A Jack of All Trades Is a Master of None: The Nexus of Firm-specific Human Capital,Ambidexterity,Productivity and Firm Performance

Abstract

Drawing on the knowledge-based theory of the firm and organisational learning theory, the present study chiefly examines the impact of firm-specific human capital on organisational ambidexterity and the subsequent effect of organisational ambidexterity on productivity by integrating human capital theory with the theory of transaction cost. The data were garnered from 197 managers in Sri Lanka with self-reported questionnaires in a time-lagged approach. The results disclose strong significant relationships between the variables investigated: a chain of positive relationships between firm-specific human capital and organisational ambidexterity, organisational ambidexterity and productivity, and productivity and firm performance; and mediated relationships between firm-specific human capital and productivity through organisational ambidexterity, and between organisational ambidexterity and firm performance via productivity. The findings of the study push back the frontiers of human resource management literature in many ways. Notably, managers should be cognizant of the effects of firm-specific human capital, organisational ambidexterity, and productivity on firm performance.

Keywords

Firm-specific human capital organisational ambidexterity productivity firm performance knowledge-based theory of the firm

Get full access to this article

View all access options for this article.

References

Adler

P. S.

Benner

Brunner

D. J.

MacDuffie

J. P.

Osono

Staats

B. R.

Takeuchi

Tushman

Winter

S. G.

(2009). Perspectives on the productivity dilemma. Journal of Operations Management , 27(2), 99–113. https://doi.org/10.1016/j.jom.2009.01.004

Ahammad

M. F.

Lee

S. M.

Malul

Shoham

(2015). Behavioral ambidexterity: The impact of incentive schemes on productivity, motivation, and performance of employees in commercial banks. Human Resource Management , 54(S1), S45–S62. https://doi.org/10.1002/hrm.21668

Andersén

(2019). Resource orchestration of firm-specific human capital and firm performance—the role of collaborative human resource management and entrepreneurial orientation. The International Journal of Human Resource Management , 1–33. https://doi.org/10.1080/09585192.2019.1579250

Asiaei

Jusoh

(2015). A multidimensional view of intellectual capital: The impact on organizational performance. Management Decision , 53(3), 668–697. https://doi.org/10.1108/MD-05-2014-0300

Auh

Menguc

(2005). Balancing exploration and exploitation: The moderating role of competitive intensity. Journal of Business Research , 58(12), 1652–1661. https://doi.org/10.1016/j.jbusres.2004.11.007

Becker

G. S.

(1962). Investment in human capital: A theoretical analysis. Journal of Political Economy , 70(5, Part 2), 9–49. https://doi.org/10.1086/258724

Bendickson

J. S.

Chandler

T. D.

(2019). Operational performance: The mediator between human capital developmental programs and financial performance, Journal of Business Research , 94, 162–171. https://doi.org/10.1016/j.jbusres.2017.10.049

Bollen

K. A.

Stine

R. A.

(1992). Bootstrapping goodness-of-fit measures in structural equation models. Sociological Methods & Research , 21(2), 205–229. https://doi.org/10.1177/0049124192021002004

Bollen

Lennox

(1991). Conventional wisdom on measurement: A structural equation perspective. Psychological Bulletin , 110(2), 305–314. https://doi.org/10.1037/0033-2909.110.2.305

10.

Burgelman

R. A.

(2002). Strategy as vector and the inertia of coevolutionary lock-in. Administrative Science Quarterly , 47(2), 325–357. https://doi.org/10.2307/3094808

11.

Byrne

B. M.

(2016). Structural Equation modelling with AMOS . Routledge.

12.

Campanella

Del Giudice

Thrassou

Vrontis

(2016). Ambidextrous organizations in the banking sector: An empirical verification of banks’ performance and conceptual development. The International Journal of Human Resource Management , 1–31. https://doi.org/10.1080/09585192.2016.1239122

13.

