Asset Management

Human Assets and Management Dilemmas: Coping with Hazards on the Road to Resource-Based
Theory
Author(s): Russell W. Coff
Source: The Academy of Management Review, Vol. 22, No. 2 (Apr., 1997), pp. 374-402
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/259327
Accessed: 15-12-2015 08:24 UTC
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/
info/about/policies/terms.jsp
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content
in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship.
For more information about JSTOR, please contact support@jstor.org.
Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academy of Management
Review.
http://www.jstor.org
This content downloaded from 193.188.46.75 on Tue, 15 Dec 2015 08:24:43 UTC
All use subject to JSTOR Terms and Conditions
CcAcademy of Management Review

1997, Vol. 22, No. 2, 374-402.
HUMANASSETS AND MANAGEMENTDILEMMAS:

COPING WITHHAZARDSON THEROAD TO
RESOURCE-BASEDTHEORY
RUSSELL W. COFF
Washington University in St. Louis
Resource-based theorists argue that human assets can be a source of
sustainable advantage because tacit knowledge and social complexity are hard to imitate. However, these desirable attributes cause dilemmas that may prevent firms from generating an advantage. This
article develops a framework for analyzing and coping with these
challenges. Although the problem arises from the strategy literature,
the solutions are drawn from the organizational behavior, human resource management, human capital, and professions literatures. Finally, I examine implications for how insights from these diverse literatures can be integrated to guide future strategy research.
Like human assets, an oil field may be a strategic asset. However, once acquired, an oil field
1. Cannot quit and move to a competing firm.
2. Cannot demand higher or more equitable wages.
3. Cannot reject the firm's authority or be unmotivated.
4. Need not be satisfied with supervision, coworkers, or advancement opportunities.
Resource-based theorists argue that sustainable competitive advantage stems from unique bundles of resources that competitors cannot imitate (Barney, 1991; Wernerfelt, 1984). Following this, prescriptive advice to
managers revolves around identifying and acquiring these critical resources. Thus, Barney (1991: 110) noted, "physical technology, whether it
takes the form of machine tools or robotics in factories or complex information management systems, is by itself typically imitable." In contrast,
human assets are often hard to imitate due to scarcity, specialization, and
tacit knowledge (Lippman & Rumelt, 1982; Polanyi, 1962; Teece, 1982).
However, human assets differ from an oil field. Merely having talented
employees does not mean that a sustainable advantage exists. Such assets
are hard to imitate because they are difficult to understand and observe
I want to thank Jay Barney, Bill Bottom, Lynnea Brumbaugh-Walter, Connie Helfat, Bob
Hoskisson, Julia Leibeskind, Judi McLean Parks, Laura Poppo, Bill Schulze, Ken A. Smith,
Todd Zenger, and many others for their suggestions. I also owe special thanks to Alison
Davis-Blake, Susan Jackson, and three anonymous reviewers for their guidance and wisdom.
374
1997
Coff
375
(Barney, 1991; Peteraf, 1993). If tacit knowledge cannot be conveyed, how

can management organize employees to attain an advantage? Tacitness
may be desirable because it is hard to imitate, but as a result, firms must
face serious management problems.
Unfortunately, while resource-based theory extols the benefits of human assets, it does not examine how the related management dilemmas
may prevent firms from generating an advantage. Compared to physical
assets, human capital is associated with serious information problems
and the threat of voluntary turnover (Cascio, 1991; Chiang & Chiang, 1990;
Steffy & Maurer, 1988). In this article, I argue that firms cannot achieve a
sustainable advantage from human assets unless they are able to cope
with the associated management dilemmas. The most obvious problem
is that the firm's assets walk out the door each day, leaving some question
about whether they will return.
Although the problem of managing human assets arises from the
strategy literature, insight into coping strategies emanates from the organizational behavior, organizational theory, and human resource management literature. Accordingly, the first part of this article draws on the
strategy literature to analyze how attributes that make human assets hard
to imitate also lead to management dilemmas. The second half uses a
variety of literatures to describe coping strategies that may help to mitigate the problems. The final section outlines implications for research
and practice.
ANALYSIS OF HUMAN ASSETS AND MANAGEMENT DILEMMAS
Before discussing how firms can cope with human assets, it is important to define what is meant by the term human asset and examine
the challenges that such assets pose. Human assets are a special form of
strategic asset (Amit & Schoemaker, 1993). Specifically, they are human
capital under limited organizational control that have the potential to
generate economic rent.' This definition is similar to the economic concept
of human capital. From that standpoint, the concept explored here is neither new nor controversial. However, the management dilemmas associated with human assets have not been fully articulated in the human
capital literature.
The framework in Figure 1 helps to illustrate how the attributes that
make employees strategic assets also make them difficult to manage. The
first column shows the properties of human assets that make them so
promising. These, in turn, are associated with the challenges in the second
column. The third column lists a typology of strategies that may help firms
l Economic rent refers to profit in excess of normal economic returns. Thus, it is not just
profit, but unusually high profit. A sustained competitive advantage means that rent is
generated for an extended period.
April
Academy of Management Review
376
U)
4-
U)
J
L)
U)
0
L)
>4
L)
--i
Q4
r.
L)
U)
0
lz
H
0
L)
z
lz
Ij
-x
M
9.4
L)
4-
(1)
0)
U)
U)
U)
p
>
(3)
U)
U)
lz
H
H
C)
L)
(1)U)
U)
ui
Coff
1997
377
cope with the problems. The remainder of this section examines how the
human asset attributes are linked to the dilemmas.
According to resource-based theory, the attributes in the first column
of Figure 1-asset specificity, social complexity, and causal ambiguitymake resources hard to imitate and/or trade.' Firm-specific human assets
are tailored for use in one context. A firm that relies on such knowledge
may attain high returns because there is no competitive market to bid up
wages (Klein, Crawford, & Alchian, 1978). Socially complex resources are
hard to replicate since they are embedded in complex social systems
(Barney, 1991). Finally, causally ambiguous assets are hard to imitate
because the link between the resource and performance is not understood
(Lippman & Rumelt, 1982). Human assets are often causally ambiguous
because many social and cognitive processes are not well understood (by
employees, management, or researchers).
Although these desirable attributes may make human assets hard to
imitate, they also cause dilemmas that may make a competitive advantage
elusive. Most likely, all human assets are associated with both turnover
and information problems. However, as shown in Figure 1, the relative
seriousness of information versus turnover dilemmas varies with the type
of human assets.
Asset Specificity
Firm-specific human assets refer to special skills, knowledge, or personal relationships that are only applicable in a given firm. In contrast,
general skills, such as knowledge of chemistry, law, or medicine, might
be valuable in a variety of firms or industries. Although human assets
are typically harder to manage than tangible assets, general and specific
human assets produce different dilemmas.
General human assets and the threat of turnover. Unlike tangible
assets, firms cannot own employees who are free to quit at will. This risk
of turnover is a problem, because the firm may lose its most critical assets if
they become dissatisfied, underpaid, or unmotivated. For example, Kidder
Peabody & Co. was devastated when key brokers moved to competitors
(Wall Street Journal, 1994).
As indicated by arrow B (in Figure 1), the threat of turnover is even
more serious for general human assets. In human capital theory it is
assumed that general skills are traded in competitive labor markets
(Becker, 1983). Thus, firms should bid up wages so that the profits flow to
the workers rather than stockholders. However, if firms are able to control
2 The list of attributes is not intended to be exhaustive; rather, it cites those that are
most
likely to pose dilemmas. All strategic resources are valuable, rare, and have no equivalent
substitutes, but these traits do not necessarily cause problems. Although asset specificity,
social complexity, and causal ambiguity limit market competition for resources (Barney,
1991; Peteraf, 1993), they also pose serious dilemmas.
378
April
turnover, they may still be able to achieve an advantage. Strategies for

