Showing papers on "Human capital published in 2005"

Social Capital, Networks, and Knowledge Transfer

Abstract: We examine how social capital dimensions of networks affect the transfer of knowledge between network members. We distinguish among three common network types: intracorporate networks, strategic alliances, and industrial districts. Using a social capital framework, we identify structural, cognitive, and relational dimensions for the three network types. We then link these social capital dimensions to the conditions that facilitate knowledge transfer. In doing so, we propose a set of conditions that promote knowledge transfer for the different network types.

The Influence of Intellectual Capital on the Types of Innovative Capabilities

Abstract: We examined how aspects of intellectual capital influenced various innovative capabilities in organizations. In a longitudinal, multiple-informant study of 93 organizations, we found that human, organizational, and social capital and their interrelationships selectively influenced incremental and radical innovative capabilities. As anticipated, organizational capital positively influenced incremental innovative capability, while human capital interacted with social capital to positively influence radical innovative capability. Counter to our expectations, however, human capital by itself was negatively associated with radical innovative capability. Interestingly, social capital played a significant role in both types of innovation, as it positively influenced incremental and radical innovative capabilities. It is widely accepted that an organization’s capability to innovate is closely tied to its intellectual capital, or its ability to utilize its knowledge resources. Several studies have underscored how new products embody organizational knowledge (e.g., Stewart, 1997), described innovation as a

Consumption and Portfolio Choice over the Life Cycle

Abstract: This article solves a realistically calibrated life cycle model of consumption and portfolio choice with non-tradable labor income and borrowing constraints. Since labor income substitutes for riskless asset holdings, the optimal share invested in equities is roughly decreasing over life. We compute a measure of the importance of human capital for investment behavior. We find that ignoring labor income generates large utility costs, while the cost of ignoring only its risk is an order of magnitude smaller, except when we allow for a disastrous labor income shock. Moreover, we study the implications of introducing endogenous borrowing constraints in this incomplete-markets setting. Copyright 2005, Oxford University Press.

The Worldwide Expansion of Higher Education in the Twentieth Century

Abstract: The authors analyze the rapid worldwide expansion of higher educational enrollments over the twentieth century using pooled panel regressions. Expansion is higher in economically developed countries (in some but not all analyses) as classic theories would have it. Growth is greater where secondary enrollments are high and where state control over education is low, consistent with conflict and competition theories. Institutional theories get strong support. growth patterns are similar in all types of countries, are especially high in countries more linked to world society, and sharply accelerate in virtually all countries after 1960. The authors theorize and operationalize the institutional processes involved, which include scientization, democratization and the expansion of human rights, the rise of development planning, and the structuration of the world polity. With these changes, a new model of society became institutionalized globally-one in which schooled knowledge and personnel were seen as appropriate for a wide variety of social positions, and in which many more young people were seen as appropriate candidates for higher education. An older vision of education as contributing to a more closed society and occupational system-with associated fears of "over-education "-was replaced by an open-system picture of education as useful "human capital "for unlimited progress. The global trends are so strong that developing countries now have higher enrollment rates than European countries did only afew decades ago, and currently about one-fifth of the world cohort is now enrolled in higher education.

An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance

Abstract: Purpose – The purpose of this article is to investigate empirically the relation between the value creation efficiency and firms’ market valuation and financial performance.Design/methodology/approach – Using data drawn from Taiwanese listed companies and Pulic's Value Added Intellectual Coefficient (VAIC™) as the efficiency measure of capital employed and intellectual capital, the authors construct regression models to examine the relationship between corporate value creation efficiency and firms’ market‐to‐book value ratios, and explore the relation between intellectual capital and firms’ current as well as future financial performance.Findings – The results support the hypothesis that firms’ intellectual capital has a positive impact on market value and financial performance, and may be an indicator for future financial performance. In addition, the authors found investors may place different value on the three components of value creation efficiency (physical capital, human capital, and structural cap...

