The steady rise in the participation of service sector in the European Union’s economy is undeniable, as it now represents the 75% of the GDP according to the World Bank. As these industries increase their relevance in the economy, it becomes more necessary to re-think about how we understand the classical theory of physical capital and ownership rights to understand productivity, since in this type of industries, human assets are the main input. Machines are different to employees; they can be owned, whereas human beings cannot. Human beings accumulate two types of capital: human –knowing what- and social –knowing who. In this project, I aim to understand how these types of capital affect the organization of firms and economies, with the goal of providing insights into the determinants of productivity and governance. This multidisciplinary project, composed of three sections, will provide insights to businesses and policy makers to enhance growth in the knowledge economy.
Interactions and knowledge become fundamental to understand how human beings develop inputs in the service sector. For this reason, it becomes essential to comprehend the role that human and social capital play in the performance of firms since not all industries rely in the same input. In some service firms productivity depends more on the social capital—that is the connections, who knows who. In other industries, these skills are less relevant, and the knowledge, who knows what, becomes a determinant factor in the firm’s outcomes. The aim of this project is to contribute to literature on the knowledge economy by studying how these two types of capital affect the organisation of firms as they become determinants of productivity and governance.
