Strategic Human Capital Management in the Context of Cross-Industry and Within-Industry Mobility Frictions

43 Pages Posted: 25 Mar 2016 Last revised: 9 Oct 2018

See all articles by Evan Starr

Evan Starr

University of Maryland Robert H Smith School of Business

Martin Ganco

University of Wisconsin - Madison - Department of Management and Human Resources

Benjamin A. Campbell

The Ohio State University - Fisher College of Business

Date Written: March 22, 2018

Abstract

We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively isolate individual human capital, ultimately changing the firm’s make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms’ human capital management practices towards internal development of human capital relative to acquisition on the external market.

Keywords: Employee mobility, Industry Specific Human Capital, Strategic human capital, Covenants Not to Compete, Labor Market Frictions

JEL Classification: J2, J3, J4, J6, K3, L41, M5

Suggested Citation

Starr, Evan and Ganco, Martin and Campbell, Benjamin A., Strategic Human Capital Management in the Context of Cross-Industry and Within-Industry Mobility Frictions (March 22, 2018). Strategic Management Journal; Robert H. Smith School Research Paper No. RHS 2753720. Available at SSRN: https://ssrn.com/abstract=2753720 or http://dx.doi.org/10.2139/ssrn.2753720

Evan Starr (Contact Author)

University of Maryland Robert H Smith School of Business ( email )

United States
(301) 405-2320 (Phone)

Martin Ganco

University of Wisconsin - Madison - Department of Management and Human Resources ( email )

Madison, WI
United States

Benjamin A. Campbell

The Ohio State University - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

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