Neo-Human Capital Theory - Term Paper Example

Definition of Neo-Human Capital Theory Neo-capital is an umbrella term which is used to describe the various types of value creation drivers which are embedded in orgaizational processes. Human Capital is one of them. Human Capital is defined as Stock of individual knowledge, capability, and skills that are economically usable.It is a mixture of the process of developing individual knowledge, skills, or abilities and the process of improving the relationships between various types of neo-capital.

It is in organisations and businesses are important and essential asset who contribute to development and growth, in a similar way as physical assets such as machines and money.There are mainly six types of Neo-capital drivers. E.g. 1. Structural Capital 2. Intellectual Capital 3. Social Capital 4. Human Capital 5. Cultural Capital 6. Relational Capital. There are various thoughts delivered by many literatures. Few of them are as follows: Neo-capital is central to performance in today’s economic environment (Swanson & Holton III, 1997; Nonaka & Takeuchi, 1995; Nooteboom, 2002; Nahapiet & Goshal, 1998).

Neo-capital is increasingly viewed as the primary driver of value creation in today’s knowledge economy (Blair & Kochan, 2000; Nooteboom, 2002; Shapiro & Varian, 2003). These various types of neo-capital work together to transform human capital into organizational output (Nakamura, 2003; Van de Ven, Polley, Garud, & Venkataraman, 2001; Nooteboom, 2002). Significance of human capital Any success or failure of orgaizational processes depends mainly on people at all levels – Directors, Leader, stackholders & employees.

In today’s competitive scenario, business and political leaders have already started to recognise that having good people who are skilled and motivated can make a significant difference. Hence today in any organization, spending money on people is considered as an investment in an important asset instead of expenses. Neo-Human Capital Theory presents in immigration system The movement of labour from agriculture, villagers are running away from village to town, movement from rural area to urban area etc are the perfect examples of satisfying the fact that Neo-Human Capital Theory presents in immigration system.

These are true facts in both developed countries (DCs) and developing countries as well. Migration is addressed by Adam Smith in The Wealth of Nations (1776). In industrial revolution England, Ravenstein (1885) and Redford (1926, 1968) argued that a combination of Malthusian forces, land scarcity, and enclosure—that is, “supply push” variables—drove rural-to-urban migration. Human capital models of migration represent an effort to provide the migration theories presented above with a micro grounding, permitting tests of a far richer set of migration determinants and impacts.

In the perfect-markets neoclassical version of the human-capital migration model (e.g., Sjaastad, 1962), wages at prospective migrant origins and destinations are assumed to be a function of individuals skills affecting their productivity. GNP per-capita From above figure , it is easily understandable that among nations, the share of rural population declines sharply as per-capita incomes increase (Figure 1), from 70 to 80 percent in countries with the lowest per-capita GNPs to less than 15 percent in the highest-income countries.

Sources: 1. Redford, A., 1968, Labor Migration in England 1800-1850, revised by W.H. Chaloner from the 1926 edition (Augustus Kelley, New York). 2. Ravenstein, E.G., 1885, the Laws of Migration, Journal of the Royal Statistical Society, 48:167-227.