limiting mobility are explored in the next section of this article.
This threat of turnover is so serious that some believe that general
skills cannot be a source of advantage. Following Becker's (1983) reasoning, Dittman, Juris, and Revsine (1976) argued that human assets must have
firm-specific skills. Thus, some suggest that specificity is a requirement
for strategic assets (Amit & Shoemaker, 1993). However, general human
assets can be the source of advantage if they are rare, have no strategic
substitutes, and the firm can retain them over time. For example, Castanias and Helfat (1991) argued that a general human asset, such as an
exceptional CEO, can be a source of advantage due to its rarity. Of course,
this is only a general asset if it is not embedded in firm-specific systems.
External social complexity as a general asset. External social complexity refers to boundary-spanning networks with stakeholders such as
customers or suppliers. Boundary spanners furnish information that helps
firms innovate and respond to dynamic environments (Tushman, 1977).
This differs from internal social complexity, which refers chiefly to team
production.
While boundary-spanning networks pose many of the information
dilemmas associated with teams, the skills may also be especially valuable to competitors. Thus, such skills may be relatively general and pose
a risk of turnover not normally connected with internal networks. Again,
the Kidder Peabody & Co. example illustrates how a firm can be affected
when it loses human assets and their customer networks (Wall Street
Journal, 1994). Similarly, the professions literature suggests that such networks make people more cosmopolitan and thus more aware of outside
opportunities (Bartol, 1979; Kerr, Von Glinow, & Schriesheim, 1977). This is
especially a challenge for the emergent organizational forms that increasingly depend on such networks.
Firm-specific human assets, social complexity, and causal ambiguity.
Though turnover is also a threat for firm-specific human assets, idiosyncratic skills reduce this risk since they are not in demand. However, by
its very nature, specificity leads to social complexity and causal ambiguity
(arrow A in Figure 1). That is, firm-specific skills often involve tacit knowledge of interpersonal relationships or corporate culture. These are elements of social complexity. Similarly, firm-specific human assets have
idiosyncratic knowledge that may be hard for competitors to understand
(Polanyi, 1962;Williamson, 1975)-hence, such assets are causally ambiguous. Based on this association, firm-specific human assets present the
same dilemmas that arise from social complexity and causal ambiguity.
These issues are examined next.
Internal Social Complexity, Causal Ambiguity, and
Information Dilemmas
As shown in Figure 1, internal social complexity and causal ambiguity
both lead to serious information dilemmas. Internal social complexity
1997
Coff
379
poses the classic dilemmas inherent in team production. Alchian and

Demsetz (1972) noted that team production causes problems because individual contributions are unobservable. They argued that the information
problems are more hazardous in markets and that hierarchies are, therefore, more efficient at governing teams. However, although hierarchies
may be preferred over markets for team production, asymmetric information also poses governance problems for firms (arrow C in Figure 1).
Causal ambiguity can be a source of advantage because of the severe
information problems it brings (Lippman & Rumelt, 1982). Though this
creates beneficial information asymmetries with competitors, it also
means that the favored firm has limited information (arrow D in Figure
1). In fact, if the favored firm had complete information, the knowledge
might be diffused to competitors through predatory hiring (Barney, 1991).
Lippman and Rumelt (1982: 421) even referred to the favored firm as "lucky"
to underscore this point.
Accordingly, both social complexity and causal ambiguity are associated with the information dilemmas outlined in Figure 1. Specifically,
firms must learn to cope with the problems of adverse selection, moral
hazard, and bounded rationality in decision making.
Adverse selection/hiring. Adverse selection is caused by asymmetric
information in the labor market. Specialized or tacit knowledge is not
observable and may lead to a market-for-lemons problem (Akerlof, 1970).
This means that the labor market would harbor a disproportionate number
of low-quality workers. This occurs if employers offer lower wages to
hedge their risk of hiring a "lemon." High-quality workers might then be
reluctant to change jobs-perpetuating
the problem.3
Causal ambiguity can further exacerbate this problem. Applicants
may misrepresent themselves by taking credit for the success of their
former employers. Causal ambiguity will thwart efforts to verify such
claims. Similarly, political candidates are notorious for taking credit for
positive events that were beyond their control. Employers may then discount information that cannot be verified and offer even lower starting
wages.
Moral hazard/motivation. Moral hazard refers to shirking, motivation
problems, or even the subversion that can occur when individual contributions are difficult to observe. Although these problems are the focus of
agency theory (Jensen & Meckling, 1976), the motivation literature also
documents reduced effort in some team settings (Kidwell & Bennett, 1993).
When individual contributions are intertwined, employees may be uncer-
'Note that if individual productivity is observable (i.e., no information problems), the

problem may be reversed and the highest performers may be at risk for turnover. This was
the case for the Kidder Peabody brokers who were lured away to competitors. Even though
researchers have examined performance differences between stayers and leavers, for the
most part, the type of knowledge has not been explored in this context.
380
Academy of Management
Review
April
tain about whether their effort will have an impact on performance (e.g.,
expectancy). In addition, the firm cannot easily provide performancebased rewards (e.g., instrumentality). If both expectancy and instrumentality are low, it will be difficult to motivate employees (Vroom, 1964).
Causal ambiguity also paves the way for problems of moral hazard.
People often take credit for successes and assign external attributions for
failures when it is difficult to observe causality. Attribution theory refers
to this as the self-serving bias (Ross, 1977). Because causality cannot be
established, organizations may inadvertently reward or punish employees
for events that are beyond their control or influence (Kerr, 1975).
Bounded rationality/poor decisions. Finally, even in the absence of
opportunism, asymmetric information is a hazard for decision makers.
Because managers are boundedly rational, they may not know to ask for
required information, and employees may not know what to provide
(Simon, 1976). Although this lack of information can lead to serious errors
in decision making, the problem is not driven by opportunism.
Causal ambiguity is especially hazardous in this respect. Not only do
managers lack information required to make decisions, the information
is not readily available from any source. Ouchi (1980) suggested that such
extreme uncertainty can cause hierarchies to fail as a governance mechanism.
In sum, adverse selection, moral hazard and bounded rationality may
be formidable challenges when human assets are socially complex or
causally ambiguous. Even though hierarchies may be more efficient than
markets, they also fail under conditions of asymmetric information (Grossman & Hart, 1986; Ouchi, 1980). Thus, in order to generate a sustainable
advantage, firms must either find ways to obtain scarce information or
learn to cope in the absence of information.
COPING STRATEGIES FOR MANAGEMENT DILEMMAS
Because human assets are typically associated with turnover and/
or information dilemmas, the overarching proposition is that firms must
develop coping mechanisms for these challenges in order to achieve an
advantage. For example, without effective turnover management, human
assets may exit and any advantage will be lost. Similarly, firms must be
able to cope with the information problems or they will not be able to
organize, coordinate, and motivate their human assets to generate an advantage.
This section develops propositions about policies that may help firms
cope with the dilemmas. The third column of Figure 1 presents a typology
of coping mechanisms. These fall into four categories: (a) retention strategies, (b) rent-sharing strategies, (c) organizational design strategies, and
(d) information strategies. Retention strategies bind employees to the firm
to create an advantage without allocating rent. In contrast, rent-sharing
strategies explicitly allocate a portion of the rent to reduce turnover and
Coff
1997
381
provide incentives that align employee and firm goals. Organizational

design strategies involve manipulating the organization's governance,
structure, and culture to cope with dilemmas. Finally, information strategies entail obtaining and analyzing unique sources of information to gain
an information advantage.
In Table 1 four case studies are listed that I will use to illustrate this
framework: (a) a securities brokerage firm, (b) a management training
seminar company, (c) a consumer magazine, and (d) a public accounting
firm. These vignettes were developed through semistructured interviews
with managers regarding the nature and management of their human
assets. These data are not presented to test hypotheses. Rather, the examples serve to illustrate how different remedies might be employed, depending on the management dilemmas.
Retention Strategies
Turnover control is a critical component of strategy whenever there
are human assets (Huselid, 1995). However, unlike the turnover literature,
the strategy literature draws our attention to the production and distribution of rent. Thus, retention strategies specifically refer to policies that
promote retention without allocating the rent. In other words, one simple
solution is to pay people enough so they will not quit (Weiss, 1990). Although this promotes retention, it also allocates rent and is therefore
considered a rent-sharing strategy.
The turnover literature is a logical starting point for discussing retention strategies. A person's propensity to change jobs depends on perceptions of the current job relative to alternatives (Carsten & Spector, 1987;
Mobley, 1982; Rusbult, Farrell, Rogers, & Mainous, 1988). Thus, firms may
decrease turnover either by raising perceptions of the current job or by
lowering the perceptions of alternatives. These perceptions can be influenced by managing the nonfinancial aspects of job satisfaction and by
investing in firm-specific skills.
Perceptions of the current job and nonfinancial facets of satisfaction.
Job satisfaction is featured prominently in the turnover literature as an
assessment of perceptions of the current job (Hom, Caranikas-Walker,
Prussia, & Griffeth, 1992; Mobley, 1982). This focus on satisfaction helps to
underscore the fact that mere retention understates what the firm requires.
Because a sustainable advantage probably demands superior cooperation
and coordination over a prolonged period, employees must be loyal and
committed as well.
The job satisfaction literature is particularly helpful because pay is
one of many facets of satisfaction (Rice, Gentile, & McFarlin, 1991). For
example, the Job Descriptive Index measures five dimensions of satisfaction: (a) pay, (b) supervision, (c) coworkers, (d) promotion, and (e) the work
itself (Jung, Dalessio, & Johnson, 1986). There is evidence that nonfinancial
facets can substitute for wages (Greenberg & Ornstein, 1983). Mobley (1982:
127) wrote about these trade-offs:
0
-Q)
April
Review
382
U)
U)
$a
J ;:I
a) 0
0
0
O
0
7c$ >
,::O
6)
-M
Q.
)..
-w
U)
W -U)
ul
01
En
4w
En
- - to
U
$a $a
0 0)
I...
u
U)
41
01
0
...4
04
0
U)
)..,0
Ul
Z
0
Q)
04
:I
VI
>
tn
>, ul
Ul
01
.tj
>
0 -O -$a
&d
zz
(1) 0 0
E-4
>
tj
: 0
tj Ul
Ei .- .::S0
u
u
rn
U2
I
>
'-
-0
U En
Aa.
u 0
0Z
En
'70
1997
Coff
383
An organization that puts all its emphasis on one facet (such

