Managing human capital in major league soccer: an empirical study of internal development and external acquisition
| Date | 14 February 2024 |
| Pages | 473-492 |
| DOI | https://doi.org/10.1108/ER-06-2023-0299 |
| Published date | 14 February 2024 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Christopher M. Harris,Lee Warren Brown,Mark B. Spence |
Managing human capital in major
league soccer: an empirical study of
internal development and
external acquisition
Christopher M. Harris
Management Department, University of Nebraska-Lincoln, Lincoln, Nebraska, USA
Lee Warren Brown
Texas Woman’s University, Denton, Texas, USA, and
Mark B. Spence
Midwestern Baptist Theological Seminary, Kansas City, Missouri, USA
Abstract
Purpose –This study examines factors that influence organizations’choices of an internal human capital
development strategy and an external human capital acquisition strategy. The human resource architecture
indicates that organizations will use different human capital acquisition strategies. Following the resource-
based view, human capital theory and the human resource architecture, we examine factors that impact the
choices of different human capital acquisition strategies.
Design/methodology/approach –We examine these important human capital decisions in the context of
Major League Soccer. Data to test the hypotheses were collected from a variety of publicly available sources.
We tested the hypotheses with regression analyses.
Findings –We find that while organizations employ both internal and external human capital strategies,
organizations may have one dominant human capital strategy and the other strategy may be used to
supplement the human capital needs of organizations. Additionally, our results indicate that organizations
with an older workforce tend to use an internal human capital development strategy, while higher performing
organizations are less likely to use an internal human capital development strategy.
Originality/value –This study makes contributions by examining the choices between internal and external
human capital strategies and factors that influence the choice of an internal or external human capital strategy.
Keywords Selection, Human capital, HR architecture
Paper type Research paper
The people of an organization and their human capital are a resource that plays a significant
role in the performance of organizations (Wright, 2021;Crook et al., 2011;Wright et al., 1994).
Organizations make important decisions regarding how they acquire and develop human
capital (Harris and Brown, 2021). These decisions include whether to develop human capital
internally or acquire human capital from the external labor market (Lepak and Snell, 1999).
This is also referred to as a “make”or “buy”decision when it comes to human capital. It is
important to study factors the influence organizations’choice of an internal development
human capital strategy or an external acquisition human capital strategy because these
decisions help determine the human capital organizations acquire. The scant research on
internal vs external human capital strategies represents a critical gap because these
strategies have diverging implications for organizational agility, long-term sustainability,
and competitiveness. As human capital is a strong predictor of organizational performance
(Crook et al., 2011), it is critical to examine factors that influence organizations’choices to
develop human capital internally or acquire human capital externally.
Internal human capital development and external human capital acquisition each have
strengths and drawbacks. For example, internal human capital development can lead to a
Managing
human capital
in major league
soccer
473
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 14 June 2023
Revised 24 October 2023
11 January 2024
Accepted 22 January 2024
Employee Relations: The
International Journal
Vol. 46 No. 2, 2024
pp. 473-492
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-06-2023-0299
more stable workforce, predictability in the stock of human capital, a stronger organizational
culture, greater coordination, and lower staffing costs (e.g. DeOrtentiis et al., 2018;Lepak and
Snell, 1999). Drawbacks to internal human capital development can include less flexibility,
fewer new ideas, less innovation, and less diversity (Noe et al., 2022). On the other hand,
external human capital acquisition can provide access to a larger pool of human capital, it
may provide greater workforce flexibility, and may bring new ideas and diversity to an
organization (Noe et al., 2022;Lepak and Snell, 1999,2002). The external acquisition of human
capital also has drawbacks such as the potential for higher costs and the organization has less
familiarity with human capital in the external labor market. While existing literature has
explored the benefits and drawbacks of each approach independently, little is known about
how firms strategically choose between them, and under what conditions. Organizations
must balance the benefits and drawbacks to each human capital strategy and thus, it is
important to examine factors that influence organizations’choice of human capital strategy.
This study seeks to contribute to human capital research on the choices betweeninternal
and external human capital strategies in at least the following ways. First, we contribute to
and extend the limitedresearch on factors that influence the choiceof an internal development
or externalacquisition human capital strategy. While previousresearch has examined internal
and external human capital strategies, most of this research focuses on outcomes of the
strategies. For example,in studies of profession soccerteams, Maqueira et al. (2019) examined
the financial outcomes of internal and external human capital strategies of two teams and
Maqueira-Mar
ınet al. (2022) studied player performance as outcomes of two teams’human
capital strategies. Additionally, Bidwell (2011) examined employee job performance and
turnover as outcomes of internallydeveloped employees and externally acquired employees.
In a study of managers, DeOrtentiis et al. (2018) examined job performance and salary
outcomes based on whether managers were promoted internally or hired from the external
labor market. One study that examined antecedents to internal development or external
acquisition,focused on the job-level and found that job performance variability and the ratio of
junior to senior employees influenced whether jobs were filled internally or externally. Our
study contributesto and extends this line of research by examiningfactors at the organization-
level that influence organizations’choices of an internal development human capitalstrategy
or an external development human capital strategy. Additionally, we extend the work of
Maqueira et al. (2019) on internal and external human capital strategies in soccer teams to
examining multiple teams over a five-year periodof time.
Specifically, we examine previous organizational performance and the age of an
organization’s workforce as factors that can influence the choice of a human capital strategy.
Organizations’previous performance is important to study because the performance of
organizations provides the resources to pursue internal development and external acquisition
human capital strategies. For example, if an organization is performing well, then it may
choose to invest resources in its current employees and focus on internal development, while
an organization that is performing poorly may use resources to acquire human capital from
the external labor market to bring in new ideas to perhaps change the direction of the
organization’s performance (Harris et al., 2022). The age of an organization’s workforce can
also play a role in organization’s decision to pursue an internal development or external
acquisition human capital strategy. With an aging workforce, there are significant human
resource challenges inc luding workforce planni ng, HR practice decisions, retention,
retirement, and the loss of human capital (Stirpe et al., 2018). In order to address the
human capital challenges associated with an aging workforce, organizations will make
choices of whether to develop talent internally or acquire talent from the external labor
market.
Second, our study makes contributions by examining the choices between internal
development and external acquisition human capital strategies. Echoing the findings of
ER
46,2
474
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