Are All Spillovers Created Equal? A Network Perspective on IT Labor Movements

Abstract

This study examines how characteristics of a firm’s labor-flow network affect firm productivity. Using employee job histories, we construct inter-firm labor-flow networks for both IT-labor and non-IT labor and analyze how a firm’s network structure for the two types of labor affects firm performance. We find that hiring IT workers from a structurally-diverse network of firms can substantially improve firm productivity, which is likely due to the novel and non-redundant information provided in such networks. Interestingly, we find the opposite effects for hiring non-IT labor, which is likely due to a structurally- cohesive network enabling frequent and repeated exposure to a common knowledge base that is beneficial for implementing complementary organizational practices especially when they are often complex and tacit. Together, these results demonstrate the importance of incorporating a network perspective in understanding the full impact of spillover effects from organizational hiring activities.