From Security to Mobility: Generalized Investments in Human Capital and Agent Commitment

Abstract

This paper considers the impacts of different investments in human capital (firm-specific versus generalized investments) on employee commitment to the firm. The resource-based literature has stressed that only firm-specific human capital is likely to generate organizational rents, since those assets are more likely to be inimitable, rare, and therefore a better basis for sustained competitive advantage. Generalized investments in human capital (i.e., investments in capabilities that people can transfer and deploy to other firms or settings) are to be avoided. However, observing lessons from the literature on psychological contracts and organizational commitment, we argue that generalized investments may have value for the firm through their effects on worker commitment to the firm. The gain in worker commitment is valuable to firms given the fragile state of the contemporary employment relation, in which the lack of job security is likely to breed diminished employee commitment. This is particularly a concern for employment relations consisting of externalized labor (i.e., contract work or selfemployed professionals operating as agents of the firm), in which agent commitment is vital but likely to be more scarce. In this paper we focus on the externalized workers (independent agents) of two insurance firms in addressing these issues. A sample of 237 agents shows support for the benefits of generalized investments on agent commitment, questioning conventional wisdom that such investments should be avoided. We also examine the impact of relation-specific investments and other key antecedents on agent commitment, concluding that a mixture of strategic investments in human capital should be considered, taking into account their impacts on the firm-worker psychological contract. We also examine the impact of agent commitment on agent performance in this context, finding committed agents do provide greater value to the insurer.

The effects of HRM practices and antecedents on organizational commitment among university employees

“…The other styles focused on role clarification, rule specification, work assignment, support, people, organization, structure, or consideration are uncorrelated with organizational commitment (Bruning and Snyder, 1983;Jermier and Berkes, 1979). The correlation between organizational commitment and communication is significantly positive (Galunic and Anderson, 2000;Knoke, 1988). Likewise, the influence of performance appraisal on organizational commitment is found to be positive.…”

Does perceived support in employee development affect personnel turnover?

“…Through the feeling of their employer's support in their own development, employees have less intention to quit. Investments in general training may therefore be perceived by employees as a signal that their organization values them individually rather than as employees only within the organization (Galunic and Anderson, 2000). We therefore formulate the following hypothesis:…”

Testing Organizational Economics Theories of Vertical Integration

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