Human Capital, Inter-firm Mobility and Organizational Evolution

Human Capital, Inter-firm Mobility and Organizational Evolution

Johannes M. Pennings and Filippo Carlo Wezel

The authors of this fascinating and original work contend that by analysing the conduct of organization members, a great deal can be learnt about firm behaviour and about the cooperative and competitive forces that underlie industry evolution.

Chapter 2: Partnership as a Major Type of Organization Form

Johannes M. Pennings and Filippo Carlo Wezel

Subjects: business and management, human resource management, organisation studies

Extract

INTRODUCTION This chapter provides an overview of partnerships as a special class of organizations. A distinction is made between ownership-derived governance and organization structure to articulate their distinctive features. Partnerships are highly human asset-intensive which means that they govern the firms’ strategic capabilities but also face major challenges in attracting, specializing and advancing their members. Here we delineate the properties of partnerships and contrast them with other classes of organizations. The ownership-governance and organizational structure in human assetintensive firms assume each other. In other words, the creation and upgrading of strategic capabilities by the corporate leadership are very much a function of the authority and control structure that surrounds the organizational strategists. Ownership structure deals mainly with the relationship between owners and managers around the firm as a bundle of strategic assets – in knowledge-intensive firms mostly carried by people – while organization structure deals with managers and employees, the stratification of people into various echelons and positioned in different departments. The governance structure is central to the building and upgrading of strategic capabilities. The firm comprises a bundle of routines – both lower order routines such as sales, marketing, finance and production and higher order or meta-routines that govern the organization of lower order routines. In Chapter 4, for instance, results are presented on a firm’s superior human and social capital and the performance advantages that are associated with such non-financial capital. Chapter 6 describes mergers and acquisitions between professional services firms and explores their relative success based upon...

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