The firm’s workforce is mobile and not owned by the firm. Since human capital can leave the firm at
will, firms will want to extract the knowledge that is embedded in their employees through employing
team mechanisms and collaboration (Grant, 1991). Moreover, studies have demonstrated that knowledge
is most effective when exchanged with others (Schulz, 2001). Therefore, firms that rely on human capital
usually require cooperative efforts, knowledge exchange, collaboration between workers, and a collegial
sharing environment (Schulz, 2001). This type of environment is difficult to manage since the link between
efforts and outcomes is not completely transparent (e.g., tasks are not programmable or easily specified).
Thus, labor-intensive firms are characterized by weak links between effort and outcome (Coff, 1997).