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Intellectual capital configurations and organizational capability: An empirical examination of human resource subunits in the multinational enterprise

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Abstract

Building on the organizational capabilities literature and theories of the multinational enterprise, this paper develops and tests a framework that examines the relationship between intellectual capital configurations and organizational capabilities in human resource (HR) subunits. Looking at 187 subunits from 20 MNEs, findings show that intellectual capital dimensions vary in their usefulness for generating, sharing, and implementing HR management practices. In particular, while certain resources may help in the development of one capability, they may harm the development of another. Implications are that an organization's intellectual capital investments will differ, depending on the desired capability.

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Notes

  1. We assessed construct reliability by calculating composite reliability scores for each of the knowledge resource and capability constructs. Bollen (1989), Fornell and Larcker (1981), and Werts, Linn, and Joreskog (1974) recommend using composite reliability over coefficient alphas because they represent more accurate assessments of reliability drawing from each item's error variance, modification index, and residual covariation. Because we used SEM for the final analysis we were also able to capture some of the error variance that might have resulted from lower reliability for the local and international experience constructs.

  2. The number of members in the HR group is representative of all HR staff in that country or region. This includes all secretarial/clerical staff.

  3. In a path model, coefficients in a completely standardized solution do not have to be smaller than 1 in magnitude (Joreskog & Sorbom, 1996). The concern is that, if the coefficient is extremely high (e.g., above two), it might suggest that there is a high degree of multicollinearity and/or suppression issues in the data. Because this coefficient is just barely above 1, the chance of multicollinearity is low. However, based on some bivariate correlations among variables and final model coefficients, we recognize potential negative suppression issues in the data (Kline, 2005). This helps explain why some coefficients related to shared vision might be above 1.

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Acknowledgements

We would like to thank our editor, Mary Ann Von Glinow, and reviewers for insightful direction and comments in guiding this paper through the review process. This research was supported in part through an SHRM Foundation Dissertation Grant, the Centre for International HRM at the University of Cambridge, and the Center for Advanced HR Studies at Cornell University.

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Authors and Affiliations

  1. Fisher College of Business, The Ohio State University, Columbus, USA

    Shad S Morris

  2. Darden School of Business, University of Virginia, Charlottesville, USA

    Scott A Snell

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  1. Shad S Morris
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Accepted by Mary Ann Von Glinow, Consulting Editor, 20 January 2011. This paper has been with the authors for two revisions.

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Morris, S., Snell, S. Intellectual capital configurations and organizational capability: An empirical examination of human resource subunits in the multinational enterprise. J Int Bus Stud 42, 805–827 (2011). https://doi.org/10.1057/jibs.2011.14

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