Shifts and Ladders: Comparing the Role of Internal and External Mobility in Managerial Careers

Abstract

Employees can build their careers either by moving into a new job within their current organization or else by moving to a different organization. We use matching perspectives on job mobility to develop predictions about the different roles that those internal and external moves will play within careers. Using data on the careers of master of business administration alumni, we show how internal and external mobility are associated with very different rewards: upward progression into a job with greater responsibilities is much more likely to happen through internal mobility than external mobility; yet despite this difference, external moves offer similar increases in pay to internal, as employers seek to attract external hires. Consistent with our arguments, we also show that the pay increases associated with external moves are lower when the moves take place for reasons other than career advancement, such as following a layoff or when moving into a different kind of work. Despite growing interest in boundaryless careers, our findings indicate that internal and external mobility play very different roles in executives' careers, with upward mobility still happening overwhelmingly within organizations.

Alternative Work Arrangements: Two Images of the New World of Work

“…Firms increasingly hire contract workers who receive no long-term job security, benefits, or often even training (Bidwell 2009, Bidwell & Briscoe 2009). Related trends include less opportunity for upward mobility (Bidwell & Mollick 2015), fewer institutional protections such as health and retirement benefits (Cobb 2015), and declining union membership ). The result is what Kalleberg (2009) refers to as precarious work, in which the power differentials between workers and employers are amplified.…”

“…As work moves beyond the boundary of the firm, workers outside of a traditional corporate hierarchy increasingly must craft their own careers (Greenhaus & Kossek 2014), fund their own training and development, and identify appropriate developmental assignments (Bidwell & Mollick 2015). Even for full-time employees, careers tend to be more individually directed, often in response to organizations offering less formal career development and to workers not being formally employed in organizations or employed for short periods of time (Bidwell 2009).…”

Bridging Strategic Human Capital and Employee Entrepreneurship Research: A Labor Market Frictions Approach

“…As individual productivity and opportunities for career advancement increase within a firm, both mobility (Hoisl, ) and entrepreneurship (Cassiman & Ueda, ; Kacperczyk, ; Sorensen & Sharkey, ) are limited. Career opportunities within firms lead to higher rates of internal promotion, which are associated with increased responsibility for employees (Bidwell & Mollick, ) and increased utility for the employees. As employers increase the potential for promotion and increased authority within the firm, they decrease the likelihood of mobility to established firms or to new ventures.…”

When Losers Become Leavers: Rejection and Turnover in Internal Labor Markets

“…In addition to robustness checks for performance, we explored an alternative explanation for our hypothesis related to expectations of being hired for advancements versus transfers (Hypothesis 3b). At HealthCo and many other organizations, advancements and transfers are both considered important ways in which individuals build their careers (i.e., Bidwell & Mollick, 2015). Advancements typically involve an increase in responsibilities and salary; transfers allow employees to move within the same level but gain experience and expand their skills in a new job function or department.…”

“…First, understanding why and how unsuccessful internal candidates respond to rejection has the potential to provide a more complete picture of contemporary ILMs, where market-oriented approaches to internal mobility have proliferated and rejection is frequent yet understudied. Second, studying differential responses to internal rejection may provide insight on employees' career trajectories within organizations following rejection, adding to the growing research on contemporary careers that has generally focused on outcomes following successful job moves (e.g., Bidwell & Mollick, 2015). Finally, internal candidates' responses to rejection can have significant consequences for organizations, particularly if different aspects of rejection predict whether they are more or less likely to leave.…”