as pay, considerate supervision, job content, or working conditions, etc.) may be disappointed. Alternatively, the employer
who cannot adequately satisfy one value may be able to partially compensate by enhancing the attainment of other values.
Scarpello and Campbell (1983) found that, for scientists, pay satisfaction was not even the most important facet. However, even where pay
satisfaction carries great weight, it may not be driven solely by the absolute pay level. For example, pay satisfaction is strongly influenced by
perceptions of equity or distributive justice (Berkowitz, Fraser, Treasure, &
Cochran, 1987; Blau, 1994; McFarlin & Sweeney, 1992). Accordingly, pay
differentials within the firm may be more important than the pay relative
to the labor market. This, in turn, implies that firms can increase pay
satisfaction without competing with other employers. External comparisons often do not begin until a shock has prompted search behavior (Lee,
Mitchell, Wise, & Fireman, 1996).
The nonfinancial facets offer even more opportunities. Firms can improve satisfaction with supervision by training and selecting people to
provide learning opportunities, promote employee participation, provide
recognition, and promote fairness. For example, when supervisors must
make unpopular decisions, employees respond more favorably when they
feel that the process was fair (Taylor, Tracy, Renard, Harrison, & Carroll,
1995). Emerging research suggests that procedural justice is even more
important than perceptions of distributive justice (Brockner & Siegel, 1996).
This may be especially important for getting employees to use voice response when they are dissatisfied (Rusbult et al., 1988).
Satisfaction with coworkers can be increased by managing group
demography and social activities to create a team-based work environment (Dimarco, 1975; O'Reilly, Caldwell, & Barnett, 1989). In other words,
the more individuals develop strong relationships within the firm, the less
likely they are to leave (Jackson, Brett, Sessa, Cooper, Julin, & Peyronnin,
1991; Krackhardt & Porter, 1986). Such internal ties may be important even
when the most critical social networks are external. For example, although
high-producing brokers (Firm 1 in Table 1) rely on external networks of
customers (they can bring 95% of their business with them), the turnover
rate is still under 10%.4Of course, such ties are beneficial to both the
employee and the firm-the brokers like their firms' support services and
their coworkers. Thus, it is not surprising that many new employees actively seek out and develop these networks (Morrison, 1993).
Firms can enhance satisfaction with promotion by structuring career
paths so that assignments are offered as rewards. The main caveat is that
employees must perceive that such promotions are earned (Greenberg &
4 Personal relationships with customers are central to personal and professional service
businesses, among others, and are transferable (in varying degrees) when employees move
to competing firms (Seabright, Levinthal, & Fichman, 1992).
384
Review
April
Ornstein, 1983). This is a consistently important facet across populations

and need not be directly linked to wages (Rice et al., 1991; Scarpello &
Campbell, 1983).
The last major dimension of job satisfaction, the work itself, is
particularly important to professionals (Humphrys & O'Brien, 1986). Typically, professionals seek more autonomy and input than other types of
employees (Raelin, 1991). The job design literature should help firms
to design jobs that are motivating to such employees (Hackman &
Oldham, 1980).
In sum, because employees value nonfinancial dimensions of satisfaction, these facets can substitute for wages. Accordingly, depending on
employee preferences, firms should be able to retain human assets without
directly allocating rent. Once in place, the work climate may be relatively
cheap to maintain. Since it is valuable to employees but relatively cheap,
the climate may be a key part of a sustainable advantage.
Perceptions of alternative jobs and firm specificity. Firms have a less
direct influence on employees' perceptions of alternative jobs than on the
current job. However, because firm specificity limits worker mobility, firms
can influence these perceptions by offering firm-specific compensation
that competitors cannot duplicate. Another way is to implement firmspecific routines so that employee knowledge will be less transferable.
Firm-specific compensation. The earlier discussion of the nonfinancial
aspects of job satisfaction ignored the fact that these facets tend to be
firm specific. That is, interpersonal relationships, challenging work, and
advancement opportunities are unique to, and embedded in, a given firm.
This firm-specific compensation limits employee mobility even for general
human capital because other firms cannot duplicate it (e.g., valued relationships with specific coworkers). Thus, although the human capital literature suggests that workers will not undertake firm-specific investments
without added wages (Becker, 1983), firm-specific compensation requires
no such inducements. Ultimately, workers are difficult to lure away because they must decide whether an increase in pay sufficiently compensates for a decrease in psychic income. Recently, brokerage firms have
lured high-producing brokers from other firms with very large signing
bonuses (Wall Street Journal, 1996). These bonuses might be viewed as an
attempt to reimburse brokers for the loss in firm-specific compensation.
Encourage firm-specific investments. Another way to reduce mobility
is to introduce firm-specific knowledge that binds people more tightly to
the firm. This would promote retention because the knowledge and skills
would be less transferable to other firms. If this knowledge does not have
an intrinsic positive utility (as do the dimensions of job satisfaction), it is
best analyzed in the traditional investment framework, rather than in a
compensation framework, as above. In order to use this strategy, firms
must induce workers to learn firm-specific skills at a cost that does not
exceed the additional generated benefits. Human capital theorists sug-
Coff
1997
385
gest that the cost and benefits from the training will be shared (Becker,
1983). However, if the firm is able to attain super-normal profit as a result,
the rent that is left for other stakeholders may be substantial.5
In addition, contrary to the human capital literature, the socialization
literature suggests that employees may not demand compensation for
initial investments (Morrison, 1993). New hires may consider firm-specific
investments to be within their zone of indifference (Barnard, 1938). In other
words, they expect that they will have to learn policies and procedures
and are actually more motivated when such information is presented
clearly (Tannenbaum, Mathieu, Salas, & Cannon-Bowers, 1991).
Accordingly, firms may be able to cope with the threat of turnover by
consciously introducing firm-specific routines. These routines may not
even be technically efficient but may help the firm retain employees long
enough to generate rent. Williamson (1975) suggested that firm-specific
knowledge can be increased by creating idiosyncracies in equipment,
processes, teams, or communication. For example, the trainers in the management training seminar company (Firm 2 in Table 1) have relatively
general skills: presenting skills and knowledge of supervision (because
they train first-line supervisors). These might easily be applied in a variety
of different firms. However, the company consciously develops proprietary
training materials so that presenters cannot leave the firm and compete
directly against them. As a result, when presenters exit, they typically do
not continue conducting seminars.
In sum, firms should be able to retain human assets without directly
allocating rent. Such retention strategies involve managing job satisfaction and creating firm-specific knowledge and routines. Although these
strategies are most important for general human assets, they may always
be relevant, because there is inevitably some risk of turnover. Thus:
Proposition 1: Firms are more likely to generate rent from
human assets when they adopt retention strategies (e.g.,
managing satisfaction and creating firm-specific knowledge or routines).
From a strategic standpoint, competitors might be able to imitate
these strategies. For example, they might be able to create a supportive
environment or firm-specific routines. If so, these policies would shift the
focus from a retention problem to an acquisition problem. Like baseball's
free agent system, the challenge is in signing young talent before it gets
picked up by another team.
Rent-Sharing Strategies
Rent-sharing strategies are important both to manage turnover (arrow
F in Figure 1) and to align goals in the absence of information (arrow H
5 Human capital theory does not consider the possibility of rents flowing to other stakeholders, because it does not examine competitive advantage or adopt a stakeholder approach
to the firm.
386
April
in Figure 1). Sharing the rent promotes retention by raising wages above
the labor market. In a sense, this is a form of efficiency wage that provides
a penalty for exiting (Weiss, 1990). In addition, employees are less likely
to leave when they perceive that they are well paid for their performance
(Lawler & Jenkins, 1990;Zenger, 1992). However, unlike retention strategies,
rent sharing may directly reduce the rent available for other stakeholders.
Rent sharing also can help to align goals to cope with agency problems. As examined earlier, asymmetric information creates a risk that
employees will use the information imbalance to exploit the firm. The
classic remedy in agency theory is to align individual and organizational
objectives through rent sharing or residual claimancy (Barzel, 1989; Chi,
1994). Thus, by making employees' earnings contingent on profitability or
performance (arrow H in Figure 1), the firm need not incur high monitoring
costs to cope with the dilemma.
In this context, it is important to note the level at which the residual
is observable. We normally think of residuals in terms of profitability.
However, even at the individual or group levels, differentials between the
cost of inputs and the value of the outputs may be observable. It is likely
that rent-sharing strategies should focus on the lowest level at which
residuals can be observed (Zenger & Marshall, 1995). For example, in
the absence of information about individual performance, firms should
probably provide rewards based on group or organizational performance.
Organization-level rent sharing. Stock ownership and profit sharing
are classic solutions to agency problems (Jensen & Meckling, 1976). When
employees are owners, their rewards depend on organizational outcomes.
Ownership should align employee goals with those of the firm, even if
the stock does not grant employees control, because they would still have
something at stake. However, a number of factors limit the effectiveness
of organization-level rent sharing: (a) the amount of rent shared may be
insignificant to influence behavior, (b) employees may not have an opportunity for voice, and (c) some employees may cash the stock in nullifying
its binding properties (Lawler & Jenkins, 1990). Nevertheless, there are a
number of successful high-profile employee-owned firms that suggest that
these problems can be resolved. Of course, these policies should probably
be directed toward the primary human assets. Such people are more likely
to have influence in decision making and may be less inclined to cash in
their stock since their efforts can influence its value.
Organization-level rent sharing, such as long-term incentives (Balkin & Gomez-Mejia, 1985) and profit sharing (Smith, 1988), is especially
common in high-technology firms. Similarly, the consumer magazine (Firm
3 in Table 1) used firm-level incentives to align the editor's goals. These
encouraged the editor to adopt a scope beyond the specific publication
(since the firm held several magazines).
Time horizon is particularly important for executives, because they
are often accused of adopting overly short planning horizons (Laverty,
1996). Schotter and Weigelt (1992) suggested that ownership corrects this
1997
Coff
387
problem. They found that long-term incentives, such as ownership, influenced subjects to apply more realistic discount rates. However, Zajac and
Westphal (1994) found that such incentives were more costly when firms
face a great deal of risk. Furthermore, Sanders, Davis-Blake, and Fredrickson (1995) found that powerful CEOs were able to influence the structure of their incentives in a manner consistent with their interests. Thus,
it may be difficult to implement this strategy for top management or when
the firm faces a great deal of risk.
Group-level rent sharing. In team-based production, individual contributions are often hard to observe. However, it may be possible to share
gains at the group level (Lawler & Jenkins, 1990). Group-level performance
measurement and incentives have been found to increase productivity
(Pritchard, Jones, Roth, Stuebing, & Ekeberg, 1988). Similarly, Zenger and
Marshall (1995) found group incentives were especially effective when
applied to the smallest possible group.
The public accounting firm (Firm 4 in Table 2) used rent-sharing strategies to address the problem of cooperation in the business development
process. Partner bonuses are not determined solely from the revenue generated from their specific clients (even though this is easily measured).
That is, all partners share the incoming revenue. This is because efforts
to track different roles in the business development process tend to discourage cooperation.
Individual-level rent sharing. Under conditions of asymmetric information, normally, there is insufficient information to stress individual
incentives. Individual incentives are most effective when: (a) individual
effort can influence the outcome measure (expectancy), (b) rewards are
linked to the outcome measure (instrumentality), and (c) the rewards are
highly valued (valence) (Vroom, 1964). Even then, there is a concern that
incentives based on the observable output cannot address all of the desired behaviors (Kerr, 1975). This suggests that individual-level rent sharing will generally be less useful under conditions of poor information.
Still, for general human assets such incentives may be quite powerful.
In the case of the brokerage firm (Firm 1 in Table 1), individual contributions were observable and brokers were paid approximately one-third of
the gross commissions received from their clients.
In sum, rent sharing is an important strategy, because it can both
bind human assets to the organization and motivate them to cooperate to
produce the rent. Although the firm must allocate some rent in order to
achieve these results, there may be a considerable amount left for other
stakeholders.
human assets when they adopt rent-sharing strategies
(e.g., profit sharing, group incentives, or performancebased compensation).
388
Organizational
April
Design Strategies
Organizational design strategies involve managing or influencing

