When Managers Stay, Workers Are Safer: Rethinking the Value of Firm-Specific Human Capital

A commonly held assumption is that firm-specific human capital benefits firms while constraining employees, particularly by reducing their external mobility. While this tension holds in many contexts, it overlooks the possibility that firm-specific human capital developed by one group of employees—managers—can generate positive externalities for others. Using a novel empirical setting and a 16-year panel of 19,044 establishments with 107,309 establishment-year observations, we find that an increase in managers’ firm-specific human capital is associated with improvements in workplace safety. These effects are especially pronounced in organizations with weak safety orientations and with higher proportions of lower-skill employees, who are typically more vulnerable to safety risks. Our findings reveal a previously underexplored channel through which firm-specific human capital creates value: by enabling managers to protect other employees. This challenges the prevailing view that firm-specific human capital primarily serves firm interests and highlights a broader set of beneficiaries—offering a new perspective on the role of managers’ firm-specific human capital in shaping organizational outcomes.