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Innovating for the Better? The Role of Advocacy Group Work Experience for Employee Pay

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  • Grimpe, Christoph

    (Copenhagen Business School)

  • Kaiser, Ulrich

    (University of Zurich)

  • Sofka, Wolfgang

    (Copenhagen Business School)

Abstract

How valuable is work experience with advocacy groups, e.g. Greenpeace, for new hires of innovative firms? We integrate strategic human capital with stakeholder theory and suggest that this experience creates scarce human capital (knowledge, skills, abilities) facilitating innovations acceptable and legitimate for stakeholders such as regulators or residents. We argue that such human capital is complementary to firm resources and leads to a value surplus. Individuals with advocacy group work experience can subsequently appropriate at least parts of that surplus through higher salaries. Using matched data for 10,303 employees in Denmark, we find that new hires of innovative firms with advocacy group human capital enjoy salary premiums which are stronger in mature and technologically concentrated firms. Our findings have important implications for HR decision making.

Suggested Citation

  • Grimpe, Christoph & Kaiser, Ulrich & Sofka, Wolfgang, 2018. "Innovating for the Better? The Role of Advocacy Group Work Experience for Employee Pay," IZA Discussion Papers 11649, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11649
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    More about this item

    Keywords

    resource complementarity; advocacy groups; scarce human capital; stakeholder theory; value creation and capture;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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