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Career Mobility and Organizational Structure
Unformatted Document Text:  more and more difficult to identify and locate problems even if they have the resources (that their smaller counterparts may not possess) to fix them. Tracking the origins of success or failure, or more broadly, interpreting past experiences as a basis for present decision-making, becomes obfuscated by the sheer mass of inventory that needs to be scanned. The evolution of internal human resource practices should not be immune to the retarding effect arising from the combination of senescence and mass. We expect that the ability of large firms to identify the value of their human capital and to retain the right personnel will diminish with age. Again, this may occur not because large firms do not have superior resources to compensate or develop the critical human capital they need but because as they age, these firms become increasingly prone (more so than smaller firms) to settle into established routines, give in to internal politics, and succumb to the cognitive strain of interpreting their past. The implication for managing human resources is a decreased ability to develop and reward talent. This, of course, suggests higher quit rates among members of aging large firms: Hypothesis 2 (H2): Organizational exits increase as large firms grow older. Note that the first two hypotheses aim to integrate a variety of size-related arguments and generate predictions about their effect on career outcomes without bringing in structural differentiation into the theory. Our next task is to do the opposite—to develop arguments about the relationship between formal structure and career mobility without recourse to organizational size. Structural differentiation can be thought of along two main dimensions—the horizontal and the vertical scope of the firm. This dual dimensionality is important because, as we illustrate below, arguments linking differentiation to tenure duration differ depending on which dimension of structure they apply to. Horizontal differentiation refers to the creation of divisions that may be organized along a number of dimensions (e.g., product, customer, technology, geography, etc) and that are relatively 12

Authors: Dobrev, Stanislav.
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more and more difficult to identify and locate problems even if they have the resources (that their
smaller counterparts may not possess) to fix them. Tracking the origins of success or failure, or
more broadly, interpreting past experiences as a basis for present decision-making, becomes
obfuscated by the sheer mass of inventory that needs to be scanned.
The evolution of internal human resource practices should not be immune to the retarding
effect arising from the combination of senescence and mass. We expect that the ability of large
firms to identify the value of their human capital and to retain the right personnel will diminish
with age. Again, this may occur not because large firms do not have superior resources to
compensate or develop the critical human capital they need but because as they age, these firms
become increasingly prone (more so than smaller firms) to settle into established routines, give in
to internal politics, and succumb to the cognitive strain of interpreting their past. The implication
for managing human resources is a decreased ability to develop and reward talent. This, of course,
suggests higher quit rates among members of aging large firms:
Hypothesis 2 (H2): Organizational exits increase as large firms grow older.
Note that the first two hypotheses aim to integrate a variety of size-related arguments and
generate predictions about their effect on career outcomes without bringing in structural
differentiation into the theory. Our next task is to do the opposite—to develop arguments about
the relationship between formal structure and career mobility without recourse to organizational
size. Structural differentiation can be thought of along two main dimensions—the horizontal and
the vertical scope of the firm. This dual dimensionality is important because, as we illustrate
below, arguments linking differentiation to tenure duration differ depending on which dimension
of structure they apply to.
Horizontal differentiation refers to the creation of divisions that may be organized along a
number of dimensions (e.g., product, customer, technology, geography, etc) and that are relatively
12


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