Session 143

The Strategic Human Capital Process: A look inside the sausage factory

Track L

Date: Tuesday, October 9, 2012


Time: 11:00 – 12:15

Common Ground

Room: Club H


  • David Lepak, University of Massachusetts Amherst

Title: Effects of Top Management Team Human Capital on HR Strategy Formulation Process: A Theoretical Framework


  • Natalia Garcia, University of Cadiz
  • Fernando Martín-Alcazar, University of Cadiz
  • Gonzalo Sanchez-Gardey, University of Cadiz

Abstract: Many past studies have focused on the role of top management team (TMT) composition in strategic decision making. Specifically, Upper Echelon Theory (UET) has been the most useful framework in this area. It analyzes TMT composition using demographic variables as a surrogate of cognitive attributes. However, conclusions obtained have been inconclusive, particularly to what composition effects mean. On the other hand, there is a lack of research on the effects of TMT human capital on human resources (HR) strategy formulation process. Therefore, drawing on recent literature, we propose a process model which considers explicitly human capital influence in HR strategy definition. Finally, we will also introduce “system strength” construct, proposed by Bowen and Ostroff (2004), as a result of the formulation process.

Title: HR in the Executive Suite: The Antecedents of HR Executive Presence in IPO Firms


  • Christopher Reutzel, Sam Houston State University
  • Carrie Belsito, Western Illinois State University

Abstract: This study represents the first systematic examination of HR executive presence. We extend the work of Cyr and colleagues (2000) by utilizing contingency theory (Lawrence & Lorsch, 1967) to consider the role of industry, strategy, and executive level characteristics in predicting the presence of HR executives in IPO firms. Preliminary results of hypothesis tests are supportive of the model developed in this study.

Title: Human Capital Acquisition and Establishment Performance


  • Clint Chadwick, University of Kansas

Abstract: Using a sample of 2155 private sector establishments, this paper contrasts investments in training and in-vestments in selection—two distinct ways to acquire human capital—in models predicting establishment perfor-mance. In general, establishment performance is positively related to training but negatively related to selection. To estimate these relationships while accounting for endogeneity of establishments’ training and selection choices, this paper uses two-stage least squares (2SLS) methodology. The 2SLS results differ considerably from OLS estimates of the same relationships. The analysis demonstrates that HRM practices can have markedly different relationships with establishment performance, opening the door for bringing strategic choice more strongly into HRM research.

Title: Intellectual Capital Valuation and Relation to Profitability: A Financial Statement Approach


  • Renato Sydler, ETH Zurich
  • Stefan Haefliger, City University London
  • Robert Pruksa, ETH Zurich

Abstract: The measurement of IC is, in contrast to its definitions, a highly discussed topic within the area of intellectual capital (IC). This paper presents a way to measure IC in order to make a quantitative assessment whether IC supports the knowledge-based view, which explains the long‐lived difference in firm profitability, and creates a sustainable competitive advantage. We do so by having a systematic look at the landscape of IC valuation methods applied and addressed in the literature and extending one model so that we can use monetary proxies for human, structural and relational capital. Our results show that IC creating expenses indeed create IC assets in the subsequent year and that an increase in IC is associated with a higher return on assets over time.

Title: Qualitative Differences in Executive Risk Taking: Examining Performance Consequences of Risk Taking in Response to Equity Based Pay


  • Geoffrey Martin, University of Melbourne
  • Luis Gomez-Mejia, Notre Dame University
  • Robert Wiseman, Michigan State University

Abstract: This study examines qualitative differences in risk taking associated with executive incentive alignment systems by addressing the question: when is executive risk taking associated with equity based pay good or bad for shareholders? Extant behavioural agency research examining executive compensation has focused upon predicting risk behavior in response to equity based pay; we extend behavioral agency research to the study of financial alignment between agent and principal. Combining the behavioural agency model with theories of heed, our theory predicts that risk taking is more likely to be applied with heed when executives have more to gain (prospective wealth) or more to lose (current wealth). In doing so, we build a richer understanding of both the governance implications of equity based pay and the relationship between executive compensation and firm performance.

Title: Real Options Framework as Strategic Human Resource Practices Application for Information Technology Industry Employees


  • Som Sekhar Bhattacharyya, National Institute of Industrial Engineering
  • Kartik Vyas, Persistent Systems Ltd.

Abstract: The growth of IT firms has created a demand for quality IT industry employees in substantive quantity in India. IT firms provide Training and Development (T&D) inputs for developing better skills of employees for better employee and superior firm performance. T&D input require firm investment. It also creates enhanced market demand for the trained employee. High growth area like IT, firms not only compete for market but also for employees. A trained employee might leave the firm that provided the training to join a rival firm which offers relatively better salary, a catch -22 situation. The authors propose a conceptual real options theory framework for the firms to use options to mitigate both investment risks and retention of the trained human resources.

All Sessions in Track L...

Sun: 08:00 – 09:15
Session 133: Transitioning from Faculty to Administrator: Building Strategic Human Capital
Sun: 09:30 – 10:45
Session 134: Management Practices across Firms and Countries
Sun: 11:15 – 12:30
Session 135: Linked Employer-Employee Data and Strategic Human Capital Research
Mon: 08:00 – 09:15
Session 144: Stars and Human Capital Flows
Mon: 09:30 – 10:45
Session 140: Knowledge Management & Knowledge Structures: Who knows?
Mon: 13:30 – 14:45
Session 112: CEO and TMT Turnover: Firm Implications
Session 138: Value Creation & Appropriation: Take the money and run
Mon: 16:30 – 17:45
Session 139: Impact of Human Capital Loss: Going Mobile
Tue: 08:00 – 09:15
Session 137: CEO Human Capital: Take a Little off the Top
Tue: 11:00 – 12:15
Session 143: The Strategic Human Capital Process: A look inside the sausage factory
Tue: 14:15 – 15:30
Session 141: Impact of the Acquisition & Loss of Human Capital: Putting a new spin on things
Tue: 15:45 – 17:00
Session 145: Individual Differences & Human Capital-based Advantage: Vive la différence
Tue: 17:30 – 18:45
Session 142: Social Networks & Human Capital: Tying things together
Session 215: CEO Personality and Characteristics Influencing Decision Making

Strategic Management Society