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An empirical test of replacement costs of turnover using human capital corporate panel in Korea

Man-Su Kang, Huifeng Pan and Hong-Youl Ha

Asia Pacific Business Review, 2018, vol. 24, issue 3, 312-329

Abstract: Scholars have devoted considerable attention to the role of turnover in influencing organizational resource allocation. Because research that addresses employee turnover based on longitudinal data remains relatively limited, the impact of employee turnover in a given time period on future turnover, as well as replacement costs, requires further explanation. This study uses the turnover–replacement cost mechanism to empirically test panel data from 224 South Korean firms between 2005 and 2015 (T1–T6). The findings indicate that the relationship between turnover and replacement costs gradually recovered following the global financial crisis and that the carryover effects have been dynamic over time. Although we found no significant effects that confirm the dynamics in our model, our findings suggest that firms must identify unstable dynamics and patterns to address future economic uncertainty. Finally, a comparison of our model to models without control variables reveals similarities and differences between the two control variables (i.e. firm size and type of industry).

Date: 2018
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