Human Capital, Inter-firm Mobility and Organizational Evolution

Human Capital, Inter-firm Mobility and Organizational Evolution

Johannes M. Pennings and Filippo Carlo Wezel

The authors of this fascinating and original work contend that by analysing the conduct of organization members, a great deal can be learnt about firm behaviour and about the cooperative and competitive forces that underlie industry evolution.

Chapter 8: Heterogeneity Shifts Due to Member Mobility: New Insights on Demographic Diversity and Organizational Survival

Johannes M. Pennings and Filippo Carlo Wezel

Subjects: business and management, human resource management, organisation studies


INTRODUCTION The study of organizational demography in general, and that of top management teams in particular, has often been examined as a major precursor to strategic positioning and organizational outcomes (for example, Finkelstein and Hambrick, 1996; Hambrick et al., 1996). Past research has investigated the short-term performance consequences of top management entries and exits at the firm or at the individual level of analysis (Harris and Helfat, 1997; Groysberg, 2001). The consequences of inter-firm mobility for different outcomes of the source and of the destination firm (for example, Agarwal et al., 2004; Madsen et al., 2003; Rao and Drazin, 2002; Rosenkopf and Almeida, 2003) have been likewise explored. Demography and inter-firm mobility have rarely been combined to explain organizational long-term performance. The investigation of the survival implications of diversity at firm and inter-firm levels due to mobility is the theme of this chapter. Specifically, we focus on three under-explored issues in organizational demography research: (i) the dynamics of demographic diversity variations within firms, (ii) the influence of demographic variation on the competitive overlap among firms, and (iii) the survival consequences of (i) and (ii), the intra- and inter-firm demographic variations. First, empirical research has focused on the study of the levels (that is, stock) of diversity, estimating the ‘average effects’ of diversity changes on performance. Moving beyond this static approach to explore the dynamic impact of diversity variations on organizational performance, researchers have noticed that focusing on such variations produces a direct...

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