The Impact of Job Similarity Along the Career Path on the Firm's Promotion Strategy

Schmalenbach Journal of Business Research (2023), DOI: 10.1007/s41471-023-00159-x.

24 Pages Posted: 18 Aug 2017 Last revised: 26 Apr 2023

See all articles by Jakob Infuehr

Jakob Infuehr

University of Southern Denmark

Sebastian Kronenberger

University of Mannheim; TRR 266 Accounting for Transparency

Date Written: April 25, 2023

Abstract

Firms use job promotions to incentivize hard work from low-level employees and to sort employees according to their skills. Since these two functions are often in conflict, a firm’s promotion strategy tries to balance them. Our model extends prior research by identifying job similarity between current and future job as a driver of a firm’s promotion strategy. When compensation costs are high or external hiring options poor, then higher job similarity leads to fewer internal promotions. Otherwise, higher job similarity can lead to more internal promotions. These results help to explain why firms with different structures or from different industries apply different promotion strategies.

Keywords: Promotion, Job Similarity, Organizational Design

JEL Classification: J31, M51, D86

Suggested Citation

Infuehr, Jakob and Kronenberger, Sebastian, The Impact of Job Similarity Along the Career Path on the Firm's Promotion Strategy (April 25, 2023). Schmalenbach Journal of Business Research (2023), DOI: 10.1007/s41471-023-00159-x., Available at SSRN: https://ssrn.com/abstract=3020977 or http://dx.doi.org/10.2139/ssrn.3020977

Jakob Infuehr (Contact Author)

University of Southern Denmark ( email )

Odense, 5230
Denmark

Sebastian Kronenberger

University of Mannheim ( email )

Mannheim, 68161
Germany

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098
Germany

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