Whose Human Capital? The Challenge of Value Capture When Capital is Embedded

abstract Current approaches that position human capital as central to value generation in knowledge‐based industries obscure the importance of the relational nature of knowledge production. That is, separable and embodied forms of capital are interdependent in value creation and capture processes. We identify a relational form of capital, embedded capital, which we argue is the critical resource in knowledge‐based industries such as professional services firms, because it allows us to include agency and interdependency in the value capture process. These dimensions have previously been overlooked by the resource‐based view of the firm. Examples of embedded capital include brand value, processes and procedures. The deployment of embedded capital is also not clearly controlled by either the firm or individual employees. A model is developed to illustrate the links between each form of capital, and the processes of value capture. This conceptual identification of the embedded form of capital is therefore of importance to future value creation and capture debates.