Human capital matters: Market valuation of firm investments in training and the role of complementary assets

Shawn M. Riley, Steven C. Michael, Joseph T. Mahoney

Research output: Contribution to journalArticlepeer-review


Research summary: This article empirically examines the economic value to firms of investing in the training of their employees and firm-level factors that influence how much the firms benefit. Event study methodology is used to obtain a measure of the economic impact of information regarding a firm's human capital management investments and policies. Subsequent regression analyses are then used to test hypotheses regarding possible complementary relationships between firm-level factors and human capital investments. Results provide robust support for the proposition that effective investments in human capital and training matter, and that these human capital investments are more impactful when combined with complementary assets of R&D, physical capital, and advertising investments. 

Managerial summary: Do firm investments in training and the development of employee human capital matter with regard to financial performance? We find that, yes, these investments do matter. Our results show that managers who view employee human capital as an asset to be invested in and developed can expect to outperform those who view it as a cost to be minimized. In addition, we find that these human capital investments will be of even greater economic value to firms when they have made complementary investments in R&D, physical capital, and advertising.

Original languageEnglish (US)
Pages (from-to)1895-1914
Number of pages20
JournalStrategic Management Journal
Issue number9
StatePublished - Sep 2017


  • complementary assets
  • general training
  • human capital
  • market frictions
  • resource-based approach

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management


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