Wang, Heli C. (Hong Kong U of Science and Technology) He, Jinyu (Hong Kong U of Science and Technology) Mahoney, Joseph T. (U of Illinois at Urbana-Champaign)
Abstract
The resource-based view of the firm emphasizes the role of firm-specific resources, especially firm-specific knowledge resources, for enabling a firm to gain and sustain competitive advantage. However, since the deployment of firm-specific knowledge frequently requires key employees to make specialized human capital investments that are not easily transferable to other settings, employees with foresight may be reluctant to make these specialized investments. This paper explores both economic- and relationship-based governance mechanisms that potentially mitigate this under-investment problem. The appropriate use of these governance mechanisms enables firms to obtain greater performance from their efforts to deploy firm-specific knowledge resources. Empirical results further support these arguments.
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Publisher Info
Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number
07-0103.