In economic terms profit maximizing firms compete for utility maximizing

In economic terms profit maximizing firms compete for

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future expected cash flows (Becker, 1962). In economic terms, “profit maximizing firms compete for utility maximizing workers, and the expected lifetime compensation of a worker with a given set of observed characteristics is equal to the expected lifetime productivity of a randomly selected worker with those characteristics” (Weiss, 1995, p. 136). In summary, human capital theory explains variation in income generated from diverse forms of human capital investments such as education and training (Becker, 1962). Development of human capital through training, education, and tacit knowledge (i.e., tenure) are likely to lead to beneficial outcomes such as career success (Fang, Zikic, & Novicevic, 2009). Development through training can be in the form of general or specific training. General training is defined as training that yields generic knowledge, skills, and abilities, and can be used and valued by other organizations beyond the one providing the training (Becker, 1962). In contrast, specific training involves developing knowledge that is uniquely beneficial to the organization that is offering the training. In his later work, Becker (1993) broadened the scope of organizations that may benefit from specific training beyond the particular organization offering the training to other firms within the same industry. Therefore, specific training may yield a set of skills that could be transferable across jobs within a specific industry. In this case, workers are compensated for skills that are not general or firm specific but rather industry specific (Neal, 1995; Parent, 2000). The distinction between general and specific training has potential implications for employee mobility. Specifically, employees with greater general training will become more marketable in the labor market and therefore may not develop a sense of loyalty or attachment to the firm offering the training. In contrast, when firm specific training is offered to an employee, that individual will be less likely to turnover as his or her skills are less marketable to other firms while his or her value to the current employer will be enhanced (Becker, 1993). In addition to developing their human capital through training, individuals may develop their human capital through schooling (i.e., formal education), experience, or tenure (Becker, 1993). Complementarity of these sources of human capital development is supported by past research that suggests that human capital is the result of the development of ability, education, and skills (Blundell, Dearden, Meghir, & Sianesi, 1999). Human capital theory suggests that formal education, specific training, and experience accumulated by working in the firm over time (i.e., tenure) enhance not only individual performance but also individual career success in the form of increased compensation. Therefore, investments in human capital offer benefits to the individual in terms of objective career success (Becker, 1964).
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