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.
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.
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.
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.
