Cognition and Human Capital: The Dynamic Interrelationship between Knowledge and Behavior

This article focuses on managerial, operative, and corporate cognition. It argues that 'the transformation of knowledge into practice is mediated by the cognition of the firm's human capital (HC)'. The article posits a mutually constituting reciprocal relationship between knowledge and behaviour, the exchange being governed by cognition. It argues that managers are able to influence the firm's cognitive states even when these are path dependent and contextualized. Managers set the strategic balance between 'learning' and 'using', between 'exploration' and 'exploitation', creating effective alignment between the environment and internal activity systems through adjustments to cognition. The article cites empirical research showing a strong relationship between HC, as measured by education and experience, and firm performance. It also presumes that HC can arise at both individual and collective levels, enabling it to explore the relationship between individual and collective cognition and the value of the firm's HC.