Employee Inter- and Intra-Firm Mobility: Volume 41

Research on employee mobility has proliferated in the past four decades across four research traditions: Economics, sociology, management, and organizational behavior/human resource management. Despite significant overlap in interest and focus, these four streams of research have evolved independent from each other, resulting in a structural divide. We provide a detailed account of the research on employee mobility and the structural divide across disciplines. We document that the payoff from this profusion of research and increasing interest has been disappointing, as reflected in the limited number of cross-disciplinary citations, even among common topics of interest. However, our analysis also provides some encouraging signs in the form of specific journals and individuals who provide a bridge for cross-disciplinary fertilization.

We initiated a conversation between two prominent scholars in the field of employee mobility who come from different disciplinary backgrounds: Rajshree Agarwal (from the human capital research tradition) and Matthew Bidwell (from the human resource management research tradition). Their cumulative work leads to vastly different conclusions. In this chapter we had an opportunity to explore their differences and share the roots of their motivations, interests, and research philosophies. The discussion provides diverging, yet insightful, directions for future research.

Firm-specific human capital (FSHC) has been an integral part of the vocabulary in the strategy field. Many scholars argue that FSHC inhibits employee mobility and drives employee retention at a discount, value appropriation, and firms' competitive advantage. FSHC also plays a central role in the resource-based view of the firm. In recent years, however, a significant debate has emerged on the validity and usefulness of the construct. The purpose of the chapter is to revisit this debate and discuss both challenges and opportunities related to FSHC. In a form of conversation, we take aim at FSHC from different angles and discuss its role as a mobility friction, in value appropriation of established firms, in the context of transitions between paid employment and entrepreneurship, and in the views of practitioners. While we agree that our understanding of the concept of FSHC must evolve, we continue to see its value in our theoretical toolbox.

Responding to Coff et al.’s “Firm-specific Human Capital at the Crossroads,” this commentary proposes three avenues for further research on firm-specific human capital: the impact on firm performance of new employee-incumbent employee interaction; the impact of variation in firm-specific human capital on the prevalence and success of spinoffs; and the intersection of research on firm-specific human capital and management pedagogy.

The past few decades have witnessed a phenomenal progress in our understanding of employee mobility as a critical driver and consequence of various outcomes for individuals, organizations, industries, and economies. In the process, researchers have tackled several important issues in conducting empirical research on employee mobility. This chapter provides a critical discussion of the extant literature focusing on five broad areas: identification of mobility, timing of mobility, outcomes of mobility and their operationalization, model identification, and other related issues. In doing so, this article identifies some of the empirical choices and methodologies adopted in prior mobility studies, evaluates those practices, and suggests areas of improvements for the practice. It is hoped that future studies will benefit from this chapter's insight by building on the best practices from the literature while continuously and successfully tackling the issues that have been challenging the researchers on this increasingly important topic of scholarly inquiry.

This chapter explores the impact of employee mobility on career sustainability, that is, the extent to which a career enables an individual to remain happy, healthy, and productive over the life course. I argue that whether employee mobility strengthens or weakens career sustainability depends on the extent to which the mobility experience increases (sustainable) or diminishes (unsustainable) person-career fit. I suggest that different forms of mobility (e.g., upward versus lateral) may have different effects on fit and subsequent career sustainability. Moreover, it is possible that a mobility experience can enhance fit in some respects but still have a negative effect on the long-term sustainability of a career. Research is necessary to address these and other questions regarding the relationship between employee mobility and career sustainability.

We examine personnel policies and careers in public agencies, particularly how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public-sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public-sector employees to invest in expertise, seek promotion, remain in the public sector, and work hard. To do so requires internal personnel policies that sort “slackers” from “zealots.” Personnel policies that accomplish this task are quite different in agencies where acquired expertise has little value in the private sector, and agencies where acquired expertise commands a premium in the private sector. Even with well-designed personnel policies, an inescapable trade-off between political control and expertise acquisition remains.

Mobility processes, the routines that organizations use to move employees into and across jobs, are a critical determinant of the way that human capital is allocated within organizations and careers developed. Most existing work on these mobility processes has examined processes in which mobility is tightly coupled to the filling of vacancies. There is substantial evidence, though, that many organizations adopt very different processes for managing mobility. In this theory chapter, I compare vacancy-based, “job-pull” systems with alternative, “person-push” systems in which mobility is keyed to employees' attainment of performance and skill thresholds to explain how and why mobility processes vary. I identify two, inter-related dimensions along which mobility processes vary: whether their decision processes emphasize the need to match employees to tasks versus providing predictable rewards; and whether the system of jobs that people move between prioritizes flexibility or control of agency costs. I use these dimensions to predict when organizations will adopt different mobility processes, and how those processes will affect employees' mobility.

