While previous studies have examined the rewards available to individuals inside entrepreneurial firms, entrepreneurial experience may provide rewards that are independent of the entrepreneurial context. Building on human capital theory, this study provides theoretical explanations for the effects of experience at a start-up on earnings across an individual's career and then examines these implications in the context of California's semiconductor industry. Comparing the career trajectories of employees who join start-ups with a matched control group of comparable workers without start-up experience, I perform a counterfactual analysis and find that start-up experience in this context has a persistent positive effect on earnings that extend outside the entrepreneurial environment. The results from the matched sample are consistent with the development and revelation of valuable general human capital through entrepreneurial experience and suggest that the rewards to entrepreneurship are not limited to just the rewards available inside entrepreneurial firms.
The strategy literature often emphasizes firm-specific human capital as a source of competitive advantage based on the assumption that it constrains employee mobility. This paper first identifies three boundary conditions that limit the applicability of this logic. It then offers a more comprehensive framework of human capital based advantage that explores both demand and supply-side mobility constraints. The critical insight is that these mobility constraints have more explanatory power than the firm-specificity of human capital.
This paper explores complementarities between human capital management strategies and their Research and Development (R&D) strategies in high-technology firms. Using data on a large sample of electronics firms in seven states from an employer–employee matched database, we examine the relationship between firm-level R&D and firms’ human capital strategies. Our results indicate that firms with high R&D investment are more likely to implement externally focused human capital strategies, while firms with low R&D investment are more likely to implement internally focused human capital strategies. Further, firms that adopt both high R&D investment and an externally focused human capital management strategy show higher productivity than comparable firms that implement an internally focused strategy. Our findings provide evidence of complementarities between firm R&D and the absorption of knowledge embedded in externally sourced individual human capital.
We explore the strategic implications of firm compensation dispersion on the heterogeneous turnover outcomes of employee mobility and entrepreneurship. We theorize that employees seek compensation systems that provide the greatest rewards for their level of performance, and thus individuals’ turnover decisions are affected by the interaction of individual performance with the firm’s compensation dispersion relative to its competitors. We test our theory using linked employer-employee data from the legal services industry. We find that individuals with extreme high performance are less likely to leave firms that offer higher compensation dispersion than competitors, however, if they do leave these employers, they are more likely to create new ventures. In contrast, employees with extreme low performance are more likely to leave firms with more compensation dispersion than competitors, and these individuals are less likely to engage in new venture creation.
We theorize that the value provided by the firm’s complementary assets has important implications for the exit decisions of employees and their subsequent effects on the firm’s performance. Using linked employee-employer data from the U.S. Census Bureau on legal services, we find that employees with higher earnings are less likely to leave relative to employees with lower earnings, but if they do leave, they are more likely to create a new venture than join another firm. Further, employee entrepreneurship has a larger adverse impact on source firm performance than moves to established firms, even controlling for observable employee quality. Our findings suggest that the adverse impact of losing valuable human capital is affected by both the quality and the destination of the persons leaving.
We examine the conditions around firm use of “inventor bricolage”, or the reconstruction of technological capabilities through reallocation of extant individual inventors to address new opportunities embodied in patents. Empirically, we examine the dynamics of both firm and individual patenting activity in publicly-traded Life Science Diagnostic firms to explore how inventor bricolage is related to firms’ existing research and development (R&D) capabilities and firms’ acquisition of external capabilities through merger and acquisition (M&A) activities. Evidence at the firm level suggests that breadth of the human capital of the inventive workforce and collaboration with co-workers with relevant experience is positively related to inventor bricolage. At the inventor level, the fewer patents an inventor has, the broader the individual’s prior patent portfolio, and the more coworkers with relevant experience, the more likely inventors will patent in a new area. M&A does not appear to have an impact of managing existing human capital. R&D managers should assign inventors with less assimilative capacity and more creative capacity in teams where there is some relevant experience in order to reallocate human capital in research and development opportunities.
The paper identifies some common problems encountered in quantitative methodology and provides information on current best practice to resolve these problems. We first discuss issues pertaining to variable measurement and concerns regarding the underlying relationships among variables. We then highlight several advances in estimation methodology that may circumvent issues encountered in common practice. Finally, we discuss approaches that move beyond existing research designs, including the development and use of datasets that embody linkages across levels of analysis, or combine qualitative and quantitative methods.
This review begins with a discussion of how technology affects wage structures. The literature reviewed is divided into two segments—studies of the impact of technological change on wages (and growing inequality), productivity, and employment and studies of the interrelationship of technology, human resource systems, and labor productivity. We conclude with suggestions for future research topics. Overall, we find that technological change accounts for only part of the changing wage structure in the United States, whereas changes in institutional forces that affect the creation of industry rents and the distribution of rents are also an important factor.
Using case study data gathered between 1993 and 1996, the authors investigate how automation of information handling and materials handling affected employment distribution, skill acquisition, work activities, and compensation in 23 semiconductor plants in four countries. Information handling automation is skill-biased technical change, which leads to use of relatively more technicians and engineers. In the sample studied, it widened the skill gap across occupations, and coincided with higher initial wages for all employees and shorter career ladders for engineers. Materials handling automation also widened the skill gap, but coincided with employment of relatively more operators and with lower pay across all occupations. Although technological change widened the skill gap between occupations and was biased toward employment of high-skill workers in the sample, the authors do not find that it led to increased wage inequality in the semiconductor plants they examine.