, but a reading of the papers in this field reveals some consistent themes that should be considered as assumptions.

First, most papers in the field treat people as the traditional ratio-economic man that has become almost synonymous with an economic approach to understanding human behavior. This means that individuals are assumed to make

Exploring the human aspects of strategic human capital

While the SHC field began with voices from both the economics and psychology conversations, the voices from psychology seem to be getting weaker and weaker. Certainly part of this stems from the focus on economic value (profits, rents, competitive advantage, etc.) emerging as the primary dependent variables, ones that lend themselves more to the conversation in economics. However, at a broader level, the financial/economic success of an organization stems largely from the behaviors of those

Bringing it all together

The caution against the process of studying a phenomenon with an overemphasis of one discipline or theoretical perspective at the expense of another is certainly not new, especially within the general field of human resources. For instance, Delbridge and Keenoy (2010) cautioned against the overemphasis of a “managerialistic” approach to studying HRM and argued that Critical Human Resource Management might enrich the methodological and theoretical approaches to studying phenomenon within the

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