Research & Projects

We study how associative stigma arising from scandal affects labor market outcomes. We theorize that workers (organizations) stigmatized by scandal will experience stigma apprehension and thus be more tolerant of organizations (workers) stigmatized by scandal, resulting in systematic sorting of stigmatized workers into stigmatized firms. We further propose that the source of stigma will impact the magnitude of this effect, with associative stigma arising from scandals involving transgressions in the personal domain being less penalizing than associative stigma arising from scandals involving transgressions in the professional domain. We test these arguments using both archival data and two randomized experiments. Our results demonstrate sorting of stigmatized workers into stigmatized firms with stronger sorting observed when the source of stigma is scandal arising in the personal as opposed to professional domain. Our experiments confirm the mechanism of stigma apprehension and demonstrate that the sorting patterns we identify likely emerge from increased tolerance and not ex-ante affirmative preferences.

We investigate the influence of financial resources on a firm’s propensity for misconduct. Previous studies offer conflicting predictions regarding the relationship, and much of the empirical evidence suffers from issues like selection, measurement error, reverse causality, and omitted variable bias. Leveraging a difference-in-differences design, we first examine quasirandom fluctuations in retailers’ financial resources resulting from large windfalls from selling winning lottery tickets. Our results suggest that an increase in financial resources from selling a large winning lottery ticket reduces retailers’ tobacco sales to minors. Next, to rule in strain theory and to rule out alternative explanations, we leverage a second natural experiment, heterogeneity analysis, an alternate measure of misconduct, and an online randomized experiment. In doing so, we provide plausibly causal evidence on the relationship between a firm’s financial resources and its propensity for misconduct and provide potentially useful findings for policymakers and regulators.

Existing theories offer conflicting perspectives regarding the relationship between career specialization and labor market outcomes. While some scholars argue it is better for workers to specialize and focus on one area, others argue it is advantageous for workers to diversify and compile experience across multiple work domains. We attempt to reconcile these competing perspectives by developing a theory highlighting the voluntary versus involuntary nature of worker–firm separations as a theoretical contingency that alters the relative advantages and disadvantages associated with specialized versus generalized careers. Our theory is rooted in the notion that the characteristics of involuntary worker–firm separations (i.e., job displacement) simultaneously amplify the disadvantages associated with specialized careers and the advantages associated with generalized careers, thereby giving displaced generalists a relative advantage over displaced specialists. We find support for our theory in the context of U.S. congressional staffing, using administrative employment records and a regression discontinuity identification strategy that exploits quasi-random staffer displacement resulting from narrowly decided congressional reelection bids. Our theoretical contingency is further supported in supplemental regressions where correlational evidence suggests that while specialists tend to be relatively penalized in the labor market after involuntary separations, specialists appear to be relatively privileged when separations are plausibly voluntary.

To which emails do employees first respond? This paper explores the near-universal element of being an employee responsible for attending to an organizational email account. Using a large email corpus of an organization across five years, we explore various response heuristics that might be guiding how organizational members make reply priority decisions. Study 1 simulates what we call the “morning inbox problem”—deciding whom to reply to when emails from multiple respondents have been received. Our analysis reveals that organizational members use the following heuristics in reply priority decisions: (a) order of arrival, (b) contents that can be inferred from the subject line rather than from the email body, (c) effort required to reply, and (d) expectation the sender has with respect to time-to-response of the email. These patterns of reply priority reveal a new construct—organizational timing norms, which are norms that govern the temporal dimension of intraorganizational interactions. Study 2 explores the organizational implications of timing norm violations. We show that organizational members sending out-of-sync replies constitute a “bottleneck” in organizational communication and is a predictor of employee turnover. We discuss the implications of our discoveries and underscore the potential value of studying timing norms in organizational routines.

This study revisits the portability of performance paradox—the common finding that external hires fail to replicate prior performance after switching firms—by examining how the nature of an employee’s human capital and social capital resources relate to the ease with which external hires can be utilized in an organization’s value creating activities. Drawing theoretically from the person–organization fit and social capital literatures, we theorize that the integration and utilization of external hires will correlate with two types of human capital resource fit: similarity and complementarity, and two dimensions of retained social capital resources: internal and external. Using data from the U.S. lobbying industry and novel empirical estimates of worker–firm fit, we provide descriptive evidence that employee utilization (performance) decreases post-mobility, consistent with the portability paradox. However, this relationship attenuates—in magnitude and duration—when there is human capital resource complementarity (but not similarity) between the employee and hiring firm or when the employee transfers social capital resources (internal or external). We also find some evidence that human capital and social capital function as substitutes, and post hoc analyses suggest the characteristics of human and social capital which facilitate the utilization of external hires also correlate with hiring firm performance.

We examine how a discontinuous increase in the value of an employee’s relational capital influences the employee’s mobility and entrepreneurship decisions in professional and business service contexts. Drawing on the unfolding model of voluntary turnover, we develop a theory proposing that positive shocks to external relational capital will catalyze employees to consider alternative employment options, thereby increasing the probability of exit. We further maintain that exit decisions in response to such shocks will be driven by a desire to appropriate more value, making these shocks strong predictors of employee entrepreneurship, especially when the employee works in an area that is peripheral to the firm’s core capabilities. Empirically, we construct a unique employee-employer linked database that tracks employment of lobbyists in the United States federal lobbying industry. Leveraging plausibly exogenous shocks to the value of an employee’s relational capital and a novel market-based measure of the employee’s position in the firm’s knowledge space, we report two sets of findings. First, an increase in the value of relational capital has a positive effect on the likelihood of mobility to established firms and employee entrepreneurship, with the effect for the latter stronger than the former. Second, the magnitude of the effect on employee entrepreneurship becomes stronger when the employee is peripheral to the firm’s core knowledge. Together, our results are consistent with a value creation-value appropriation rationale, where sudden increases in the value of an employee’s relational capital drive exit as a means to appropriate a greater portion of value created.