elements of the structure and culture to align individual goals with those
of the organization in the absence of information. Within the domain of
design strategies, there are three types of mechanisms that we might
distinguish: shared governance, organic structure, and culture. Each of
these, in turn, has the potential to help the firm cope with both the threat
of turnover (arrow G in Figure 1)and the hazards of asymmetric information
(arrow I in Figure 1).
Shared governance. Shared governance is similar to the concept of
participation in decision making. However, much of the organizational
behavior research examines interventions at the lower levels, such as
quality circles or participation in individual goal setting (Wagner & Gooding, 1987). Shared governance is intended to include a broader scope
of issues and a more serious commitment to "symbolic egalitarianism"
(Pfeffer, 1994). Such policies have the potential to help control turnover
and cope with information dilemmas.
Shared governance is a tool for managing turnover (arrow G in Figure
1), largely through the relationship between participation and satisfaction.
That is, although the association between participation and productivity
is tenuous, there is a fairly consistent relationship between participation
and satisfaction (Miller & Monge, 1986; Wagner, 1994). This, in turn, suggests that participation may help to manage turnover by making employees more satisfied (Jackson, 1983; Mobley, 1982). The brokerage firm (Firm
1 in Table 1) gave the high-producing brokers considerable influence in
major decisions. Because broker productivity is observable (there are few
information problems), it would appear that participation is important here
for the purpose of retention. This may also be one reason that professional
organizations, such as law firms, involve employees in decision making,
particularly with respect to professional norms (Tolbert & Stern, 1991).
Participation can also help managers to make decisions when there
is asymmetric information (arrow I in Figure 1). Thus, the availability of
information is one of the primary situational factors in Vroom and Yetton's
(1973) normative model of participation in decision making. Similarly,
quality interventions (e.g., quality circles, TQM, reengineering) assume
that management has incomplete information and must seek input from
employees, customers, and competitors (Deming, 1989).
Participation also plays a fundamental role in higher level strategic
decisions. For example, Mintzberg (1987) suggests that grass roots strategy
making is critical for the process of crafting a business strategy. Similarly,
Eisenhardt (1989) and Dean and Sharfman (1996) found that the decision
process was an important determinant of decision quality. Eisenhardt
(1989) found that the best decision makers used consensus with qualification and relied on input from others in the firm (e.g., real-time information
about the firm's operations). The group process and involvement of others
1997
Coff
389
outside the executive team allowed them to make faster, higher quality
decisions. The accounting firm and the consumer magazine (Firms 3 and
4 in Table 1) granted significant authority and autonomy to partners and to
the editor, respectively. Asymmetric information and uncertainty demand
that these professionals be involved in "crafting" the strategy for the
company as a whole.
Organic structure. Mechanistic structures have clearly specified routines and a clear line of authority (Burns & Stalker, 1961). However, as
shown in Figure 1 (arrow I), such systems may break down if there is
asymmetric information (Ouchi, 1980). The alternative is a more organic
or flexible structure. Organic structures are flatter with more lateral and
face-to-face communication. Tasks and roles also tend to be loosely defined. Put another way, organic structures are designed to accommodate
social complexity (e.g., team production). This link is supported by Snell's
(1992) finding that work-flow integration is negatively associated with
output and behavior control. In other words, when there is greater interdependence (e.g., reliance on networks), firms are less likely to rely on formal controls.
Organic structures also help the firm to manage the threat of turnover
(arrow G in Figure 1). By definition, they are more likely to have idiosyncratic or firm-specific routines. Employees must develop more complex
internal networks to get their jobs done (as opposed to utilizing a clear
chain of command). These firm-specific relationships and procedures, in
turn, make it more difficult for employees to move to other firms.
Corporate culture. Culture refers to common values, beliefs, and norms
held within a firm. A strong culture is one that is widely shared in the
organization (Schein, 1985). Like the other design strategies, a strong
culture may help a firm cope with both the threat of turnover and
information dilemmas. In the case of turnover, once employees are
acclimated to the culture, it may be very difficult for them to find a
match at other firms. Other alternatives will seem less attractive and
employees are more likely to exhibit commitment and citizenship behaviors (Arthur, 1994; Sheridan, 1992). This finding is consistent with evidence
from the accounting firm (Firm 4 in Table 1) because management
worked hard to hire and socialize new employees. Subsequently, promotions were made from within to ensure that the culture was maintained
throughout the firm.
Culture is also important for coping with information dilemmas (arrow
I in Figure 1). Ouchi (1980) suggested that a strong culture (e.g., clan control)
may substitute for other types of control that do not function well under
conditions of asymmetric information. That is, employees may choose to
adhere to the firm's informal norms and not act opportunistically, even if
the firm cannot monitor them.
Therefore, organizational design strategies in the form of shared governance, organic structures, and culture management may help firms to
address both turnover and information dilemmas without directly allocat-
390
April
ing rent. This may help to explain why design strategies are featured in
many of the emergent organizational forms (horizontal, networked, boundaryless, virtual, upside down, etc.). Different forms draw on distinct combinations of design strategies and vary in the extent that they address
turnover and information dilemmas. For example, virtual organizations
are temporary (e.g., turnover is not a concern) and it is difficult to envision
a strong culture. At the same time, this design typically involves some
form of shared governance and flexibility of roles (organic) that should
help the firm cope with information problems. Thus, it would appear that
design can be a valuable tool:
human assets when they adopt organizational design
strategies (e.g., shared governance, organic structures,
and a strong culture).
Information Strategies
As was discussed, asymmetric information can lead to agency problems and, even in the absence of opportunism, poor decisions. Thus, information is a valuable commodity and firms have strong incentives to seek
better information sources. If a firm is able to obtain scarce information,
this, in itself, may be an important part of gaining a sustainable advantage. Firms must seek distinct types of information to mitigate the problems of moral hazard and adverse selection.
Information sources to cope with moral hazard. Firms may seek information about current workers through supervisory monitoring, peer and
subordinate feedback, or external information sources. In general, as is
noted, the first alternative may not be viable for managing human assets.
Supervisory monitoring. Agency theory suggests that a common way
of responding to problems of moral. hazard is increased supervisory monitoring. This assertion is supported by empirical findings that bureaucratic
controls are associated with firm-specific skills and technological change
(Baron, Davis-Blake, & Bielby, 1986; Pfeffer & Cohen, 1984). Similarly, DiPrete (1987) attributed internal hiring patterns in a government agency to
asymmetric information and task idiosyncrasy. Because firm specificity
is associated with causal ambiguity and social complexity, these may
represent attempts to cope with information problems.
Nevertheless, monitoring can be very costly and ineffective, especially
if it lowers morale. Only the management training seminar company (Firm
2 in Table 1) seemed to use supervisory monitoring a great deal-it sent
observers to make sure the seminar content was consistent. HMOs also
monitor doctors to help mitigate problems of asymmetric information. That
is, although the firm cannot monitor each decision, it does track and analyze data on doctors' decisions over time. The firm then uses the possibility
of dropping doctors from the network to influence decisions (Wall Street
Journal, 1993). Neither the doctors nor the presenters relished the firm
1997
Coff
391
looking over their shoulder. Morale and commitment suffered in both

