Calculating Human Capital: The Market Based Valuation of the Human Resource**

Zusammenfassung

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According to the Resource Based View of strategic management, analyzing the human resource of a specific firm in terms of its potential to serve as a source of a sustainable competitive advantage requires an examination of - among others - the resource value. The question of how to parameterize this value, i.e., how to calculate human capital, straightly leads to an integration of RBV reasoning with market based models of the competitive environment at the factor and product market side. However, there seems to be a tacit consent among strategy scholars that the only adequate market mechanism to be used for resource valuation is the product market with the economic rents effectively created there. Yet this regularly ends in a tautology criticism of the RBV. It thus is the particular purpose of this paper to examine what market mechanism really is the adequate one to use for the calculation of human capital. For this, a deductive methodology is used. In advancing the idea of a product market orientation, one encounters some major dilemmas ultimately leading to the conclusions that a product market based resource valuation is neither useful nor possible and that the resource value must be measurable independent from any product market success - thus invalidating the tautology criticisms at the same time.

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Auszug

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Calculating Human Capital: The Market Based Valuation of the Human Resource**

1. Introduction

"Our employees are our greatest asset." - such statements can often be found on corporate websites, in business and social responsibility reports. They are supposed to underline the relevance of a firm's human capital embodied in its employees possibly being a strategic success factor. However, as long as management is not able to answer the provocative counter question "What is the monetary value of this human capital?" with definite figures, the above commitment is easily unmasked as a platitude. If "What you can't measure, you cannot manage." holds true, no adequate management behavior would be able to follow. Thus, in practice, the credibility of such statements requires quantitative methods for the calculation of human capital.

"Human resource management has, as one of its central tenets, the assumption that employees are the single most important asset of the organization." (Poole/Jenkins 1996, 9) - such statements programmatically outline the common understanding of state-of-the-art business research in the field of strategic human resource management, highlighting the employees as (most) important resource for corporate success (e.g., Bartlett/Ghoshal 2002; Boxall 1996; Pfeffer 1995; Ridder/Conrad 2004; Swart/Kinnie/Purcell 2004; Wright/Dunford/Snell 2001; Wright/McMahan/ McWilliams 1994). However, this statement as well remains purely normative as long as a firm's human resource - with its idiosyncratic attributes holding for a possible competitive advantage - necessarily requires a valuation, but not provided by academics. Thus, in scientific research, only a theoretically consolidated calculation of human capital allows to go beyond nonbinding (and nonscientific) postulates.

These deficits lead to the need for a further specification of the value attribute ascribed to a firm's human resource. Such numerical or even monetary calculation of corporate human capital is a constitutive prerequisite for examining whether and to what extent it can be the source of a sustainable "human capital advantage" (Boxall 1996, 66) for the firm compared to its competitors. With this end in mind, the calculation of human capital forms the basis for a managerial optimization of a given human resource stock and, as such, may be understood as the key challenge for Human Capital Management (HCM).

This task manifests an issue for strategic management research; with respect to the analysis and explication of sustainable competitive advantages, Resource Based View (RBV) and Market Based View (MBV) of strategic management are commonly used throughout literature in order to identify underlying key success factors:

* The RBV, as an inside/out perspective, focuses on a firm's internal strategic resources, not least its employees with their personal (intellectual, physical, and motivational) and social-interactional skills and characteristics.

* The MBV, as an outside/in perspective, focuses on a firm's external environment, thus taking into account various stakeholders and market requirements determining the given business context.

Accordingly, with the rivaling resource based Chicago and the market based Harvard schools (e.g., Rühli 1994, 32), for strategic management research two renowned schools of thought emerged. The ongoing discourse between representatives of both perspectives manifests itself exemplary in the 2001 "Academy of Management Review" article...

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