This paper investigates the effects of environmental pressure, human capital, and social capital on organizational effectiveness and decline using a population ecology perspective. Panel data with 1,553 observations from 398 companies spanning 4 years in Taiwan were used for analyses. Research results indicate that several environmental pressure indicators significantly affect organization effectiveness and decline. Although human capital and social capital did not predict our outcome variables, human capital plays a moderating role in explaining the variation of the relationship between environmental pressure and organizational effectiveness. This paper provides a new perspective that suggests that organizations should accumulate intangible assets to resist the threat of external environmental pressure. The leading consumer electronics company Samsung is a good example supporting our argument that investment in human capital can produce commercial benefits, especially in tough economic times.
Journal of Management and Organization 10.1017/jmo.2014.83