Hiring Expert Talent in a Recession: Targeted Labor Pool Sourcing and Firm Performance

John Kenneth Mawdsley, Amit Jain Chauradia and Rhett Andrew Brymer
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John Kenneth Mawdsley: HEC Paris - Ecole des Hautes Etudes Commerciales

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Abstract: Extant research suggests that hiring experts during economic downturns can improve firm financial performance. However, recessionary labor markets deepen the challenges facing hiring firms, calling to question both the firm-level benefits and the tactics of acquiring talent when demand for a firm's business is declining. We theorize and find that hiring expert talent during a recession actually weakens firm performance in the context of knowledge-based services. Notably though, we find firms can effectively attenuate the negative hiring effect by targeting particular labor pools, underlining the significance of gaining human capital advantages through focused sourcing. We test our hypotheses using a longitudinal sample of large U.S. corporate law firms between 2002 and 2010.

Keywords: human capital; firm performance; knowledge workers; labor pools; economic recession (search for similar items in EconPapers)
Date: 2017-06-27
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01941540

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