This paper investigates the interaction effects of specialization and relational capital on performance. We distinguish between upstream and downstream relational capital and theorize that higher levels of specialization will buffer against decreases in upstream relational capital, because of deeper domain expertise and stronger downstream relational capital. Conversely, higher levels of generalization permit greater gains from increases in upstream relational capital, due to leverage across a more diversified downstream portfolio of activities. We test and find support for these hypotheses in the context of the US lobbying industry. Our study contributes to the strategic human capital literature by isolating the dimension of specialization and relational capital embodied within individuals and providing performance implications of the interactions.

This study integrates theories of diffusion and social identity to conceptualize the diffusion of Sustainability Report (SR) as a result of a firm’s identification with its reference groups. Specifically, we first hypothesize four different sources of external stakeholder pressures driving the diffusion. Next, we argue that the source of external stakeholder pressures has a differential effect on the adoption of SR for firms that claim their identity on sustainability management. For firms with organizational identity claims, in-group stakeholder pressure will amplify whereas out-group stakeholder pressure will dampen the adoption. We test our theory using an event-history analysis of 675 publicly traded firms in Korea during the period of 2003–2010. The results show that all four sources of external pressure serve as mechanisms through which SR spread in Korea. More importantly, we find support for the moderating role of organizational identity claims in the effect of external pressures. We discuss how organizational identity matters in the diffusion of corporate social initiatives along with implications for policy makers.

We theorized and tested the performance implications of the lateral hiring by professional service firms (i.e. law firms). Using a longitudinal dataset of lateral partner hires in 148 US law firms between the years of 2004 and 2008, the results indicated that the size of lateral hiring had a reversed U-shape relationship with the financial performance of a firm. In addition, the leverage ratio (i.e. the ratio between associate lawyers and partners) significantly moderated the reversed U-shape relationship between lateral hiring and firm performance, such that the placement of the bend in the curvilinear relationship, that is, the threshold, occurred more quickly at a low than at a high leverage ratio.

This study examines the performance implications of client tie diversifying entry, defined as firms entering new markets with existing clients. Recognizing the theoretical basis for both positive and negative outcomes of client tie diversifiers, the paper adopts a question-driven approach and discovers a strong negative correlation between client tie diversification and firm performance. Using data from the U.S. federal lobbying industry during the creation of the Homeland Security issue market post-9/11, we find that lobbying firms entering the new market with existing client ties underperform compared to other firms. This underperformance appears to stem from diseconomies of scope associated with sharing and transferring client ties as well as the complexities in client-firm relationships, challenging the assumption that repeated client ties are readily fungible across markets. 

Can firms create synergies by hiring human capital following acquisitions? A growing body of research emphasizes human capital as a key lever for creating synergies following mergers and acquisitions. While previous research has given primacy to post-merger retention, deletion, or reallocation of human capital for generating synergies, there has been less exploration of the post-merger addition of human capital. Using a dataset of job postings and information on 2,530 M&A transactions between publicly listed U.S. firms from 2011 to 2019, we examine this underexplored mechanism for creating synergies. We find that acquirers attempt to hire human capital that complements the combined entity’s pre-existing talent pool, thereby improving acquisition performance.

As firms strive for growth, firms face the strategic dilemma of pursuing either inorganic growth through M&As or organic growth via internally building and hiring. This study examines the circumstances under which these growth strategies act as substitutes, particularly when firms’ initial technological M&A attempts fail. While M&As provide opportunities for rapid innovation, they often come with high termination rates and associated costs, prompting firms to reassess their strategic approach. We explore whether firms pivot towards internal development (Make) or pursue alternative acquisition targets (Buy) following failed M&A attempts. Leveraging insights from problemistic search theory, we hypothesize that firms are more likely to pivot to internal development through hiring in response to negative market feedback or when the reasons for deal termination are attributable to the acquirer. Using a sample of 120 technological M&A deal termination events among publicly traded U.S. firms, our findings reveal a tendency for firms to repeat the M&A strategies, but significant negative market reactions and terminations attributable to the firm encourage a shift towards internal development. Notably, we find a preference for internal development reflected in increased engineering and data analytics job postings.

The relationship between divestitures and acquisitions is generally presented in three ways: to free up resources for future acquisitions; to remove redundant parts of a previously acquired firm; or due to underperformance of the combined firm. We propose an additional relationship: if an announced acquisition fails to close, the bidder may pivot to divest resources related to the target firm, particularly under certain conditions. To test this relationship, we augment previous methodological approaches with a novel method: matching successful and unsuccessful bids using the perceived risk of deal failure by using arbitrage spreads between the announced and spot price of the target. Consistent with this argument, we find that bidding firms make more divestitures in sectors related to the target after a failed bid.