Intra- and Inter-Group Dynamics and the Market for Quality: Evidence from the Mobility of Elite Professionals

Internal Seminar for Researchers

Research Area: Management (SIMBE)

Abstract: Knowledge-based organizations rely on the knowledge, skills, and relationships of their talented workers to build their competitive advantage. This creates incentives to recruit “the best and the brightest” professionals in their respective fields, with the expectation of improved performance. Prior research, however, challenges the assumption that recruiting talented workers necessarily improves group and firm performance, and has explored several key contingencies affecting this relationship. In this study, we investigate how intra- and inter-group factors moderate the relationship between recruiting a talented individual into a group and that group’s quality-performance. Using a longitudinal panel dataset of the largest UK corporate law firms between 2000 and 2017, we show that while recruiting an elite professional into a group (legal practice) generally reduces group quality, this negative effect is weaker when the average quality of the incumbent professionals in the group is higher, and stronger when the organization comprises a higher number of other high-quality groups. Our study contributes to the strategic human capital, employee mobility, and team dynamics literatures and has practical implications for managers.