Internal Vs. External Promotions: Evidence from Professional Football Coaching Careers
C. Edward Fee
Michigan State University - Department of Finance
Charles J. Hadlock
Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management
Joshua R. Pierce
University of Kentucky - Gatton College of Business and Economics
November 8, 2002
We examine the job movements of professional football coaches both within and across employers and compare the mechanisms governing internal and external promotions. We find that the likelihood of an external promotion is strongly related to individual performance measures and only weakly related to team performance. In contrast to external promotions, we find that the overall likelihood of an internal promotion is unrelated to an individual's performance. This difference between internal and external labor markets appears to arise from the process governing job openings within the internal hierarchy, as the likelihood of an internal job opening up is negatively related to performance. Conditional on an internal opening occurring, we do find that increases in individual performance increase the probability of being promoted. Relationships matter a great deal in this labor market in the sense that coaches appear to be fired and hired as a group, suggesting that the value of an individual to an employer depends on the identity of the entire set of individuals who work together. We argue that our findings have implications for several issues related to incentives and organizational design.
Number of Pages in PDF File: 48
Keywords: Promotions, Internal Labor Markets, Hierarchies, Performance Evaluation, Careers, Football, Teams
JEL Classification: D23, J41, L22, L83
Date posted: December 18, 2002
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