Editorial Setting new agendas: critical perspectives on Corporate Social Responsibility in the developing world

Abstract: The article discusses Corporate Social Responsibility (CSR) in the developing world. Numerous claims have been made about the contribution CSR can make to poverty alleviation and other development goals. However, the contributors to this issue have reached the conclusion that current CSR approaches do not warrant such claims. A critical agenda is needed because many policy-makers see business as important in meeting development challenges: not just those of economic growth, but also in areas such as combating HIV/AIDS, reducing poverty and building human capital.

Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital

Abstract: From 1940 to 1990, a 10 percent increase in a metropolitan area's concentration of college-educated residents was associated with a .8 percent increase in subsequent employment growth. Instrumental variables estimates support a causal relationship between college graduates and employment growth, but show no evidence of an effect of high school graduates. Using data on growth in wages, rents and house values, I calibrate a neoclassical city growth model and find that roughly 60 percent of the employment growth effect of college graduates is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This finding contrasts with the common argument that human capital generates employment growth in urban areas solely through changes in productivity.

Human Capital Investment: The Returns from Education and Training to the Individual, the Firm and the Economy

Abstract: This paper provides a non-technical review of the evidence on the returns to education and training for the individual, the firm and the economy at large. It begins by reviewing the empirical work that has attempted to estimate the true causal effect of education and training on individual earnings, focusing on the recent literature that has attempted to control for potential biases in the estimated returns to education and training. It then moves on to review the literature that has looked at the returns from human capital investments to employers. Lack of suitable data and methodological difficulties have resulted in a paucity of studies that have carried out sound empirical work on this issue. In the final part of the review, we look at the work that has tried to assess the contribution of human capital to national economic growth at the macroeconomic level. This work has generally involved using either a ‘growth accounting’ theoretical framework or ‘new growth’ theories. Although the empirical macroeconomic evidence that accompanies this work does not generally allow one to distinguish between the two approaches, there is a substantial body of evidence on the contribution of education to economic growth.

The Psychological Capital of Chinese Workers: Exploring the Relationship with Performance

Abstract: Everyone knows about China's huge population and the fast-growing economy. Although macro-level sociological and economic analyses have given some attention to the linkage between the two, at the micro level, the relationship between human resources and, more specifically, psychological capital of Chinese workers and their performance has been largely ignored. Within the context of three factories (two private and one state-owned) in the People's Republic of China, this exploratory study examined the relationship of a sample (n=422) of Chinese workers’ positive psychological capital states and their performance. Results indicated the workers’ positive states of hope, optimism, and resiliency, separately and when the three were combined into a core construct of psychological capital, significantly correlated with their performance, as rated by their supervisors. An analysis of workers in one of the factories (n=272) also found a significant relationship between the workers’ positive psychological capital and the performance outcome of relative merit-based salary. Limitations, future research, and practical implications conclude the article.

International Migration, Remittances, and the Brain Drain

Abstract: Knowledge of the economic effects of migration, especially its impact on economic development, is rather limited. In order to expand knowledge on migration, and identify policies and reforms that would lead to superior development outcomes, this volume presents the results of a first set of studies carried out on the subject. Current demographic trends in both developed and developing countries are pointing toward significant, potential economic gains from migration. The labor forces in many developed countries are expected to peak around 2010, and decline by around 5 percent in the following two decades, accompanied by a rapid increase in dependency ratios. Conversely, the labor forces in many developing countries are expanding rapidly, resulting in declines in dependency ratios. This imbalance is likely to create strong demand for workers in developed countries' labor markets, especially for numerous service sectors that can only be supplied locally. There are large north-south wage gaps, however, especially for unskilled and semiskilled labor. Part 1 of this book, Migration and Remittances, examines the determinants of migration, and the impact of migration and remittances on various development indicators, and measures of welfare. Among these are poverty and inequality; investments in education, health, housing and other productive activities; entrepreneurship; and child labor and education. It focuses on different source countries, use data collected via different methodologies, and employ different econometric tools. Their results, however, are surprisingly consistent. Part 2, Brain Drain, Brain Gain, Brain Waste, focuses on issues related to the migration of skilled workers, that is, the brain drain. It presents the most extensive database on bilateral skilled migration to date, and also examines a number of issues associated with the brain drain, that have not been emphasized in the literature so far, uncovers a number of interesting and unexpected patterns, and, provides answers to some of the debates. This volume deals essentially with economically motivated south-north migration, whose principal cause is, in most cases, the difference in (the present value of) expected real wages, adjusted for migration costs.

