Hybrid Entrepreneurship and Labor Market Frictions

I believe that labor market frictions are the core factors that define the strategic human capital space. Labor market frictions can constrain employee mobility (and entrepreneurship) which allows firms to create a gap between the value that employees generate and the value that they appropriate. Accordingly, firms that can create and leverage market frictions can build human capital–based competitive advantages. Putting primacy on the role of frictions echoes the work of Mahoney and Qian (2013), who argue that market frictions are the fundamental building blocks of strategic management. Building on their taxonomy, it is a pretty straightforward exercise to create a list of classes of labor market frictions that shape employee mobility and entrepreneurship and find a rich literature that explores each of these frictions in isolation (Campbell, Kryscynski, & Olson, 2017).