cases.
Peer/subordinate feedback. Common sources of internal information
include peer and subordinate appraisal. Used in concert, these may provide better information without the hazard of lowering morale. Firms often
collect such information as part of management development efforts. Managers then use these multiple perspectives to improve their skills (Smither,
London, Reilly, & Millsap, 1995). Some firms also use peer and subordinate
evaluations as part of the formal appraisal system (London & Smither,
1995). Because management is a tacit skill (Castanias & Helfat, 1991), these
additional information sources can be critical.
Pritchard and colleagues (1988) also found that in a team production
context, group feedback may improve performance substantially. A group
may be able to disentangle differences in performance and effort that a
manager might find difficult to observe. Also, they found that the focus
on performance feedback helps groups to establish strong performance
norms.
External information sources for evaluating employees. Firms also
may seek external information from customers, external peers, or suppliers
to evaluate employees. The consumer magazine (Firm 3 in Table 1) collected extensive information from advertisers because they are leading
indicators of how subscribers will receive a new editor's vision. Similarly,
the training seminar company (Firm 2 in Table 1) tracked customer comments and closely monitored the presenter to assure the quality and consistency of presentations.6 This type of customer-based performance measurement is often a central component of TQM initiatives (Deming, 1989).
In the case of professionals, the external network of peers can help
the firm evaluate performance (arrow J in Figure 1). Zucker (1991) describes
how universities often lack expertise in specific fields to evaluate academic excellence. Consequently, they use external networks to mitigate
asymmetric information. Similarly, Henderson and Cockburn (1994) found
that pharmaceutical companies rely on external recognition, in the form
of publications, to reward top performers. Strong professional norms
driven by an external knowledge base and network may augment or even
substitute for internal control mechanisms (Scheid-Cook, 1990).
Information sources to cope with adverse selection. The problem of
adverse selection requires that firms be able to assess labor market data
to evaluate tacit knowledge. Firms often rely on crude signals, such as the
educational level achieved, even though wide variations in productivity
remain (Spence, 1973). This is part of the reason why adverse selection
might keep high performers out of the labor market (Akerlof, 1970). The
ability to identify human assets using incomplete information may even
be central to gaining a sustainable advantage. This mastery may take
'For instance, there was an approved list of jokes to be used with each seminar.
392
Review
April
the form of limiting exposure to the external labor market, a competency

in interpreting tacit labor market signals, or the ability to identify talent
in the absence of information.
Limiting exposure to the labor market. One way to avoid adverse
selection is to limit the firm's exposure to external labor markets. Firms
may hoard human capital or promote from within to avoid adverse selection (Dalton & Kesner, 1985). Hoarding involves retaining workers during
economic downturns so that the firm need not hire people of uncertain
quality at the crest of each business cycle. The consumer magazine (Firm
3 in Table 1) sometimes employed mediocre editors for extended periods
of time because it would take up to three years to know whether a replacement was any better. In contrast, the accounting firm (Firm 4 in Table 1)
used an up-or-out position in its hierarchy to promote only those employees
that had been observed for a time.
Competency in interpreting labor market signals. An alternative to
avoiding the labor market is to develop sophisticated ways of gathering
and interpreting information. For example, as knowledge about productivity has increasing strategic value, employment information from competitors takes on strategic significance (Waldman, 1990). Thus, senior management at the consumer magazine (Firm 3 in Table 1) monitored departmental
editors' performance at competing publications to help identify talented
junior editors. Often, these promising junior editors become part of the
applicant pool for senior editor positions.
Interestingly, this tendency to seek information from competitors may
have implications for information production within firms. Firms may actually underinvest in information production to prevent competitors from
gaining access to it (Waldman, 1989). Though it perpetuates management
problems, such secrecy may help to maintain causal ambiguity over time
(Lippman & Rumelt, 1982).
Competency in identifying talent without labor market signals. Poppo
and Weigelt (1994) presented a reputational model of competitive advantage in labor market transactions. In studying the market for free agents
in baseball, they found that owners were able to exploit the lag between
performance and recognition in the market. Teams take advantage of
asymmetric information about free agent performance in the early years
of players' careers and base compensation more on the owner's perceptions of the player than on actual performance. Because the owner has
better information, his or her perception can precede the player's development of a reputation and the owner can realize rent from the information
imbalance. Later, as players approach retirement, owners place more
emphasis on actual performance (lagged) and less on their perception,
because the player's reputation is established and there is less asymmetric information.
In sum, firms may be able to overcome some information problems
by obtaining better information or honing their ability to interpret tacit
information. Problems of moral hazard require that these efforts be focused
Coff
1997
393
on existing employees while adverse selection indicates that effort should