Talentship, talent segmentation, and sustainability: A new HR decision science paradigm for a new strategy definition

Abstract: Two paradigm shifts are discussed here: talentship and sustainability. First, the traditional service-oriented HR focus must be extended to a “decision science” that enhances decisions about human capital. We call this decision science talentship. It includes talent segmentation, or identifying pivotal talent pools where the quality and/or availability of human capital makes the biggest difference to strategic success. Second, HR and business leaders increasingly define organizational effectiveness beyond traditional financial outcomes to encompass sustainability—achieving success today without compromising the needs of the future. A common strategic human capital decision science can reveal pivotal talent under both traditional and sustainability-based definitions, and thus uncover important insights about the talent implications of the shifting definition of strategic success. © 2005 Wiley Periodicals, Inc.

Social capital: a fad or a fundamental concept?*

Abstract: Social capital is an essential complement to the concepts of natural, physical and human capital and can be usedfor beneficial or harmful ends-or simply be allowed to dissipate. While allforms of capital are essentialfor development, none of them are sufficient in and of themselves. In this paper, Ifocus first on the concept of human-made capital and examine some of the essential similarities between physical, human, and social capital. In the second section, four differences between physical and social capital will be examined, including: (a) social capital does not wear out with use, but rather with disuse; (b) social capital is not easy to observe and measure; (c) social capital is hard to construct through external interventions; and (d) national and regional governmental institutions strongly affect the level and type of social capital available to individuals to pursue long-term development efforts. The third section will discuss the problem of creating social capital and present a game-theoretic analysis of how a group offarmers creates rules to allocate the benefits and costs of building and operating their own irrigation system. Empirical evidence derivedfrom a study of 150 irrigation systems in Nepal supports the conclusions of this analysis. The last section is devoted to the policy significance of the theoretical and empiricalfindings presented in this paper.

Education and Nonmarket Outcomes

Abstract: This chapter explores the effects of education on nonmarket outcomes from both theoretical and empirical perspectives. Examples of outcomes considered include general consumption patterns at a moment in time, savings and the rate of growth of consumption over time, own (adult) health and inputs into the production of own health, fertility, and child quality or well-being reflected by their health and cognitive development. They are distinguished from the labor market outcomes of education in terms of higher earnings and wage rates. The focus is on identifying causal effects of education and on mechanisms via which these effects operate. The chapter pays a good deal of attention to the effects of education on health for a variety of reasons. They are the two most important sources of human capital: knowledge capital and health capital. They interact in their levels and in the ways they affect the cost and usefulness of the other. There is a large literature addressing the nature of their complementarities. While each affects the production and usefulness of the other, there are important dynamics of their interaction, seen in the age-structure of the net and gross production of the two. This sequencing also affects their optimal amounts. In the conceptual foundation section, models in which education has productive efficiency and allocative efficiency effects are considered. These frameworks are then modified to allow for the endogenous nature of schooling decisions, so that observed schooling effects can be traced in part to omitted "third variables" such as an orientation towards the future. An additional complication is that schooling may contribute to a future orientation in models with endogenous preferences. The empirical review provides a good deal of evidence for the proposition that the education effects are causal but is less conclusive with regard to the identification of specific mechanisms.

