A Theory of Firm Value Capture from Employee Job Performance: A Multidisciplinary Perspective

Abstract

Understanding the impact that employee job performance has on firm value creation and capture has been an enduring challenge. Micro management scholarship focuses on employee job performance behavior and rarely considers the extent to which value created by employees is actually appropriable by the employing firm. Simultaneously, macro management scholarship focuses on firm value creation and capture without explicit attention to the nature and types of individual job performance or collective performance processes within firms. Thus, we conceptually integrate strategic management theory on value creation/capture with psychological theory on employee job performance and collective performance, to propose a theory explaining how and when firms will capture value from employee job performance. Heterogeneity in value created and captured by employee job performance is affected by two broad factors: individual (e.g., the type of job performance) and market (e.g., labor market constraints). These insights lead to theoretical and practical advances for both micro and macro fields, suggesting that the relationship between employee job performance and firm value capture is more conditional and context-specific than previously recognized.