Learning on the Job? Employee Mobility in the Asset Management Industry

37 Pages Posted: 6 Dec 2014

See all articles by Aaron Chatterji

Aaron Chatterji

Duke University - Fuqua School of Business

Rui J.P. de Figueiredo

University of California, Berkeley - Business & Public Policy Group

Evan Rawley

University of Minnesota - Twin Cities - Carlson School of Management

Multiple version iconThere are 3 versions of this paper

Date Written: November 26, 2014

Abstract

We present a new mechanism by which prior employment can influence transitions to other firms. We propose that some employees divert effort toward unproductive activities to learn about their own fitness for alternative employment. Based on the results of this costly learning experience, or “experiment,” some employees will transition into other firms or launch their own ventures, while others will remain at the incumbent firm. We develop a theoretical model to explicate these propositions, and test them using four datasets from the mutual fund and hedge fund industries. We find evidence that managers who engage in excessive risk-taking at mutual funds are subsequently more likely to join or start hedge funds, even though there is little evidence that this risk-taking is intended to signal quality to outside observers. Taken together, our findings suggest that learning about one’s own fitness for alternative employment, through experimentation on the job, is an important mechanism for enabling employee mobility.

Keywords: employee mobility, learning, financial services, employee entrepreneurship, spawning

Suggested Citation

Chatterji, Aaron and de Figueiredo, Rui José P. and Rawley, Evan, Learning on the Job? Employee Mobility in the Asset Management Industry (November 26, 2014). Columbia Business School Research Paper No. 14-64, Available at SSRN: https://ssrn.com/abstract=2534145 or http://dx.doi.org/10.2139/ssrn.2534145

Aaron Chatterji

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Rui José P. De Figueiredo

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-6452 (Phone)
510-643-1412 (Fax)

Evan Rawley (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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