be focused on the labor market. In either case, human assets would generally demand astute information management.
Proposition 4: Firms that obtain high-quality internal
and external information are more likely to build a sustainable advantage from social networks or causally ambiguous human assets.
IMPLICATIONS
Resource-based theory stresses the role of human assets in achieving
a sustainable advantage. However, as indicated in this article, human
assets engender major management challenges that must be overcome to
achieve an advantage. In order to move forward, resource-based theorists
must have a keen understanding of the problems introduced by tacit resources. While this article has explored some of these dilemmas, its most
significant contribution is to raise new research questions and bring some
methodological problems to light.
Implications for Research
Although the essential dilemma examined here is linked to resourcebased theory, the discussion also has drawn on a variety of other literatures. That is, the problem arises within the strategic management literature, but the solutions must span disciplinary boundaries. As such, the
directions for future research begin in the strategy literature but extend
well beyond that domain.
Strategic management. The framework set forth here suggests two
major areas for future research in strategic management: (a) research
should examine the organizational capabilities required to generate a
sustainable advantage, and (b) research should identify different configurations or types of human assets.
First, in this article I question what resources really have the potential
to generate a sustainable advantage. Considering the obstacles described
here, it might be argued that human assets alone cannot be the source
of a sustainable advantage. Rather, firms can only generate rent if they
also have systems to cope with the associated dilemmas. These systems
may represent inimitable capabilities since they reflect the idiosyncratic
nature of the human assets. Research that expands and integrates organizational learning with the resource-based view would help us to understand these capabilities (Lant & Mezias, 1990; Williams, 1992).
In addition, Figure 1 helps to highlight that different human asset
profiles represent unique combinations of specificity, social complexity,
and causal ambiguity. These profiles, in turn, might create distinct patterns in the dilemmas faced. Additional research should identify patterns
394
Review
April
in these attributes, the rent-generating potential of different configurations, and the challenges each pattern creates. For example, it seems
reasonable that a personal service firm faces different problems from a
biotechnology firm. Yet both depend heavily on human assets. Black and
Boal (1994) embarked on a related path with their configurational approach
to strategic resources. Future research might build on this by estimating
specificity, social complexity, and causal ambiguity and by linking these
to the management dilemmas as well as to firm performance.
Human resource management and organizational behavior. In addition, this article highlights a need for studies that explore how firms
resolve these dilemmas. Here, coping strategies were presented with a
mixture of anecdotal and existing empirical evidence. Subsequent research should identify the strategies and assess their relative effectiveness in dealing with the various challenges.
Furthermore, this discussion has not explored interdependencies
among coping strategies. That is, some strategies may be linked or even
causally dependent upon others. For example, culture management entails influencing elements of satisfaction such as supervision, coworkers,
promotion criteria, and rewards (Schein, 1985). There is also a chronological link between hiring, motivating, and retaining. Although these activities are ongoing and concurrent, they must be compatible as employees
proceed from one process to the next.
Exploration of the coping strategies requires strategy-driven studies
that integrate the organizational behavior, human resource management,
and organizational theory literatures. For example, even though the turnover and satisfaction literatures are quite mature, they do not explicitly
address differences between general and specific knowledge. This article
suggests that retention strategies are particularly important when there
is general knowledge. However, turnover research has not directly tested
how the retention strategies might have to vary with the type of knowledge.
For example, facet importance appears to vary with the sample studied
(Rice et al., 1991; Scarpello & Campbell, 1983).
Although rent sharing has been examined in the strategic compensation literature (Ehrenberg & Milkovich, 1987; Lawler & Jenkins, 1990), researchers have not examined how strategic compensation practices
should vary with the type of human assets. That is, rent-sharing strategies
might be indicated with some types of human assets and not with others.
Similarly, information strategies are drawn from the appraisal and selection literatures. Although these areas are well developed, there has been
relatively little work examining how such policies should vary with the
type of human assets. These inquiries are important for a research agenda
that is linked to the strategy literature.
The organizational design strategies are linked to structural contingency theory. Even though this literature is mature (Miller, Glick, Wang, &
Huber, 1991), the more flexible, innovative designs are closely linked to
the study of emergent organizational forms (Daft & Lewin, 1993). Neither
1997
Coff
395
of these literatures has been integrated with resource-based theory. Future

studies might correlate different configurations of human assets with various design strategies. What dilemmas do the emergent forms help to
resolve and what dilemmas do they create?
These questions are central to the applicability of resource-based
theory. Without answers, we cannot hope to understand the link between
merely having resources and achieving a sustainable advantage from
them. Again, the framework presented here suggests that firms must have
both the human assets and the organizational capabilities to manage
them. Each element may be necessary, but neither by itself may be sufficient to bring about a sustainable advantage.
Methodological
Issues
This inquiry also raises methodological questions. It requires that we

identify tacit constructs, including asset specificity, social complexity,
causal ambiguity, and asymmetric information. Such measures are elusive for the same reasons that strategic assets are hard to imitate. Still,
even imperfect measures may yield useful insights if they are correlated
with competitive advantage.
Perhaps more central is the question of how to identify firms that have
human assets (human-asset-intensive
or HAI). This requires more than
a simple distinction between service and manufacturing firms because
advanced manufacturing methods are driven by human assets (Snell &
Dean, 1992). Furthermore, HAI firms are no more alike than physical-assetintensive firms. Human assets may range from a group of professionals
to a single editor who builds a successful magazine. The various types
of assets have different properties and, accordingly, unique consequences.
Existing research has laid some of the groundwork for the measures.
Asset specificity has long been used in the economics (Becker, 1983) and
organization theory literatures (Masten, Meehan, & Snyder, 1991). General
human capital is measured by formal schooling while firm-specific skills
are reflected in informal training. Coff (1995) found that even these crude
measures helped to explain how buyers cope when acquiring knowledgeintensive targets.
Social complexity is an emerging topic in the organizational theory
literature under the rubric of social capital or social networks. Thus, there
are existing measures of internal and external social complexity. For
example, D'Aveni & Kesner (1993) studied CEO networks as a determinant
of target resistance in corporate acquisitions. Similarly, internal social
networks have been studied as predictors of influence and turnover patterns in organizations (Brass, 1984; Krackhardt & Porter, 1986). Measures
such as team size and interdependence could serve as proxies in empirical research.
Although causal ambiguity is difficult to observe, it might be possible
to identify organizational settings in which it is more likely to occur. For
396
April
example, one indicator of its presence is when stakeholders make very

different assessments about which factors lead to the firm's success. Existing measures such as task programmability or crystallization are the
inverse of causal ambiguity (Sneli, 1992). Similarly, asymmetric information could be measured by examining the ease with which management
can monitor employees or observe output. Do managers have the expertise
to assess employees' knowledge bases and contributions? This might be
operationalized as differences in functional orientation or knowledge base
between managers and employees.
Thus, even though measurement problems represent a challenge for
research methods, they should not prevent the study of human assets. In
many cases, existing measures need only be applied to explore a different
research agenda.
Implications for Managers
Numerous authors offer prescriptions for how to achieve a sustainable
competitive advantage (e.g., Peters & Waterman, 1982; Pfeffer, 1994). Although these suggestions are often based on observations of actual firms,
they are not generally drawn from theory. Likewise, managers adopt some
of the policies implemented by successful firms without the benefit of a
theory explaining exactly what the policies accomplish.
For example, Pfeffer (1994) outlined employment practices, such as
symbolic egalitarianism, overarching philosophies, and cross utilization,
that successful firms consistently employ. Although this enumeration is
useful, it doesn't focus on the role that these practices play in generating
an advantage. Specifically, these practices should help to resolve the
problems discussed earlier. Interestingly, almost all of the practices that
Pfeffer described are either organizational design or rent-sharing strategies. In other words, they should help firms cope with both the threat of
turnover and information problems. It may be useful for firms implementing "excellent practices" to understand how these steps might help to
mitigate specific management dilemmas.
REFERENCES
Akerlof, G. A. 1970. The market for 'lemons': Quality uncertainty and the market mechanism.
Quarterly Journal of Economics, 84: 488-500.
Alchian, A. A., & Demsetz, H. 1972. Production, information costs, and economic organization.
American Economic Review, 62: 777-795.
Amit, R., & Schoemaker, P. J. H. 1993. Strategic assets
Management Journal, 14: 33-46.
and organizational
Arthur, J. B. 1994. Effects of human resource systems on manufacturing

turnover. Academy of Management Journal, 37: 670-687.
rent. Strategic
performance and
Balkin, D. B., & Gomez-Mejia, L. 1985. Compensation practices in high-technology

Personnel Administrator, 30: 111-123.
industries.
1997
Coff
397
Barnard, C. I. 1968 {1938}. The functions of the executive. Cambridge, MA: Harvard University Press.
Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17: 99-120.
Baron, J., Davis-Blake, A., & Bielby, W. 1986. The structure of opportunity: How promotion
ladders vary within and among organizations. Administrative Science Quarterly, 31:
248-273.
Bartol, K. M. 1979. Professionalism as a predictor of organizational commitment, role stress,
and turnover: A multidimensional
approach. Academy of Management Journal, 22:
815-821.
Barzel, Y. 1989. Economic analysis of property rights. Cambridge, England: Cambridge University Press.
Becker, G. 1983. Human capital: A theoretical and empirical analysis with special reference
to education. Chicago: University of Chicago Press.
Berkowitz, L., Fraser, C., Treasure, F. P., & Cochran, S. 1987. Pay, equity, job gratifications,
and comparisons in pay satisfaction. Journal of Applied Psychology, 72: 544-551.
Black, J. A., & Boal, K. B. 1994. Strategic resources: Traits, configurations, and paths to sustainable competitive advantage. Strategic Management Journal, 15: 131-148.
Blau, G. 1994. Testing the effect of level and importance of pay referents on pay level
satisfaction. Human Relations, 47: 1251-1268.
Brass, D. J. 1984. Being in the right place: A structural analysis of individual influence in an
organization. Administrative Science Quarterly, 29: 518-539.
Brockner, J., & Siegel, P. 1996. Understanding the interaction between procedural and distributive justice. In R. M. Kramer & T. R. Tyler (Eds.), Trust in organizations: Frontiers of theory
and research. Thousand Oaks, CA: Sage.
Burns, T., & Stalker, G. M. 1961. The management
of innovation. London: Tavistock.
Carsten, J. M., & Spector, P. E. 1987. Unemployment, job satisfaction, and employee turnover:
A meta-analytic test of the Muchinsky model. Journal of Applied Psychology, 72:
374-381.
Cascio, W. F. 1991. Costing human resources: The financial impact of behavior in organizations. Boston: PWS-Kent.
Castanias, R., & Helfat, C. 1991. Managerial resources and rents. Journal of Management,
17: 155-171.
Chi, T. 1994. Trading in strategic resources: Necessary conditions, transaction cost problems,
and choice of exchange structure. Strategic Management Journal, 15: 271-290.
Chiang, S. H., & Chiang, S. C. 1990. General human capital as a shared investment under
asymmetric information. Canadian Journal of Economics, 23: 175-188.
Coff, R. W. 1995. Adapting to control dilemmas when acquiring human-asset-intensive firms:
Implications of the resource-based view. Paper presented at the annual meeting of the
Academy of Management, Vancouver.
Daft, R. L., & Lewin, A. Y. 1993. Where are the theories for the "new" organizational
An editorial essay. Organization Science, 4: 513-528.
forms?
Dalton, D. R., & Kesner, I. F. 1985. Organizational performance as an antecedent of inside/

