The Theory of Real Options as Theoretical Foundation for the Assessment of Human Capital in Organizations
AbstractThe human capital represented by corporate employees involved in the information and knowledge economy is becoming an increasingly central value-creating factor in global competition. However, in contrast to other value-creating factors, human capi-tal is more difficult to measure, evaluate and manage. Due to human capital’s great importance for economic value creation, a series of studies on human capital evalua-tion have been published during the last few years. This paper discusses why so many traditional evaluation methods are only partly appropriate for categorizing, analyzing and evaluating human capital’s special characteristics. In particular, it is difficult for many traditional approaches to integrate notions of flexibility and options with regard to the human capital of companies. Our result shows that the real options theory provides a theoretical framework for the evaluation of human capital and allows a differentiated analysis that, on a qualitative basis, enables investments in uncertainties that are associated with human capital. This theory thus forms the foundation for the quantification of human capital’s inherent opportunities and risks. Consequently, this paper provides approaches for the future evaluation of human capital and a conceptual context for empirical studies.
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Bibliographic InfoArticle provided by Rainer Hampp Verlag in its journal Zeitschrift fuer Personalforschung.
Volume (Year): 21 (2007)
Issue (Month): 3 ()
Pages: 274 - 294
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Web page: http://www.hampp-verlag.de/
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Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
- M50 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - General
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
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- Knauer, Thorsten, 2010. "Relevanz, Qualität und Determinanten der externen Unternehmenspublizität zum Humankapital: Eine empirische Bestandsaufnahme der HDAX-Unternehmen," Arbeitspapiere des Lehrstuhls fÃ¼r Betriebswirtschaftslehre, insbesondere Controlling 13-1, University of Münster, Chair of Management Accounting.
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