Does Firm-Specific Human Capital Decrease or Increase Employee Mobility?

An ongoing debate in the field of strategic human capital is whether high levels of firm- specific human capital decrease or increase employee mobility. Some argue that firm-specific human capital limits employment options, thus reducing mobility. Others argue that firm- specific human capital, because it signals an employees’ willingness and ability to make such investments, is broadly valuable and increases mobility. Empirical findings using tenure as a measure of firm-specific human capital provide mixed results. Addressing the puzzle, this paper suggests that whether firm-specific human capital decreases or increases employee mobility depends on the extent to which an employee’s current firm relies on team production to generate economic value. Analysis of linked employer-employee data on 1,024 R&D workers in acquired firms provides support for this idea. Implications for human capital theory are discussed