outside chief executive succession: An empirical assessment. Academy of Management
Journal, 28: 749-762.
D'Aveni, R. A., & Kesner, I. F. 1993. Top management prestige, power, and tender offer response:
A study of elite social networks and target firm cooperation during takeovers. Organization Science, 4: 123-151.
398
April
Review
Dean, J. W., & Sharfman, M. P. 1996. Does decision process matter? A study of strategic
decision-making effectiveness. Academy of Management Journal, 39: 368-396.
Deming, W. E. 1989. Out of crisis. Cambridge, MA: MIT Press.
Dimarco, N. 1975. Life-style, work group structure, compatibility, and job satisfaction. Academy of Management Journal, 18: 313--322.
DiPrete, T. 1987. Horizontal and vertical mobility in organizations.
Quarterly, 32: 422-444.
Administrative
Science
Dittman, D., Juris, H., & Revsine, L. 1976. On the existence of unrecorded human assets, an
economic perspective. Journal of Accounting Research, Spring: 49-55.
Ehrenberg, R. G., & Milkovich, G. T. 1987. Compensation and firm performance. In M. M.
Kleiner, R. N. Block, M. Roomkin, & S. W. Salsburg (Eds.), Human resources and the
performance of the firm. Madison, W1: Industrial Relations Research Association.
Eisenhardt, K. M. 1989. Making fast strategic decisions in high velocity environments. Academy of Management Journal, 32: 543--576.
Greenberg, J., & Ornstein, S. 1983. High status job title as compensation
A test of equity theory. Journal of Applied Psychology, 68: 285-297.
for underpayment:
Grossman, S. J., & Hart, 0. D. 1986. The costs and benefits of ownership: A theory of vertical
and lateral integration. Journal of Political Economy, 94: 691-719.
Hackman, J. R., & Oldham, G. R. 1980. Work redesign. Reading, MA: Addison-Wesley.
Henderson, R., & Cockburn, I. 1994. Measuring competence? Exploring firm effects in pharmaceutical research. Strategic Management Journal, 15: 63-84.
Hom, P. W., Caranikas-Walker, F., Prussia, G. E., & Griffeth, R. W. 1992. A meta-analytical
structural equations analysis of a model of employee turnover. Journal of Applied Psychology, 77: 890-909.
Humphrys, P., & O'Brien, G. E. 1986. The relationship between skill utilization, professional
orientation and job satisfaction for pharmacists. Journal of Applied Psychology, 59:
315-326.
Huselid, M. A. 1995. The impact of human resource management practices on turnover,
productivity, and corporate financial performance. Academy of Management Journal,
38: 635-672.
Jackson, S. E. 1983. Participation in decision-making
strain. Journal of Applied Psychology, 68: 3-19.
as a strategy for reducing job-related
Jackson, S. E., Brett, J. F., Sessa, V. I., Cooper, D. M., Julin, J. A., & Peyronnin, K. 1991. Some
differences make a difference: Individual dissimilarity and group heterogeneity as correlates of recruitment, promotions, and turnover. Journal of Applied Psychology, 76: 675-689.
Jensen, M. C., & Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs
and ownership structure. Journal of Financial Economics, 3: 305-360.
Jung, K. G., Dalessio, A., & Johnson, S. M. 1986. Stability of the factor structure of the job
descriptive index. Academy of Management Journal, 29: 609-616.
Kerr, S. 1975. On the folly of rewarding
Journal, 18: 769-782.
A while hoping for B. Academy of Management
Kerr, S., Von Glinow, M., & Schriesheim, J. 1977. Issues in the study of professionals in
organizations: The case of scientists and engineers. Organizational Behavior and Human
Performance, 18: 329-345.
Kidwell, R. E., & Bennett, N. 1993. Employee propensity to withhold effort: A conceptual model
to intersect three avenues of research. Academy of Management Review, 18: 429-456.
399
Coff
1997
Klein, B., Crawford, R., & Alchian, A. 1978. Vertical integration, appropriable rents, and the
competitive contracting process. Journal of Law Economics and Organization, 21: 297-326.
Krackhardt, D., & Porter, L. W. 1986. The snowball effect: Turnover embedded in communication networks. Journal of Applied Psychology, 71: 50-55.
Lant, T. K., & Mezias, S. J. 1990. Managing discontinuous change: A simulation study of
organizational learning and entrepreneurship. Strategic Management Journal, 11:
147-179.
Laverty, K. 1996. Economic "short-termism": The debate, the unresolved issues, and the implications for management practice and research. Academy of Management Review, 21:
825-860.
Lawler, E. E., & Jenkins, G. D. 1990. Strategic reward systems. In M. Dunnette & L. Hough
(Eds.), Handbook of industrial and organizational psychology, vol. 2: 1009-1055. Palo Alto,
CA: Consulting Psychologists Press.
Lee, T., Mitchell, T. R., Wise, L., & Fireman, S. 1996. An unfolding model of voluntary turnover.
Academy of Management Journal, 39: 5-36.
Lippman, S. A., & Rumelt, R. P. 1982. Uncertain imitability: An analysis of interfirm differences
in efficiency under competition. The Bell Journal of Economics, 13: 418-438.
London, M., & Smither, J. W. 1995. Can multi-source feedback change perceptions of goal
accomplishment, self-evaluations,
and performance-related outcomes? Theory-based
applications and directions for research. Personnel Psychology, 48: 803-839.
Masten, S. E., Meehan, J. W., Jr., & Snyder, E. A. 1991. The costs of organization. The Journal
of Law, Economics and Organization, 7: 1-25.
McFarlin, D. B., & Sweeney, P. D. 1992. Distributive and procedural justice as predictors
of satisfaction with personal and organizational outcomes. Academy of Management
Journal, 35: 626-637.
Miller, C. C., Glick, W. H., Wang, Y., & Huber, G. P. 1991. Understanding technology-structure
relationships: Theory development and meta-analytic theory testing. Academy of Management Journal, 34: 370-399.
Miller, K. I., & Monge, P. R. 1986. Participation, satisfaction, and productivity: A meta-analytic
review. Academy of Management Journal, 29: 727-753.
Mintzberg, H. 1987. Crafting strategy. Harvard Business Review, 65: 66-75.
Mobley, W. H. 1982. Employee turnover: Causes, consequences,
Addison-Wesley.
and control. Reading, MA:
Morrison, E. W. 1993. Longitudinal study of the effects of information seeking on newcomer

socialization. Journal of Applied Psychology, 78: 173-183.
O'Reilly, C. A., Caldwell, D. F., & Barnett, W. P. 1989. Work group demography, social integration and turnover. Administrative Science Quarterly, 34: 21-37.
Ouchi, W. G. 1980. Markets, bureaucracies,
25: 129-141.
and clans. Administrative
Science Quarterly,
Peteraf, M. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic

