Perceived Firm-Specific Human Capital: Mobility Constraint or Enhancer?

Abstract

We explore the relationship between workers’ perceptions of firm-specific human capital (FSHC) and turnover. The belief that actual FSHC constrains mobility undergirds its critical role in resource-based theory. However, this rests on a strong assumption of information efficiency that market actors correctly assess how specific an individual’s skills are, and price it appropriately. Emerging theoretical viewpoints dispute this, pointing out labor market imperfections and substantial difficulty in observing FSHC. We therefore develop theory about how perceived FSHC may relate positively to mobility by articulating a role for well-known supply-side mechanisms such as job satisfaction, embeddedness, and preference for job autonomy. Using two archival surveys and two primary surveys collected in very different contexts (South Korea and the United States), we found support for our theory. Perceptions of FSHC were associated with increased mobility and this effect was partially mediated by job satisfaction and job embeddedness. The effect was augmented for workers who value autonomy in their jobs (and who are more likely to exit if they perceived their skills as FSHC). Since the effect of perceived FSHC is quite different from that OF extant theory which focused on actual FSHC, we explore implications for resource-based and human capital theories.