Finance, firm size and growth

Abstract: The authors examine whether financial development boosts the growth of small firms more than large firms and hence provides information on the mechanisms through which financial development fosters aggregate economic growth. They define an industry's technological firm size as the firm size implied by industrial specific production technologies, including capital intensities and scale economies. Using cross-industry, cross-country data, the results indicate that financial development exerts a disproportionately large effect on the growth of industries that are technologically more dependent on small firms. This suggests that financial development accelerates economic growth by removing growth constraints on small firms and also implies that financial development has sectoral as well as aggregate growth ramifications.

The divergence of human capital levels across cities

Abstract: . Over the past 30 years, the share of adult populations with college degrees increased more in cities with higher initial schooling levels than in initially less educated places. This tendency appears to be driven by shifts in labor demand as there is an increasing wage premium for skilled people working in skilled cities. In this article, we present a model where the clustering of skilled people in metropolitan areas is driven by the tendency of skilled entrepreneurs to innovate in ways that employ other skilled people and by the elasticity of housing supply.

An empirical investigation of the relationship between intellectual capital and firms market value and financial performance

Abstract: Purpose – The purpose of this article is to investigate empirically the relation between the value creation efficiency and firms’ market valuation and financial performance. Design/methodology/approach – Using data drawn from Taiwanese listed companies and Pulic’s Value Added Intellectual Coefficient (VAICe) as the efficiency measure of capital employed and intellectual capital, the authors construct regression models to examine the relationship between corporate value creation efficiency and firms’ market-to-book value ratios, and explore the relation between intellectual capital and firms’ current as well as future financial performance. Findings – The results support the hypothesis that firms’ intellectual capital has a positive impact on market value and financial performance, and may be an indicator for future financial performance. In addition, the authors found investors may place different value on the three components of value creation efficiency (physical capital, human capital, and structural capital). Finally, evidence is presented that R&D expenditure may capture additional information on structural capital and has a positive effect on firm value and profitability. Originality/value – The results extend the understanding of the role of intellectual capital in creating corporate value and building sustainable advantages for companies in emerging economies, where different technological advancements may bring different implications for valuation of intellectual capital.

Roles of Social Capital in Venture Creation: Key Dimensions and Research Implications*

Abstract: This study was built upon Nahapiet and Ghoshal's three dimensions of social capital--structural, relational, and cognitive. It addresses three research questions: (1) Are there significant differences in social capital between nascent entrepreneurs and the general public (control group)? (2) Are there significant differences in social capital between technology and nontechnology nascent entrepreneurs? (3) How do the three dimensions of social capital interact among themselves across different sample groups? These questions were examined by using the Panel Study of Entrepreneurial Dynamics data set. Results suggest that there are no significant differences in various dimensions of social capital between nascent entrepreneurs and the general public. What differentiates the two groups is not the amount of social capital but the patterns of association among its different dimensions. Additionally, the authors found that technology-based nascent entrepreneurs tend to have a higher degree of relational capital than their nontechnology counterparts. Implications and future research directions are discussed. Introduction Researchers studying social capital are centrally concerned with the significance of relationships as a resource for social action (Burt 1992; Baker 1990; Coleman 1988, 1990; Bourdieu 1985). The term social capital has traditionally been conceptualized as a set of social resources embedded in relationships (for example, Burt 1992; Loury 1977). It takes a sociological view of human action and perceives individuals as actors who are shaped by societal factors. Early usage highlighted the central importance of the development of individuals in community social organizations (Loury 1977; Jacobs 1965). A broader conceptualization presents social capital as including not only social relationships but also the norms and values associated with them (for example, Tsai and Ghoshal 1998; Putnam 1995; Coleman 1990). Social capital is therefore described by researchers as an asset embedded in the relationships of individuals, communities, networks, or societies (Nahapiet and Ghoshal 1998; Burt 1997; Walker, Kogut, and Shan 1997). The concept has been applied to a wide range of social phenomena, with focused attention on the role of social capital as an influence on compensation of chief executive officers (CEOs) (Belliveau, O'Reilly, and Wade 1996), individual occupational attainment (Lin and Dumin 1986), economic performance of firms (Baker 1990), the development of human capital (Coleman 1988), industry creation (Aldrich and Fiol 1994), and firm growth (Ostgaard and Birley 1994). More recently, the theory of social capital has been expanded to the field of entrepreneurship research. At the company level, the entrepreneurship literature has highlighted the significance of social capital in understanding how firms create and manage a network and what the outcomes are (e.g., Florin, Lubatkin, and Schulze 2003; Larson and Starr 1993; Aldrich and Zimmer 1986). At the individual level, studies have demonstrated that an entrepreneur's personal network allows access to resources that are not possessed internally (Ostgaard and Birley 1994). The general consensus is that a high level of social capital, built on a favorable reputation, relevant previous experience, and direct personal contact, often assists entrepreneurs in gaining access to venture capitalists, key competitive information sources, potential customers, and others (for example, Florin, Lubatkin, and Schulze 2003). The availability of resources made possible by entrepreneurial networks greatly enhances the survival and growth potential of new firms (Bruderl and Preisendorfer 1998). Although the theory of social capital has made significant inroads into entrepreneurship research, there are a number of limitations in how the concept is explored. First, social capital has been mainly defined and operationalized as a unidimensional rather than multidimensional construct, with much emphasis placed on the network or structural component. …

