Ann C. Frost

The Influence of Capital Structure on Strategic Human Capital: Evidence From U.S. and Canadian Firms

Strategic human capital research has emphasized the importance of human capital as a resource for sustained competitive advantage, but firm investments in this intangible asset vary considerably. This article examines whether and how external pressures on firms from capital markets influence their human capital strategy. These pressures have increased over the past three decades due to banking deregulation, technological innovation, and the rise of institutional investors and new financial intermediaries. Against this backdrop, this study examines whether a firm’s capital structure as measured by share turnover, shareholder concentration, and financial leverage is associated with firm investment in strategic human capital. Based on survey and objective financial data from 221 establishments in the United States and Canada, our analysis indicates that firms with greater share turnover, higher shareholder concentration, and higher levels of financial leverage are less likely to invest in human resource systems that create strategic human capital. Differences in national financial systems also lead to differential effects for U.S. and Canadian firms.

Book Review: The Impact on the Next Generation of Researchers

In summary, the Transformation book was written at a time when the most important new developments in industrial relations were taking place at the firm level. Today, a focus beyond the level of individual firms is needed to consider, among other things, global supply chains, a diverse array of worker rights advocates, and a broad public debate over the future of work and employment relations. How to reconceptualize the study of employment relations given these developments should be at the center of academic and public policy debates.