Are All Spillovers Created Equal? A Network Perspective on IT Labor Movements

This study aims to understand how characteristics of a labor flow network affect firm productivity using an inter-firm hiring network constructed from individual job histories. We separate IT-labor from non-IT labor and use the network measures constructed from the two types of labor flow to evaluate how they affect firm performance. We find that hiring IT workers from a diverse set of firms can substantially improve firm productivity, which is likely due to the diverse and nonredundant information provided in a network with high diversity. Interestingly, we find that the opposite is true for hiring non-IT labor. Having a cohesive network of non-IT labor hires allows frequent and repeated exposure to a common knowledge base is instrumental for implementing complementary organizational practices that are often complex and tacit. Together, these results demonstrate the importance of incorporating a network perspective in understanding the full impact of spillover effects from organizational hiring activities.