Caniëls

M. C.

Neghina

Schaetsaert

(2017). Ambidexterity of employees: The role of empowerment and knowledge sharing. Journal of Knowledge Management , 12(5), 1098–1119. https://doi.org/10.1108/JKM-10-2016-0440

14.

Castanias

R. P.

Helfat

C. E.

(1991). Managerial resources and rents. Journal of Management , 17(1), 155–171. https://doi.org/10.1177/014920639101700110

15.

Cheung

G. W.

Lau

R. S.

(2008). Testing mediation and suppression effects of latent variables: Bootstrapping with structural equation models. Organizational Research Methods , 11(2), 296–325. https://doi.org/10.1177/1094428107300343

16.

Coff

Raffiee

(2015). Toward a theory of perceived firm-specific human capital. The Academy of Management Perspectives , 29(3), 326–341. https://doi.org/10.5465/amp.2014.0112

17.

Costello

A. B.

Osborne

J. W.

(2005). Best Practices in exploratory factor analysis: Four recommendations for getting the most from your analysis. Practical Assessment Research & Evaluation , 10(7), 1–9. https://doi.org/10.7275/jyj1-4868

18.

Cousins

C. R.

Tang

(2004). Working time and work and family conflict in the Netherlands, Sweden and the UK. Work, Employment and Society , 18(3), 531–549.

19.

Crook

T. R.

Todd

S. Y.

Combs

J. G.

Woehr

D. J.

Ketchen

D. J.

(2011). Does human capital matter? A meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology , 96(3), 443–456. https://doi.org/10.1037/a0022147

20.

Dess

G. G.

Robinson

R. B.

(1984). Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit. Strategic Management Journal , 5(3), 265–273. https://doi.org/10.1002/smj.4250050306

21.

Dewar

R. D.

Dutton

J. E.

(1986). The adoption of radical and incremental innovations: An empirical analysis. Management Science , 32(11), 1422–1433. https://doi.org/10.1287/mnsc.32.11.1422

22.

Dooley

L. M.

Lindner

J. R.

(2003). The handling of nonresponse error, Human Resource Development Quarterly , 14(1), 99–110. https://doi.org/10.1002/hrdq.1052

23.

Fabrigar

L. R.

Wegener

D. T.

MacCallum

R. C.

Strahan

E. J.

(1999). Evaluating the use of exploratory factor analysis in psychological research. Psychological Methods , 4(3), 272–299. https://doi.org/10.1037/1082-989X.4.3.272

24.

FitzRoy

Kraft

(2005). Co-determination, efficiency and productivity. British Journal of Industrial Relations , 43(2), 233–247. https://doi.org/10.1111/j.1467-8543.2005.00353.x

25.

Floyd

S. W.

Lane

P. J.

(2000). Strategizing throughout the organization: Managing role conflict in strategic renewal. Academy of Management Review , 25(1), 154–177. https://doi.org/10.5465/amr.2000.2791608

26.

Frank

D. H.

Obloj

(2014). Firm-specific human capital, organizational incentives, and agency costs: Evidence from retail banking. Strategic Management Journal , 35(9), 1279–1301. https://doi.org/10.1002/smj.2148

27.

Freeze

R. D.

Raschke

R. L.

(2007). An assessment of formative and reflective constructs in IS research. ECIS Proceedings, 1481–1492.

28.

Gibson

C. B.

Birkinshaw

(2004). The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal , 47(2), 209–226. https://doi.org/10.5465/20159573

29.

Glenn

McGarrity

J. P.

Weller

(2001). Firm-specific human capital, job matching, and turnover: Evidence from major league baseball, 1900–1992. Economic Inquiry , 39(1), 86–93. https://doi.org/10.1111/j.1465-7295.2001.tb00052.x

30.

Grant

R. M.

(1996). Toward a knowledge-based theory of the firm. Strategic Management Journal , 17(SI), 109–122. https://doi.org/10.1002/smj.4250171110

31.

