Taking It to Another Level: Do Personality-Based Human Capital Resources Matter to Firm Performance?

Abstract

Drawing on the attraction-selection-attrition perspective, strategic human resource management scholarship, and recent human capital research, this study explores organization-level emergence of personality (i.e., personality-based human capital resources) and its direct, interactive, and (conditional) indirect effects on organization-level outcomes based on data from 6,709 managers across 71 organizations. Results indicate that organization-level mean emotional stability, extraversion, and conscientiousness are related to organization-level managerial job satisfaction and labor productivity but not to financial performance. Further, organization-level mean and variance in emotional stability interact to predict all three organization-level outcomes, and organization-level mean and variance in extraversion interact to predict firm financial performance. Specifically, the positive effects of organization-level mean emotional stability and extraversion are stronger when organization-level variance in these traits is lower. Finally, organization-level mean emotional stability, extraversion, and conscientious are related to firm financial performance indirectly via labor productivity, and the indirect effects are more positive when organization-level variance in those personality traits is lower. Overall, the findings suggest that personality-based human capital resources demonstrate tangible effects on organization-level outcomes. Theoretical and practical implications of these findings are discussed along with study limitations and future research directions.

Keywords: personality, performance, human capital resources, attraction-selection-attrition