The half-life of knowledge and strategic human capital
Knudsen & Lien (2023) The half-life of knowledge and strategic human capital, Human Resource Management Review
Innovation and technological progress has contributed to drive down the half-life of knowledge in a range of industries. But what are the implications of this development for the strategic management of human capital?
The strategic human capital literature has largely overlooked the fact that knowledge stocks depreciate and that the speed of depreciation varies across settings and over time. We argue that the value of knowledge has a half-life and that numerous core predictions from the conventional human capital analysis change as the half-life shortens. This applies to the ability to extract rents from human capital, employee mobility patterns, employees’ disincentive to invest in firm-specific human capital, and more. We also show that, at the limit, a sufficiently rapid rate of knowledge depreciation eliminates the importance of the distinction between general and firm-specific human capital for appropriation and employee mobility.