This chapter argues that intra-firm geographic mobility is an understudied mechanism that can help mitigate coordination failures in a geographically distributed organization. The chapter presents an organizing framework on how intra-firm geographic mobility creates value for firms and discusses how intra-firm geographic mobility can create value for individual workers. The chapter concludes by presenting a future research agenda for intra-firm geographic mobility in light of emerging phenomena such as global collaborative patenting by multinationals, temporary colocation of knowledge workers, and nonstandard work.

How does having an external affiliation influence the probability of employee inter-firm mobility? Our review of the literature suggests that it is difficult to predict ex-ante whether holding an external affiliation increases or decreases inter-firm mobility due to the presence of competing arguments related to the benefits of employment flexibility against agency costs. In the absence of a clear direction for prediction, we conduct an exploratory analysis on administrative labor market data from Sweden during 2002–2010. Specifically, we examine the effects of a few contingencies that are prominent in the study of employment and organizations, namely, organizational age, size, and employment tenure. We find that holding an external organizational affiliation reduces inter-firm mobility among younger and smaller organizations, and for recent hires; yet it increases inter-firm mobility for other organizations and employees. We discuss the implications of our work for future research.

How is the performance of a knowledge worker affected by the departure of a colleague? While prior research has highlighted the aggregate impact of knowledge worker mobility on firms, in this chapter we look inside the firm, to explore the individual-level impact of a coworker's departure on the performance of a remaining employee. We propose that the departure of a coworker can change the remaining employee's access to knowledge, but the implications of such changes will depend on the nature of the coworker's relationship with the employee: the employee's performance will be negatively affected to the extent that the relationship is collaborative, but it will be positively affected to the extent that the relationship is competitive. Moreover, these effects will be magnified to the extent that the employee was dependent on the coworker for knowledge access prior to the move, but weakened to the extent that the relationship persists after the move. Our knowledge-based perspective on coworker departures advances research on employee mobility and knowledge flows by highlighting the variety of changes in knowledge access that may result when a colleague leaves the firm, and illuminating the implications of these changes for the performance of employees who remain behind.

Prior research suggests that patents by mobile inventors are at higher risk of generating spillovers between departed and hiring firms. Despite extensive research on how inter-firm inventor mobility affects firms' learning and innovation, little is known about how firms protect their existing intellectual property in the face of inter-firm inventor mobility. We argue that one main way in which firms try to prevent others from appropriating the value of these inventions is by extending the validity of mobile inventors' patents. We derive a set of hypotheses consistent with this argument and test them using longitudinal data on four major American semiconductor firms. Our analyses show that, as hypothesized, both departed and hiring firms are more likely to extend the validity of mobile inventors' patents than is the case for the patents of other, non-mobile inventors. Furthermore, in line with the view that firms use patent renewal to deter other firms from appropriating mobile inventors' knowledge, we find this effect to be stronger where the risks of spillovers are most intense. Our findings extend prior literature by explicating the role of patent renewal as a strategic deterrent against intellectual property appropriation in the face of inter-firm inventor mobility.

This chapter provides a briefly summary of the main message and contribution of Martin C. Goossen's and Gianluca Carnabuci's paper “When Employees Walk Out the Door, Their Memories Remain: The Effect of Inventor Mobility on Patent Renewal”. It situates the paper and its contribution in the broader literature and provides critical areas and possible avenues for future research.

In the context of worker–firm complementarities, the extant literature has focused primarily on worker–firm dyads that generate additional revenue for the firm. However, we extend the study of worker–firm complementarities by examining matches that create value through the generation of additional nonpecuniary utility for employees. Through this lens, we hypothesize that mobile employees will receive lower wages to offset the benefits they receive from these nonpecuniary complementarities. Further, we hypothesize that star employees who create unique revenue-generating complementarities receive higher wages than otherwise predicted as they can capture a share of the additional revenue they generate. We test this conceptualization using panel data on all US National Basketball Association players from 2000 to 2009. We demonstrate that NBA players accept lower than predicted wages to play for their home teams which reflects worker utility-generating complementarities. We also show that superstars receive higher than predicted wages to play for their home teams, consistent with firm revenue-generating complementarities.