Hair

J. F.

Black

W. C.

Babin

B. J.

Anderson

R. E.

(2014). Multivariate data analysis . (7th ed.). Pearson

32.

Hansen

N. K.

Güttel

W. H.

Swart

(2019). HRM in dynamic environments: Exploitative, exploratory, and ambidextrous HR architectures. The International Journal of Human Resource Management , 30(4), 648–679. https://doi.org/10.1080/09585192.2016.1270985

33.

Hatcher

(1994). A step-by-step approach to using the sas system for factor analysis and Structural Equation Modelling . SAS Institute Inc.

34.

Z. L.

Wong

P. K.

(2004). Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization Science , 15(4), 481–494. https://doi.org/10.1287/orsc.1040.0078

35.

Hitt

L. M.

Brynjolfsson

(1996). Productivity, business profitability, and consumer surplus: Three different measures of information technology value. MIS Quarterly , 20(2), 121–142. https://doi.org/10.2307/249475

36.

Jovanovic

(1979). Firm-specific capital and turnover. Journal of Political Economy , 87(6), 1246–1260. https://doi.org/10.1086/260834

37.

Junni

Sarala

R. M.

Taras

Tarba

S. Y.

(2013). Organizational ambidexterity and performance: A meta-analysis. The Academy of Management Perspectives , 27(4), 299–312. https://doi.org/10.5465/amp.2012.0015

38.

Kang

S. C.

Snell

S. A.

(2009). Intellectual capital architectures and ambidextrous learning: A framework for human resource management. Journal of Management Studies , 46(1), 65–92. https://doi.org/10.1111/j.1467-6486.2008.00776.x

39.

Kengatharan

(2019). A knowledge-based theory of the firm: Nexus of intellectual capital, productivity and firms’ performance, International Journal of Manpower , 40(6), 1056–1074. https://doi.org/10.1108/IJM-03-2018-0096

40.

Kessler

A. S.

Lülfesmann

(2006). The theory of human capital revisited: On the interaction of general and specific investments. The Economic Journal , 116(514), 903–923. https://doi.org/10.1111/j.1468-0297.2006.01116.x

41.

Kline

R. B.

(2015). Principles and practice of structural equation modeling . Guilford Publications.

42.

Kostopoulos

K. C.

Bozionelos

Syrigos

(2015). Ambidexterity and unit performance: Intellectual capital antecedents and cross-level moderating effects of human resource practices. Human Resource Management , 54(SI), s111–s132. https://doi.org/10.1002/hrm.21705

43.

Lazear

E. P.

(2009). Firm-specific human capital: A skill-weights approach. Journal of Political Economy , 117(5), 914–940. https://doi.org/10.1086/648671

44.

Leuven

Oosterbeek

(2001). Firm-specific human capital as a shared investment: Comment. American Economic Review , 91(1), 342–347. https://doi.org/10.1257/aer.91.1.342

45.

Little

T. D.

Lindenberger

Nesselroade

J. R.

(1999). On selecting indicators for multivariate measurement and modeling with latent variables: When ‘good’ indicators are bad and ‘bad’ indicators are good. Psychological Methods , 4(2), 192–211. https://doi.org/10.1037/1082-989X.4.2.192

46.

Lubatkin

M. H.

Simsek

Ling

Veiga

J. F.

(2006). Ambidexterity and performance in small-to medium-sized firms: The pivotal role of top management team behavioral integration. Journal of Management , 32(5), 646–672. https://doi.org/10.1177/0149206306290712

47.

Malik

Boyle

Mitchell

(2017). Contextual ambidexterity and innovation in healthcare in India: The role of HRM. Personnel Review , 46(7), 1358–1380. http://doi.org/10.1108/PR-06-2017-0194

48.

March

J. G.

(1991). Exploration and exploitation in organizational learning. Organization Science , 2(1), 71–87. https://doi.org/10.1287/orsc.2.1.71

49.

