How Can HR Drive Growth?

How Can HR Drive Growth?

New Horizons in Management series

Edited by George Saridakis and Cary L. Cooper

The ten up-to date research reviews that are presented in this book provide new insights into the HR academic literature. The chapters provide clear lessons that can be learnt from, along with strategies, approaches and processes in which HR could be used by both practitioners and policy makers to drive growth.

Chapter 10: Creating and sustaining economic growth through HR

Hai-Ming Chen, Ku-Jun Lin and Yen-Lin Huang

Subjects: business and management, human resource management, organisational behaviour, strategic management

Extract

With the rise of the knowledge economy, the importance of intellectual capital has grown. The concept of intellectual capital was raised by Galbraith in 1969, since when the market to book value of corporations around the world has increased dramatically. The implication of this phenomenon is that value creating factors have shifted from tangible assets to intangible ones. Thus, in order to create and sustain economic growth, there is a need for both scholars and practitioners to break down the value creating process and identify the crucial intellectual capital that creates value. However, there is no consistent definition of intellectual capital. For example, Chen et al. (2004) argue that intellectual capital includes human capital, structural capital, innovation capital and customer capital. Human capital is the source of all intellectual capital, and through structural capital and innovation capital, human capital can enhance customer capital. Wang and Chang (2005) use the Taiwanese information technology industry as an example and conclude that by using the human capital, performance can be increased through the enhancement of innovation capital and process capital. Sveiby (1997) suggested that market value is created by tangible net book value and intangible value, which includes external structure, internal structure and individual competence. Edvinsson and Malone (1997), using a similar structure, argue that market value is composed of financial capital and intellectual capital, including human capital, structure capital and customer capital.

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