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Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area

Christian Belzil (), Michael Bognanno and François Poinas ()

No 1206, DETU Working Papers from Department of Economics, Temple University

Abstract: This article estimates a dynamic reduced-form model of intra-firm promotions using an employer-employee panel of over 300 of the largest corporations in the U.S. in the period from 1981 to 1988. The estimation conditions on unobserved individual heterogeneity and allows for both an endogenous initial condition and sample attrition linked to individual heterogeneity in demonstrating the relative importance of variables that influence promotion. The role of the executive's functional area in promotion is considered along with the existence and source of promotion fast tracks. We find that while the principal determinant of promotions is unobserved individual heterogeneity, functional area has a high explanatory power, resulting in promotion probabilities that differ by functional area for executives at the same reporting level and firm. No evidence is found that an executive's recent speed of advancement in pay grade has a causal impact on in- sample promotions after conditioning on the executive’s career speed of advancement. For high-level executives, fast tracks appear to result from heterogeneity in persistent individual characteristics, not from an inherent benefit in recent advancement itself.

Keywords: promotion; fast track; functional area; dynamic discrete choice (search for similar items in EconPapers)
JEL-codes: C33 M5 M51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm and nep-lab
Date: 2012-11
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http://www.cla.temple.edu/RePEc/documents/DETU_12_06.pdf First Version, 2012 (application/pdf)

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Working Paper: Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area (2012) Downloads
Working Paper: Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area (2012) Downloads
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