Three Essays on Strategic Human Capital, Managers and Competitive Advantage

Jongsoo Kim, Purdue University

Abstract

In this dissertation, I investigate the interplay between strategic human capital and the role of managers in an organization. In Essay 1, using a natural experiment setting with a dataset on change of interdependence that an organization requires, and unexpected employee exit in a professional sports league for the period 1992 to 2010, I examine the consequence of losing strategically important human resources (HR) and shows that how specific organizational recovering techniques for dealing with HR can help the firm’s strategic renewal process. The data present that the consequential impact of losing employees is depending upon the type of interdependence that organization relies on, which are pooled interdependence and reciprocal interdependence. Furthermore, the results indicate that: (1) during the individual-focused period (pooled interdependence), loss of star employees harms organizational performance, but this harm can be mitigated by strong resource-picking skill, and (2) during the collaboration -focused period (reciprocal interdependence), loss of non-star employees harms organizational performance, but this harm can be mitigated by strong capability-building skill.^ In Essay 2, I try to answer following question: when promoted to management, do former star performers become superior managers? If so, why? Using performance data from a professional sports league, this study finds that organizational performance is greater under star-performers-turned-managers (SPTM’s) than other managers. Organizational performance is driven by the visibility of the manager’s prior career to employees for SPTM’s only, but driven by managerial competence for other managers only, suggesting a substitution effect between skill and inspirational role modeling. Consistent with social-comparison and self-enhancement theories, this inspirational role-modeling effect of SPTM’s on performance is contingent upon the need for self-enhancement by subordinates, and situational salience of the manager’s stardom. The results are consistent across robustness checks that control for potential selection issues, endogeneity concerns, and outliers.^ In Essay 3, I assess the causal impact of stakeholder orientation on the impact of corporate social responsibility and CEOs’ wealth and prominence. To obtain exogenous variation in stakeholder orientation, I exploit the enactment of state-level constituency statutes, which allow corporate executives and directors to consider non-shareholders’ interests when making business decisions. Using a cross-section of Texan firms during 2002-2012, I have found that the enactment of constituency statutes leads to significant increases in the quality of a firm’s corporate social responsibility (CSR); however, the effect of CSR does not necessarily lead to superior firm performance or value. I further argue and provide evidence suggesting that the obligated stakeholder orientation decreases the impact of CSR on CEOs’ compensation but increases the impact of CSR on CEOs’ media exposure. Finally, I posit that the impact of non-shareholder orientation on CEOs’ wealth and prominence is salient in non-consumer-focused industries.^

Degree

Ph.D.

Advisors

Richard Makadok, Purdue University.

Subject Area

Management

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