Management journal, 14: 179-191.
Peters, T., & Waterman, R. 1982. In search of excellence:
companies. New York: Harper & Row.
Lessons from America's best-run
Pfeffer, J. 1994. Competitive advantage through people: Unleashing

force. Boston: Harvard Business School Press.
the power of the work
Pfeffer, J., & Cohen, Y. 1984. Determinants of internal labor markets in organizations. Administrative Science Quarterly, 29: 550-572.
400
Review
April
Polanyi, M. 1962. Personal knowledge: Toward a post critical philosophy. Chicago: University
of Chicago Press.
Poppo, L., & Weigelt, K. 1994. A valuation of organizational assets: Determining sources
of competitive advantage in a strategic factor market. Unpublished working paper,
Washington University, St. Louis, MO.
Pritchard, R. D., Jones, S. D., Roth, P. L., Stuebing, K. K., & Ekeberg, S. E. 1988. Effects of group
feedback, goal setting, and incentives on organizational productivity. Journal of Applied
Psychology, 73: 337-358.
Raelin, J. A. 1991. The clash of cultures: Managers managing professionals.
Business School Press.
Boston: Harvard
Rice, R. W., Gentile, D. A., & McFarlin, D. B. 1991. Facet importance and job satisfaction.
Journal of Applied Psychology, 76: 31-39.
Ross, L. 1977. The intuitive psychologist and his shortcomings: Distortions in the attribution
process. In L. Berkowitz (Ed.),Advances in experimental social psychology, vol. 10: 174-220.
New York: Academic Press.
Rusbult, C. E., Farrell, D., Rogers, G., & Mainous, A. G. 1988. Impact of exchange variables
on exit, voice, loyalty, and neglect: An integrative model of responses to declining job
satisfaction. Academy of Management Journal, 31: 599-627.
Sanders, W. G., Davis-Blake, A., Fredrickson, J. W. 1995. Prizes with strings attached: Determinants of the structure of CEO compensation. Academy of Management Best Papers
Proceedings, 266-270.
Scarpello, V., & Campbell, J. P. 1983. Job satisfaction:
Psychology, 36: 577-600.
Are all the parts there? Personnel
Scheid-Cook, T. L. 1990. Ritual conformity and organizational control: Loose coupling or

professionalization. Journal of Applied Behavioral Science, 26: 183-199.
Schein, E. H. 1985. Organizational
culture and leadership. San Francisco: Jossey-Bass.
Schotter, A., & Weigelt, K. 1992. Behavioral consequences

term bonuses. Management Science, 38: 1280-1298.
of corporate incentives and long-
Seabright, M. A., Levinthal, D. A., & Fichman, M. 1992. Role of individual attachment in
the dissolution of interorganizational relationships. Academy of Management Journal,
35: 122-160.
Sheridan, J. E. 1992. Organizational culture and employee retention. Academy of Management
Journal, 35: 1036-1056.
Simon, H. A. 1976. Administrative behavior: A study of decision-making
trative organization. New York: Free Press.
processes in adminis-
Smith, S. C. 1988. On the incidence of profit and equity sharing: Theory and an application
to the high tech sector. Journal of Economic Behavior, 9: 45-58.
Smither, J. W., London, M., Reilly, R., & Millsap, R. E. 1995. An examination of the effects of
an upward feedback program over time. Personnel Psychology, 48: 1-34.
Snell, S. A. 1992. Control theory in strategic human resource management: The mediating
effect of administrative information. Academy of Management Journal, 35: 292-327.
Snell, S. A., & Dean, J. W. 1992. Integrated manufacturing and human resource management:
A human capital perspective. Academy of Management Journal, 35: 467-504.
Spence, M. 1973. Job market signaling.
Quarterly Journal of Economics, 87: 355-374.
Steffy, B. D., & Maurer, S. D. 1988. Conceptualizing the economic effectiveness

resource activities. Academy of Management Review, 13: 271-286.
of human
401
Coff
1997
Tannenbaum, S. I., Mathieu, J. E., Salas, J. E., & Cannon-Bowers, J. A. 1991. Meeting trainees'
expectations: The influence of training fulfillment on the development of commitment,
self-efficacy, and motivation. Journal of Applied Psychology, 76: 759-769.
Taylor, S. M., Tracy, K. B., Renard, M. K., Harrison, J. K., & Carroll, S. J. 1995. Due process in
performance appraisal: A quasi-experiment in procedural justice. Administrative Science
Quarterly, 40: 495-523.
Teece, D. 1982. Towards an economic theory of the multiproduct firm. Journal of Economic
Behavior and Organization, 3: 38-63.
Tolbert, P., & Stern, R. 1991. Governance structures in organizations of professionals: Recent
trends in major law firms. In S. Barley & P. Tolbert (Eds.), Research in the sociology
of organizations: Organizations and the professions, vol. 10: 97-118. Greenwich, CT:
JAI Press.
Tushman, M. 1977. Special boundary roles in the innovation process. Administrative Science
Quarterly, 22: 568-586.
Vroom, V. H. 1964. Work and motivation. New York: Wiley.
Vroom, V. H., & Yetton, P. W. 1973. Leadership and decision-making.
of Pittsburgh Press.
Pittsburgh, PA: University
Wagner, J. A. 1994. Participation's effects on performance and satisfaction: A reconsideration

of research evidence. Academy of Management Review, 19: 312-330.
Wagner, J. A., & Gooding, R. Z. 1987. Shared influence and organizational behavior: A metaanalysis of situational variables expected to moderate participation-outcome relationships. Academy of Management Journal, 30: 524-541.
Waldman, M. 1989. Information on worker ability: An analysis of investment within the firm.
Information, Economics and Policy, 4: 57-80.
Waldman, M. 1990. Up-or-out contracts: A signaling perspective. Journal of Labor Economics,
8: 230-250.
Wall Street Journal. 1993. Physicians fight back as insurers cut them from health networks.
December 30: Al.
Wall Street Journal. 1994. Kidder's top talent is being signed up by rivals before Paine Webber
takeover. October 25: C1.
Wall Street Journal. 1996. Merrill may back off paying sign-on bonus. May 7: Cl.
Weiss, A. 1990. Efficiency wages: Models of unemployment,
Princeton, NJ: Princeton University Press.
Wernerfelt, B. 1984. A resource-based
171-180.
Williams, J. R. 1992. How sustainable
Review, 34: 29-51.
layoffs, and wage dispersion.
view of the firm. Strategic Management
Journal, 5:
is your competitive advantage? California Management
Williamson, 0. 1975. Markets and hierarchies analysis and antitrust implications: A study
in the economics of internal organization. New York: Free Press.
Zajac, E., & Westphal, J. 1994. The costs and benefits of managerial incentives and monitoring
in large U.S. corporations: When is more not better? Strategic Management Journal,
15: 121-142.
Zenger, T. 1992. Why do employers only reward extreme performance? Examining the relationships among performance, pay, and turnover. Administrative Science Quarterly, 37:
198-219.
Zenger, T., & Marshall, C. R. 1995. Group-based pay plans: An empirical test of the relationships among size, incentive intensity, and performance. Academy of Management Best
Papers Proceedings, 161-165.
402
Review
April
Zucker, L. 1991. Markets for bureaucratic authority and control: Information quality in professions and services. In S. Barley & P. Tolbert (Eds.), Research in the sociology of organizations: Organizations and the professions, vol. 10: 157-190. Greenwich, CT: JAI Press.
Russell W. Coff received his Ph.D. in management from UCLA. He is an assistant
professor of strategy and organization at Washington University in St. Louis. His
current research interests include the management of human assets, knowledge,
and competitive advantage.

Asset Management

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Asset Management

Transféré par

Droits d'auteur :

Formats disponibles

Human Assets and Management Dilemmas: Coping with Hazards on the Road to Resource-Based

CcAcademy of Management Review

HUMANASSETS AND MANAGEMENTDILEMMAS:

(Barney, 1991; Peteraf, 1993). If tacit knowledge cannot be conveyed, how

Academy of Management Review

Academy of Management Review

turnover, they may still be able to achieve an advantage. Strategies for

poses the classic dilemmas inherent in team production. Alchian and

'Note that if individual productivity is observable (i.e., no information problems), the

provide incentives that align employee and firm goals. Organizational

An organization that puts all its emphasis on one facet (such

Ornstein, 1983). This is a consistently important facet across populations

Academy of Management Review

Academy of Management Review

Organizational design strategies involve managing or influencing

Academy of Management Review

looking over their shoulder. Morale and commitment suffered in both

the form of limiting exposure to the external labor market, a competency

on existing employees while adverse selection indicates that effort should

of these literatures has been integrated with resource-based theory. Future

This inquiry also raises methodological questions. It requires that we

Academy of Management Review

example, one indicator of its presence is when stakeholders make very

Arthur, J. B. 1994. Effects of human resource systems on manufacturing

Balkin, D. B., & Gomez-Mejia, L. 1985. Compensation practices in high-technology

of innovation. London: Tavistock.

Dalton, D. R., & Kesner, I. F. 1985. Organizational performance as an antecedent of inside/

as a strategy for reducing job-related

A while hoping for B. Academy of Management

and control. Reading, MA:

Morrison, E. W. 1993. Longitudinal study of the effects of information seeking on newcomer

and clans. Administrative

Peteraf, M. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic

Lessons from America's best-run

Pfeffer, J. 1994. Competitive advantage through people: Unleashing

the power of the work

Are all the parts there? Personnel

Scheid-Cook, T. L. 1990. Ritual conformity and organizational control: Loose coupling or

culture and leadership. San Francisco: Jossey-Bass.

Schotter, A., & Weigelt, K. 1992. Behavioral consequences

of corporate incentives and long-

Quarterly Journal of Economics, 87: 355-374.

Steffy, B. D., & Maurer, S. D. 1988. Conceptualizing the economic effectiveness

Pittsburgh, PA: University

Wagner, J. A. 1994. Participation's effects on performance and satisfaction: A reconsideration

layoffs, and wage dispersion.

view of the firm. Strategic Management

is your competitive advantage? California Management

Vous aimerez peut-être aussi