Employee Incentives to Make Firm-Specific Investments: Implications for Resource-Based Theories of Corporate Diversification

13 Pages Posted: 23 Jul 2007

See all articles by Heli C. Wang

Heli C. Wang

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization

Jay B. Barney

Ohio State University (OSU) - Human Resource Research

Abstract

We argue that the risk associated with the value of a firm's core resources has an impact on employee decisions to make firm-specific investments, independent of the threat of opportunism that might exist in a particular exchange. We further explore mechanisms firms may adopt to mitigate the employee incentive problem stemming from the risk assiciated with core resource value. These arguments shed new light on resource-based theories of corporate diversification.

Suggested Citation

Wang, Heli and Barney, Jay, Employee Incentives to Make Firm-Specific Investments: Implications for Resource-Based Theories of Corporate Diversification. Academy of Management Review, Vol. 31, No. 2, pp. 466-476, 2006, Available at SSRN: https://ssrn.com/abstract=1002272

Heli Wang (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization ( email )

Clear Water Bay, Kowloon
Hong Kong

Jay Barney

Ohio State University (OSU) - Human Resource Research ( email )

700 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-3161 (Phone)

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