Handbook of Research on Strategic Human Capital Resources
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Handbook of Research on Strategic Human Capital Resources

Edited by Anthony J. Nyberg and Thomas P. Moliterno

Strategic human capital resources are a relatively new construct with a scholarly literature that is still evolving. Work in this area requires the integration of multiple theoretical perspectives and empirical approaches, but that integration rarely occurs. Within these pages, the editors have combined the voices of leading scholars from a wide range of disciplinary backgrounds to provide a comprehensive introduction to the current state of the field.
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Chapter 24: Strategic compensation: a critique and research agenda

Ian Larkin

Abstract

Scholars and management practitioners often hold that management of a firm’s compensation system can be a source of strategic advantage. This chapter argues that the academic literature on compensation has not yet provided a compelling theory for how a firm’s compensation systems can generate long-term sustainable competitive advantage over its rivals. It reviews the basic theory of competitive advantage and shows that, while the current literature is clear that compensation systems can affect performance, it is unclear whether improved use of compensation systems simply represents a correction of a previous inefficiency or actually provides a way for firms to outperform competitors in a way competitors cannot imitate. The chapter lays out what a true theory of strategic compensation might look like, and critiques several pitfalls that inhibit current compensation research from making a compelling case for the strategic role of compensation by firms.

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