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

Abstract

This study explores when employees are more or less likely to voluntarily exit after having unsuccessfully applied for a new job within their organization. Although prior work suggests that employees react negatively to rejection, we propose that employees will react differently based on how their experience during the hiring process shapes their perceptions about their prospects for future internal mobility. Drawing on insights from the literatures on vacancy chains, social exchange, and expectancy violations, we argue that rejected internal candidates will use three sources of information from the hiring process in assessing their potential for future advancement: (1) whether the "winner" was an internal or external candidate, (2) how far they made it in the hiring process, and (3) how likely they were to be hired for the job. Using data on over 2,000 internal losers at a single organization, we find that rejected internal candidates are less likely to leave when the job is filled with another internal candidate, when they make it further in the hiring process before rejection, and when their expectations of being hired for the job are likely to be lower. The results highlight the importance of understanding how rejection shapes careers and mobility in contemporary internal labor markets.iii