Talent hiring strategies: when do firms build versus buy their human capital

Firms often face a strategic decision between developing talent from within (build) through investments in mentoring, training, and development, or acquiring already developed and experienced talent (buy) from external labour markets. While prior research acknowledges these as alternative employment modes, few studies have examined how firms choose between them based on internal capabilities and external factors. We draw on resource orchestration and human capital theories to argue that the build – buy decision reflects a deeper organisational logic rooted in resource availability and environmental volatility. Drawing on a longitudinal dataset of 174 U.S. law firms over eight years, we test how financial slack, managerial slack, and demand volatility influence firms’ relative investment in novice vis-à-vis experienced hires. Using panel regression, we find that firms with greater financial and managerial resources are more likely to pursue building strategies, whereas those facing volatile client demand shift towards buying talent. These findings suggest that hiring strategies are contingent on firms’ capability to support long-term developmental systems and their need for short-term flexibility. Our results contribute to both strategic HRM and HRD literatures by specifying when internal developmental infrastructure is more viable and how external pressures reshape developmental capacity.