Democracy and Economic Growth: A Historical Perspective

Abstract: Recent studies appear to show that democracy has no robust association with economic growth. Yet all such work assumes that the causal effect of democracy can be measured by a country's regime status in a particular year (T), which is correlated with its growth performance in a subsequent period (T+l). The authors argue that democracy must be understood as a stock, rather than a level, measure. That is, a country's growth performance is affected by the number of years it has been democratic, in addition to the degree of democracy experienced during that period. In this fashion, democracy is reconceptualized as a historical, rather than a contemporary, variable—with the assumption that long-run historical patterns may help scholars to understand present trends. The authors speculate that these secular-historical influences operate through four causal pathways, each of which may be understood as a type of capital: physical capital, human capital, social capital, and political capital. This argument is tested in a crosscountry analysis and is shown to be robust in a wide variety of specifications and formats.

Human Capital Theory and Venture Capital Firms: Exploring

Abstract: Human capital theory is used to investigate the impact of the education and experience of top management teams (TMTs) on the number of "home runs" (portfolio companies that go public) and "strike outs" (portfolio companies that go bankrupt) experienced by those teams' venture capital firms (VCFs). Taken together, the hypotheses suggest that TMTs with industry experience in law, finance, and consulting, as well as advanced education in business, law, science, and the humanities, have more home runs and fewer strike outs in their portfolios. Data on the education and industry experience of 749 TMT members from 112 VCFs were used to test these hypotheses.Although the data do not support all of the hypotheses, they indicate that general human capital is positively associated with home runs. However, specific human capital (such as law experience or education in the humanities and science) is associated with strike outs.Clearly, particular aspects of human capital contribute to some, but not all, dimensions of performance. (SAA)

Investment Climate and Firm Performance in Developing Economies

Abstract: Drawing on recently completed firm‐level surveys in Bangladesh, China, India, and Pakistan, this article investigates the relationship between the investment climate and firm performance These standardized surveys of large, random samples of firms in common sectors reveal that objective measures of the investment climate vary significantly across countries and across locations within these countries We focus primarily on measures of the time or monetary cost of different bottlenecks (eg, days to clear goods through customs, days to get a telephone line, and sales lost to power outages) For many of these costs, the obstacles are lower in China than in Bangladesh or India, which in turn are higher than in Pakistan There is also systematic variation across cities within countries We estimate a production function for garment firms and show that total factor productivity is systematically related to the investment climate indicators Factor returns (wages for a given quality of human capital a

'I Just Couldn't Fit It In': Gender and Unequal Outcomes in Academic Careers.