Mathew

Ogbonna

Harris

L. C.

(2012). Culture, employee work outcomes and performance: An empirical analysis of Indian software firms. Journal of World Business , 47(2), 194–203. https://doi.org/10.1016/j.jwb.2011.04.006

50.

Mayer

K. J.

Somaya

Williamson

I. O.

(2012). Firm-specific, industry-specific, and occupational human capital and the sourcing of knowledge work. Organization Science , 23(5), 1311–1329. https://doi.org/10.1287/orsc.1110.0722

51.

Miao

Qian

(2017). The relationship between entrepreneurial self-efficacy and firm performance: A meta-analysis of main and moderator effects. Journal of Small Business Management , 55(1), 87–107. https://doi.org/10.1111/jsbm.12240

52.

Mom

T. J.

Bosch

F. A. van. den.

Volberda

H. W.

(2007). Investigating managers’ exploration and exploitation activities: The influence of top-down, bottom-up, and horizontal knowledge inflows. Journal of Management Studies , 44(6), 910–931. https://doi.org/10.1111/j.1467-6486.2007.00697.x

53.

Nafukho

F. M.

Hairston

Brooks

(2004). Human capital theory: Implications for human resource development. Human Resource Development International , 7(4), 545–551. https://doi.org/10.1080/1367886042000299843

54.

Neal

(1995). Industry-specific human capital: Evidence from displaced workers. Journal of Labor Economics, 13(4), 653–677. https://doi.org/10.1086/298388

55.

Nemanich

L. A.

Vera

(2009). Transformational leadership and ambidexterity in the context of an acquisition. The Leadership Quarterly , 20(1), 19–33. https://doi.org/10.1016/j.leaqua.2008.11.002

56.

O’Reilly

C. A.

Tushman

M. L.

(2004). The ambidextrous organization. Harvard Business Review , 82(4), 74–81.

57.

O’Reilly

C. A.

Tushman

M. L.

(2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior , 28, 185–206. https://doi.org/10.1016/j.riob.2008.06.002

58.

Patky

Pandey

S. K.

(2020). Does flexibility in human resource practices increase innovation? mediating role of intellectual capital. South Asian Journal of Human Resources Management, 1–19. https://doi.org/10.1177/2322093720934243-

59.

Podsakoff

P. M.

MacKenzie

S. B.

Jeong-Yeon

Podsakoff

N. P.

(2003). Common method biases in behavioral research: Critical review of the literature and recommended remedies. Journal of Applied Psychology , 88(5), 879–903. https://doi.org/10.1037/0021-9010.88.5.879

60.

Raffiee

Coff

(2016). Micro-foundations of firm-specific human capital: When do employees perceive their skills to be firm-specific? Academy of Management Journal , 59(3), 766–790. https://doi.org/10.5465/amj.2014.0286

61.

Raisch

Birkinshaw

(2008). Organizational ambidexterity: Antecedents, outcomes, and moderators. Journal of Management , 34(3), 375–409. https://doi.org/10.1177/0149206308316058

62.

Raisch

Birkinshaw

Probst

Tushman

M. L.

(2009). Organizational ambidexterity: Balancing exploitation and exploration for sustained performance. Organization Science , 20(4), 685–695. https://doi.org/10.1287/orsc.1090.0428

63.

Richard

P. J.

Devinney

T. M.

Yip

G. S.

Johnson

(2009). Measuring organizational performance: Towards methodological best practice. Journal of Management , 35(3), 718–804. https://doi.org/10.1177/0149206308330560

64.

Richardson

H. A.

Vandenberg

R. J.

(2005). Integrating managerial perceptions and transformational leadership into a work-unit level model of employee involvement. Journal of Organizational Behavior , 26(5), 561–589. https://doi.org/10.1002/job.329

65.

Sharabati

A. A. A.

Naji Jawad

Bontis

(2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision , 48(1), 105–131. https://doi.org/10.1108/00251741011014481

66.

Sheldon

(2013). Localized poaching and skills shortages of manufacturing employees among MNEs in China. Journal of World Business , 48(2), 186–195. https://doi.org/10.1016/j.jwb.2012.07.003

67.

