Internal Promotion or External Hire? Staffing Management Positions When Employees Have a Seat in the Boardroom

Aleksandra Gregoric (), Takao Kato and Casper B.L. Larsen
Additional contact information
Aleksandra Gregoric: Copenhagen Business School
Casper B.L. Larsen: Copenhagen Business School

No 17304, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We join the scholarly conversation on the implications of the different configurations of firms' stakeholder coalitions for their employment practices, by investigating how the structural arrangements granting employees a role in firm boards of directors (employee governance representation, EGR) affect firms' propensity to staff management positions through external labor markets rather than internal promotions. The literature has thus far pointed to a possible workers' impact on employment practices primarily through the power mechanism, contingent on the employees' ability to enforce their preferences with regard to hiring and other employment practices. We contribute to this scholarly work by (1) explicating why employees likely prefer firms to rely on internal labor markets (ILM) when hiring new managers and (2) conceptualizing the employees' impact on the staffing of management positions via the efficiency mechanism, related to the positive effects of EGR on the functioning of the ILM. We provide support for our hypotheses, using linked employer-employee data for Danish firms during 2001-2017.

Keywords: employee representation; corporate governance; hiring practices; internal labor markets; management jobs (search for similar items in EconPapers)
JEL-codes: M5 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2024-09
New Economics Papers: this item is included in nep-hrm, nep-ipr and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17304.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp17304

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().