Abstract: This article reports on the findings of two pieces of research that were designed to test and challenge widely accepted theories about the causes of gender inequity in academic employment at the national level, and subsequently in a more detailed case study of one of Australia's largest and most prestigious universities. Both research projects used large-scale surveys to capture information about levels of human capital, family responsibilities, career preferences, workloads and objective experiences of appointment and promotion. The case study, conducted in 2002, also utilized focus group discussions with particular groups of women who seemed, from the survey data, to be located just under the glass ceiling. The case study research confirmed the earlier national survey research which concluded that discrimination or bias in appointments, promotions and workloads were not significant in explaining men's domination of the senior levels. It also confirmed the significant gender differences in some kinds of human capital (particularly possession of a Ph.D.). But it also pointed to a quite particular explanation for the failure of women to progress to Level D (associate professor/reader) which involved other more general demographic changes — particularly, high rates of separation and divorce, far higher rates of partnering among men than women and the impact of older children's needs.

An Empirical Investigation of Annual Reporting Trends of Intellectual Capital in Sri Lanka

Abstract: This study examines the annual reports of each of the top 30 firms listed on the Colombo Stock Exchange in the period 1998/1999 to 1999/2000, using the ‘content analysis’ method. The findings indicate that the most reported accounting category during this period was external capital and the second most reported was human capital. There was an increase in the frequency of intellectual capital reporting over the 2 years, which this paper explains using political economy of accounting theory. Interestingly, the individual intellectual capital items of each capital category reported by firms in Sri Lanka differed from those found in other countries. It is hoped that the findings of this pioneering study can be used as a benchmark for future studies in Sri Lanka and in other developing countries.

Intellectual Capital and Corporate Value in an Emerging Economy: Empirical Study of Taiwanese Manufacturers.

Abstract: Competitive success now is based less on the strategic allocation of physical and financial resources, and more on the strategic management of intellectual capital. Although intellectual capital is intangible and cannot be accurately measured, companies must develop methods of increasing corporate value by proactively focusing on intellectual capital management. This study examines the relationship between intellectual capital and corporate value in an emerging economy. This study employs an intellectual capital perspective, resource-based view and a financial perspective, and investigates how to apply the concept of intellectual capital to value creation. After reviewing the relevant literature, this study identifies human capital, organizational capital, innovation capital and relationship capital as four constructs of intellectual capital. Corporate value is measured using three selection methods: (1) Market/Book value, (2) Tobin'Qand (3) Value Added Intellectual Coefficient (VAIC™). Through a questionnaire survey and secondary data collection, this study applies the Structure Equation Model to analyze the relationships among four constructs of intellectual capital, as well as the relationship between intellectual capital and corporate value. From the empirical findings, for Taiwanese manufacturers, a positive relationship exists between intellectual capital and corporate value. This study visualizes and mobilizes intellectual capital to articulate eight value creation paths.

Capitalism, Democracy, and Welfare

Abstract: This book, first published in 2005, builds on institutionalist theory in both economics and political science to offer a general political economy framework for the study of welfare capitalism. Based on the key idea that social protection in a modern economy, both inside and outside the state, can be understood as protection of specific investments in human capital, the book offers a systematic explanation of popular preferences for redistributive spending, the economic role of political parties and electoral systems, and labor market stratification (including gender inequality). Contrary to the popular idea that competition in the global economy undermines international differences in the level of social protection, the book argues that these differences are made possible by a high international division of labor. Such a division is what allows firms to specialize in production that requires an abundant supply of workers with specific skills, and hence high demand for protection.

Human Capital Formation, Life Expectancy, and the Process of Development

Abstract: This paper presents a microfounded theory of long-term development. We model the interplay between economic variables, namely the process of human capital formation and technological progress, and the biological constraint of finite lifetime expectancy. All these processes affect each other and are endogenously determined. The model is analytically solved and simulated for illustrative purposes. The resulting dynamics reproduce a long period of stagnant growth as well as an endogenous and rapid transition to a situation characterized by permanent growth. This transition can be interpreted as industrial revolution. Historical and empirical evidence is discussed and shown to be in line with the predictions of the model. JEL-classification: E10, J10, O10, O40, O41