Poaching Workers in a Supply Chain: Enemy from Within?

39 Pages Posted: 5 Feb 2015

Date Written: February 3, 2015

Abstract

Poaching is the prevalent practice of recruiting workers who are already employed elsewhere. Economy-wide, it represents the primary mode by which workers flow directly from one firm to another. In this paper, we examine the interaction between the flow of goods and the flow of workers (via poaching) between firms linked in a supply chain. We find that the direction of worker poaching between supply chain partners can run counter to classical labor economics results. Specifically, in a supply chain, the less productive firm may offer its workers higher wages and poach workers from the more productive firm. We also find that worker flows accomplished via poaching impact supply chain management. First, we find that the identity of supply chain bottleneck may depend on whether poaching is available as a means to accomplish worker flows. Next, we find that the benefits of worker flows between supply chain partners in some cases outweigh the costs incurred, so no-poaching agreements would be worse for some supply chains. This net benefit of poaching between members of a supply chain is robust to the presence of outside labor market competitors as long as the competitors do not have high productivity. Thus, poaching workers from supply chain partners can often increase the benefit of operating in manufacturing hubs for all supply chain members.

Keywords: worker poaching, passive recruiting, supply chain, capacity management, staffing

JEL Classification: M11, M12, M51

Suggested Citation

Barlow, Evan and Allon, Gad and Bassamboo, Achal, Poaching Workers in a Supply Chain: Enemy from Within? (February 3, 2015). Available at SSRN: https://ssrn.com/abstract=2560084 or http://dx.doi.org/10.2139/ssrn.2560084

Evan Barlow

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Gad Allon (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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