Thomaz Teodorovicz

Abstract

This paper examines how private firms operating in social sectors reshape strategic human capital deployment when moving from a small-scale to a large-scale orientation. Specifically, we advance that as private firms refocus their provision of social service activities towards reaching larger populations, they will also reassign human capital to tasks that complement core resources that can be deployed at scale. However, while such reallocation can increase human capital productivity, it can simultaneously reduce the role of human capital as a source of competitive advantage. These seemingly opposing outcomes occur when firms specialize workers on tasks that, although complement resources deployed at scale, rely on workers’ generic skills. We study these relationships in the context of private higher education in Brazil. Using a unique dataset on ownership changes, labor contracts, and establishment characteristics, we report an abductive study of the firm-level implications of acquisitions conducted by scale-oriented private higher education firms. We show that only acquisitions expected to change a target unit’s operations (from small-scale to large-scale provision) increased faculty specialization in teaching, increase teaching productivity, and expanded the scale of service provision without reducing quality. Simultaneously, only these acquisitions also resulted in sustainably higher levels of faculty turnover. In-depth interviews with actors in our context reinforce our interpretations. The main contribution of this paper is to show that while private firms can provide social services at scale successfully, such provision may entail a reconfiguration of how they deploy workers and on the strategic value of human capital resources.