Using data from a top-five global executive placement firm, the authors explore how an organization's financial misconduct may affect pay for former employees not implicated in wrongdoing. Drawing on stigma theory, they hypothesize that although such alumni did not participate in the financial misconduct and they had left the organization years before the misconduct, these alumni experience a compensation penalty. The stigma effect increases in relation to the job function proximity to the misconduct, recency of the misconduct, and an employee's seniority. Collectively, results suggest that the stigma of financial misconduct could reach alumni employees and need not be confined to executives and directors that oversaw the organization during the misconduct.

Homophily, or the tendency for individuals to be attracted to those who resemble them, is significantly influential in the formation of startup founding and top management teams. But its role in subsequent stages of startup growth remains largely unclear. We consider the impact of homophily on matching of early workers to startups. We propose that, in the case of underrepresented minority groups, the tendency toward homophily plays an important role in this matching process, albeit in an asymmetric way. In particular, homophily exerts a stronger influence on the supply than the demand side: job candidates are more inclined to favor startups with demographically similar founders than startup founders are inclined to favor demographically similar job-seekers. Focusing on an important group of historically disadvantaged workers – women – we examine these arguments using unique data on the online recruiting of high-tech startups concentrated in the Silicon Valley. We find evidence suggesting that female candidates' propensity to apply to a job at a given startup increases with the proportion of female founders. However, startups with a higher proportion of female founders are not more likely than other startups to favor female candidates in personnel selection.

We explore how absolute and relative incomes affect an individual's propensity to start a new business as a pure or hybrid entrepreneur. Using a sample of 12,686 individuals from the National Longitudinal Survey of Youth, 1979 cohort (NLSY79) in our empirical analyses, we find that individuals with high absolute income are generally less likely to engage in entrepreneurship. However, once absolute income is controlled, those with above-average relative income are more likely to become an entrepreneur, particularly in pure form as opposed to a hybrid one. Our findings provide more nuanced understanding on the differences between absolute and relative income levels influencing an individual's decision to become an entrepreneur, and if so, whether to engage in pure or hybrid form.

This chapter investigates the relationship between the composition of initial spinout teams and spinout survival. We develop a theory suggesting that spinout founders hiring from their prior firm versus hiring from the external labor market to assemble spinout teams will have differential effects on spinout survival. Using confidential employee–employer linked data in the legal services industry provided by the United States Census Bureau, we find evidence that inclusion of spinout team members from the founder's prior firm is positively related to spinout survival, a relationship which increases with included members' prior earnings. In contrast, we find that inclusion of spinout team members from firms outside the founder's prior firm is positively associated with spinout failure, a relationship which becomes statistically insignificant when included team members' prior earnings are high. Taken together, our results point to the potential hazards associated with using external markets to assemble spinout teams, thereby establishing an important boundary condition for extant theory which has focused on the benefits associated with spinout team size, but has often neglected the labor market strategy through which such teams are assembled.

Raffiee, Ganco, and Campbell's intriguing study of the likelihood of success of law firm “spinouts” suggests some important inferences for our understanding of the effects of strategic human capital. The types of human capital that are most relevant to a firm may depend greatly on the type of work that the firm performs. Moreover, the processes that drive firm performance should be distinguished from those that influence firm survival. This study also touches on some broader, as yet unresolved issues about how to empirically operationalize strategic human capital arguments, particularly the central paradox that the human capital with the most potential for strategically differentiating a firm is likely to be quite hard to measure across a population of firms.

Strategy and entrepreneurship scholars have identified many benefits of signaling for new ventures to access resources in financial and other factor markets. However, scholars have not studied the extent to which new ventures can employ signals to hire new talent. This chapter investigates inventor mobility across biopharmaceutical new ventures and examines the effects of two signals, venture capitalist (VC) prominence and alliance network prominence. We suggest that VC prominence and alliance network prominence can provide assurances to prospective employees about a venture's resources and prospects, thereby facilitating inventor mobility owing to enhanced labor market efficiency. Empirical evidence from biopharmaceutical startups shows that new ventures can benefit from signals emanating from their ties to VCs and alliance partners and attract inventors to join them. We also find that these signaling effects attenuate as information asymmetry diminishes.