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neo-human-capital


Department
Sociology
Course Code
SOC227H5
Professor
Gregory Bird

Page:
of 2
DefinitionofNeo-HumanCapitalTheory
Neo-capitalisanumbrellatermwhichisusedtodescribe thevarious typesofvalue creation drivers
whichare embeddedinorgaizationalprocesses. HumanCapitalisone ofthem.
HumanCapitalisdefinedasStockofindividualknowledge,capability, andskillsthatare economically
usable.Itisamixtureoftheprocess ofdeveloping individualknowledge,skills, orabilitiesandthe
process ofimproving therelationships between various typesofneo-capital.Itisinorganisations and
businessesareimportantandessentialassetwho contributetodevelopment and growth,inasimilarway
asphysicalassetssuchasmachinesandmoney.There aremainlysixtypesofNeo-capitaldrivers. E.g.1.
StructuralCapital2. IntellectualCapital3. SocialCapital4. HumanCapital5. CulturalCapital6.
RelationalCapital.
There arevarious thoughtsdeliveredby manyliteratures. Fewofthemare asfollows:
Neo-capitaliscentral toperformance intodayseconomic environment (Swanson &Holton III,1997;
Nonaka &Takeuchi,1995; Nooteboom,2002; Nahapiet&Goshal,1998).Neo-capitalisincreasingly
viewedastheprimarydriverofvalue creation intodaysknowledge economy(Blair&Kochan, 2000;
Nooteboom,2002; Shapiro&Varian,2003).These various typesofneo-capitalworktogetherto
transformhumancapitalinto organizationaloutput (Nakamura,2003; VandeVen, Polley, Garud,&
Venkataraman, 2001; Nooteboom,2002).
Significance of human capital
Any success orfailureoforgaizationalprocessesdepends mainly onpeople atall levelsDirectors,
Leader,stackholders&employees. Intodayscompetitive scenario,business andpolitical leadershave
alreadystartedtorecognise thathaving good peoplewho areskilledandmotivatedcanmake a significant
difference.Hencetodayinany organization, spending money onpeopleisconsideredasaninvestment in
animportantassetinsteadofexpenses.
Neo-Human Capital Theorypresentsinimmigration system
Themovement oflabour fromagriculture,villagersarerunning awayfromvillagetotown, movement
fromruralarea tourbanarea etc aretheperfectexamplesofsatisfying thefact thatNeo-HumanCapital
Theorypresentsinimmigration system.These aretrue factsinboth developedcountries(DCs) and
developing countriesaswell.Migration isaddressedby AdamSmithinTheWealthofNations (1776).In
industrialrevolution England, Ravenstein(1885) andRedford(1926, 1968) arguedthata combination of
Malthusianforces, landscarcity, andenclosurethatis, supplypushvariablesdrove rural-to-urban
migration. Humancapitalmodelsofmigration represent aneffort toprovide themigration theories
presentedabovewithamicrogrounding, permitting testsofafar richersetofmigrationdeterminantsand
impacts. Intheperfect-marketsneoclassicalversion ofthehuman-capitalmigration model(e.g., Sjaastad,
1962),wagesatprospectivemigrantorigins and destinations are assumedtobe afunction ofindividuals'
skillsaffectingtheirproductivity.
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GNP per-capita
Fromabove figure,itiseasilyunderstandablethatamong nations, theshareofruralpopulation declines
sharplyasper-capitaincomesincrease (Figure1),from70 to80 percent incountrieswiththelowest per-
capitaGNPstoless than15 percent inthehighest-income countries.
Sources:
1. Redford, A., 1968, LaborMigration inEngland1800-1850, revisedby W.H. Chalonerfromthe1926
edition (Augustus Kelley, NewYork).
2. Ravenstein, E.G.,1885, theLawsofMigration,JournaloftheRoyalStatisticalSociety, 48:167-227.
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