The rise of the human capital industry and its implications for research

Abstract

We document the size and scope of the industry of for-profit vendors that now handles a considerable proportion of human resource tasks for individual US employers, a collection we describe as the human capital industry. Outsourcing these tasks changes how the human resources function is executed in ways we describe below. This change should matter to researchers if they are interested in choosing topics that have relevance, and it should also matter to teachers of human resources who want to present an accurate description of practice to students. Aside from the now remarkable size of the HR industry, arguably its most important attribute is its marketing efforts, which now drive the agenda for the field of HR. A concern about that agenda is that it often creates the perception of challenges for management when in practice no evidence of those challenges exists.