Making the Most of the Revolving Door: The Impact of Outward Personnel Mobility Networks on Organizational Creativity

Citation: Frédéric C. Godart, Andrew V. Shipilov, Kim Claes (2013) Making the Most of the Revolving Door: The Impact of Outward Personnel Mobility Networks on Organizational Creativity. Organization Science (RSS)
DOI (original publisher): http://dx.doi.org/10.1287/orsc.2013.0839
Semantic Scholar (metadata): http://dx.doi.org/10.1287/orsc.2013.0839
Sci-Hub (fulltext): http://dx.doi.org/10.1287/orsc.2013.0839
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Tagged: absorptive capacity (RSS), fashion industry (RSS), organizational creativity (RSS), outward centrality (RSS), personnel mobility networks (RSS), status (RSS)

Summary

This paper proposes that employees leaving a firm for the competition embed this firm in personnel mobility networks which are characterized by outward centrality and inward centrality. A focal firm’s outward (respectively, inward) centrality is defined as the number of firms the focal firm’s employees go to (come from) within a certain time frame. A firm’s creativity depends upon the creativity of its individual employees and is therefore heavily affected by these mobility networks. However, despite wide acknowledgement of the importance of socio-structural factors in the creativity process, they were seldom studied so far. In addition, the literature about personnel mobility mainly treated the determinants of mobility and not its consequences for firms. Therefore, looking at the global high-end fashion industry, the authors ask a simple question: what is the impact of losing personnel to competitors on a firm’s creativity. They also explore several moderators (status, inward mobility, and top executives tenure and achievements).

In order to produce creative output, organizations need two things 1) to be able to access heterogeneous information 2) to be recognized as legitimate by their peers so that their output is considered novel and useful. This is why outward personnel mobility networks are such a strong determinant of firm creativity. Indeed, outward personnel mobility allows for 1) access to heterogeneous information as people stay in touch with one another (even after departure to another firm) and 2) the legitimization of the firm’s best practices in the industry.

However, when too many employees leave, high outward mobility disrupts the firm’s operations. The authors propose the following main effect:

1) A firm’s creativity will be an inverted U function of its outward centrality in the industry mobility network. (Supported)

This main effect is moderated by two mechanisms. First, the absorptive capacity of the firm, meaning its ability to absorb novel ideas and to transform it into creative output, and, second, the firm’s status since this will influence how peers will value the firm’s outputs. Absorptive capacity is a function of the firm’s personnel and therefore the firm’s position in an inward centrality network, the tenure, and the prior accomplishments of its creative directors. More specifically, the authors make the following four hypotheses.

Regarding the firm’s absorptive capacity:

2) a) The main effect is positively moderated by a firm’s inward mobility centrality, meaning the inverted U curve will shift higher up on the creativity axis as inward mobility centrality increases. (Supported). This is because a higher inward mobility centrality means that the firm’s employees come from a more heterogeneous set of sources. This helps the firm understand its external environment and turn various inputs into creative outputs.

b) The main effect is negatively moderated by the tenure of the creative director, meaning that the inverted U curve will shift lower down on the creativity axis as creative director tenure increases. (Unsupported)

c) The main effect is negatively moderated by the prior accomplishments of the creative director, meaning that the inverted U curve will shift lower down on the creativity axis as the accomplishments of the creative director increase. (Supported). This is because past accomplishments will tend to make creative directors less open to new ideas.

Regarding the firm’s status:

3) The main effect is positively moderated by a firm’s status: the inverted U curve will shift higher up on the creativity axis as the firm’s status increases. (Supported).

The setting under study is the high-end fashion industry over a decade (2000 to 2010). The authors created an exhaustive and unique database from several online and offline sources. The database is complemented by field interviews of key actors in the fashion industry.

The creativity ranking of fashion houses was obtained from Journal du Textile, a widely respected source in the industry that asks the biggest clothes buyers in world who they think are the most creative houses.

Theoretical and Practical Relevance

Perhaps counterintuitively, losing employees can have positive consequences for a firm since the social relationships between ex-coworkers can be a significant source of information and influence. From a theory standpoint, the papers contributes to the (still) scarce research on the social determinants of creativity, to the literature on turnover by highlighting the consequences of turnover for the sending firm, and to the literature on organizational learning by showing how relationships between ex-colleagues can be a source of exploration. The paper also develops the important concept of “mobility network” which constitutes a fresh view on inter-organizational networks