Shocks that cause economic losses and disrupt normal operations often require rationing of various resources. Considering the critical nature of allocating limited resources during periods of excess demand, extensive research has been dedicated to understanding how firms respond to crises. Unfortunately, these studies often overlook various types of shocks and yield mixed findings based on the context, making it challenging to derive meaningful conclusions. Applying event system theory (EST), we explore the impact of various attributes of a shock on a firm's human capital (HC) allocation decisions. Analyzing longitudinal data spanning from 2013 to 2021 for 1,115 Japanese firms, our findings reveal a positive correlation between the strength dimension of shock events and retrenchment-focused allocation. Simultaneously, the space dimension of shock events is linked to innovation-oriented resource allocation.
