Human Capital Investment in Supply Chain Coordination: Evidence from Online Job Postings

Abstract

Using granular online job posting data, we examine the coordination of human capital investment between long-term bilateral supply chain partners. Using a unique dataset of online job postings from publicly listed firms and their supply chains, we show a significant and positive contemporaneous correlation and lead-lag effect between the job postings of principal customers and their dependent suppliers, which is stronger for supplier firms with higher dependence on their principal customers. Relying on the random outcomes of H-1B visa lotteries as an instrumental variable, we establish the causal relationship for suppliers’ labor hiring catering to their major customers. Moreover, supply chain partners are more likely to recruit workers with similar general skills and distinct specialized skills simultaneously. At last, we find that the disruption of such relationship-specific human capital investment leads to negative economic consequences, i.e., higher supply chain discontinuity risk, lower future sales, and weaker market performance, along the supply chain. Overall, our paper shows that long-term supply chain relationships lead to human capital coordination, which provides valuable insights into the potential risks and benefits for policymakers, managers, and investors in understanding the importance of relationship-specific human capital investment in supply chain coordination.

Keywords: Supply Chain Coordination, Human Capital, H-1B Lottery

JEL Classification: E22, G30, J24, L16