A causal model of human capital antecedents and consequents in the financial services industry
| Published date | 16 January 2009 |
| DOI | https://doi.org/10.1108/14691930910922897 |
| Date | 16 January 2009 |
| Pages | 53-69 |
| Author | Nick Bontis,Alexander Serenko |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
A causal model of human capital
antecedents and consequents in
the financial services industry
Nick Bontis
DeGroote School of Business, McMaster University, Hamilton, Canada, and
Alexander Serenko
Faculty of Business Administration, Lakehead University, Thunder Bay,
Canada
Abstract
Purpose – Causal models have been used in recent intellectual capital research studies to better
understand the various outcomes of antecedent configurations of intangible asset components. These
studies have been conducted in various industry sectors including insurance, healthcare, banks, and
others. The purpose of this study is to replicate and extend prior research results within a new
financial services sub-sector.
Design/methodology/approach – A survey instrument based on prior research was administered
to 396 employees from ten credit unions across Canada.
Findings – The results show that the pattern and value of causal paths change slightly from one
context to another.
Research limitations/implications – Six research implications are offered which summarize the
key academic findings of the study related to how the interdependencies of the constructs alter from
one context to another.
Practical implications – The empirical results presented here should lead analysts to recognize
that measuring and strategically managing intellectual capital may in fact become the most important
managerial activity for driving organizational performance.
Originality/value – The study provides a unique opportunity to test the generalizability and
contextual implications of administering a similar survey instrument across various contexts.
Keywords Intellectualcapital, Human capital, Knowledge management
Paper type Research paper
1. Introduction and purpose of the study
The idea of taking a knowledge-based view of organizations is not a novel one.
During the last decade, the field of intellectual capital has seen a concerted shift
towards empirical-based research as an extension from its conceptual roots in the
1990s. In the past decade, an increasing number of organizations in various fields
have started employing non-financial performance measures, for example, the
Balanced Scorecard, Six Sigma, customer satisfaction indexes, and the intellectual
capital Skandia Navigator. One of the latest trends includes the development of
causal models to empirically test a set of hypotheses pertaining to a variety of
organizational aspects (Ittner and Larcker, 2003). A major advantage of causal
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
The authors would like to acknowledge the support of Heather McLachlin at CUMIS for assisting
in the data collection process.
Causal model of
human capital
53
Journal of Intellectual Capital
Vol. 10 No. 1, 2009
pp. 53-69
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930910922897
modeling techniques is that they allow assessment and prediction of the effect of
organizational strategies on important outcome variables, for example productivity,
technology usage, or turnover.
Bontis and Fitz-enz (2002) developed and validated empirically a causal model
describing antecedents and consequences of effective human capital management
practices in the financial services industry. The model presents a set of constructs and
their relationships integrated from the KM/IC, organizational behavior, business
policy, human resources, information technology and accounting disciplines. By using
this model, organizations are able to predict the effect of human capital management
policies on several important outcomes including retention, turnover and business
performance. As a result, companies may better allocate their resources to achieve
specific organizational goals. To test the generalizability of the findings by Bontis and
Fitz-enz (2002), Bontis and Serenko (2008) employed this model in their longitudinal
investigation of the non-profit healthcare sector and reported several important
insights that should be explored further. As such, they argued that the entire model
exhibits different structural relationships depending on the mode of the organization
(i.e. commercial versus non-profit sectors). To demonstrate this issue, Bontis and
Serenko (2008) emphasized an ambiguous role of turnover.
Specifically, Bontis and Fitz-enz (2002) demonstrated a negative relationship
(
b
¼20:23) between knowledge sharing and voluntary turnover, and a negative link
(
b
¼20:37) between business performance and voluntary turnover for the for-profit
financial industry. In contrast, Bontis and Serenko (2008) reported that both links did
not exist for a non-profit healthcare organization and argued that subjects in each
study perceived turnover differently because of dramatic differences in the natures of
their organizations and position level of respondents. With respect to organizational
differences, they concluded that a negative relationship is likely to exist for
profit-oriented companies rather than for goodwill-focused organizations since
different factors affect the turnover decision of employees. For instance, in a highly
profit-oriented financial company, employees are likely to leave if they believe their
colleagues hoard their knowledge, or if the company’s financial performance
suddenly drops and affects their bonus. At the same time, in a non-profit
organization, whose mission is to serve people rather than increase the financial value
of stakeholders, employees may stay with the organization regardless of their
colleagues’ knowledge sharing behaviors or overall organizational performance
because of moral obligations or loyalty to the profession. With respect to individual
differences, Bontis and Serenko (2008) argue that a negative relationship between
knowledge sharing and turnover, and business performance and turnover, is likely to
exist for senior executives rather than for middle and lower-level employees. For
example, it is easier for higher-level executives to move to another company in a
booming financial sector if they do not like some aspects of their job. In sharp
contrast, middle and lower-level employees of a healthcare sector may find it more
difficult getting a job elsewhere, which may affect their decision to stay regardless of
company performance or knowledge-sharing culture. Differences may also be
observed with regards to other model relationships.
However, except for the studies above, little research has been done to under stand
these important issues. Therefore, the main research objectives of this project are to:
JIC
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