Stevens

J. P.

(2002). Applied multivariate statistics for the social sciences (4th ed.). Lawrence Erlbaum Associates.

68.

Stubner

Blarr

W. H.

Brands

Wulf

(2012). Organizational ambidexterity and family firm performance. Journal of Small Business & Entrepreneurship , 25(2), 217–229. https://doi.org/10.1080/08276331.2012.10593570

69.

Subramaniam

Youndt

M. A.

(2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal , 48(3), 450–463. https://doi.org/10.5465/amj.2005.17407911

70.

Velicer

W. F.

Fava

J. L.

(1998). Affects of variable and subject sampling on factor pattern recovery. Psychological Methods , 3(2), 231–251. https://doi.org/10.1037/1082-989X.3.2.231

71.

Venugopal

Krishnan

T. N.

Kumar

Upadhyayula

R. S.

(2019). Strengthening organizational ambidexterity with top management team mechanisms and processes. The International Journal of Human Resource Management , 30(4), 586–617. https://doi.org/10.1080/09585192.2016.1277369

72.

Wall

T. D.

Michie

Patterson

Wood

S. J.

Sheehan

Clegg

C. W.

West

(2004). On the validity of subjective measures of company performance. Personnel Psychology , 57(1), 95–118. https://doi.org/10.1111/j.1744-6570.2004.tb02485.x

73.

Wallace

R. O.

Mellor

C. J.

(1988). Nonresponse bias in mail accounting surveys: A pedagogical note. The British Accounting Review , 20(2), 131–139. https://doi.org/10.1016/0890-8389(88)90036-4

74.

Wang

Barney

J. B.

Reuer

J. J.

(2003). Stimulating firm-specific investment through risk management. Long Range Planning , 36(1), 49–59.

75.

Wang

Zhao

Chen

(2017). Firm-specific knowledge assets and employment arrangements: Evidence from CEO compensation design and CEO dismissal. Strategic Management Journal , 38(9), 1875–1894. https://doi.org/10.1002/smj.2604

76.

Wang

J. F. J.

Tarn

D. D.

(2018). Are two heads better than one? Intellectual capital, learning and knowledge sharing in a dyadic interdisciplinary relationship. Journal of Knowledge Management , 22(6), 1379–1407. https://doi.org/10.1108/JKM-04-2017-0145

77.

Wooldridge

Floyd

S. W.

(1989). Strategic process effects on consensus. Strategic Management Journal , 10(3), 295–302. https://doi.org/10.1002/smj.4250100308

78.

Xing

Liu

Tarba

Wood

(2020). A cultural inquiry into ambidexterity in supervisor–subordinate relationship. The International Journal of Human Resource Management , 32(2), 1203–1231. https://doi.org/10.1080/09585192.2015.1137619

79.

Huang

Y. T.

(2020). Effects of social support on English reading amount in Hong Kong primary schools: The mediating role of reading confidence. Educational Studies , 1–16. https://doi.org/10.1080/03055698.2020.1729096

80.

Youndt

M. A.

Subramaniam

Snell

S. A.

(2004). Intellectual capital profiles: An examination of investments and returns. Journal of Management Studies , 41(2), 335–361. https://doi.org/10.1111/j.1467-6486.2004.00435.x

81.

Youndt

Snell

(2004). Human resource configurations, intellectual capital, and organizational performance. Journal of Managerial Issues , 16(3), 337–360. Retrieved from http://www.jstor.org/stable/40604485

82.

Yuan

K. H.

Marshall

L. L.

Bentler

P. M.

(2002). A unified approach to exploratory factor analysis with missing data, nonnormal data, and in the presence of outliers. Psychometrika , 67(1), 95–121. https://doi.org/10.1007/BF02294711

83.

Zhao

Lynch

J. G.

Jr Chen

(2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research , 37(2), 197–206. https://doi.org/10.1086/651257