The Diffusion of Knowledge Via Managers' Mobility

68 Pages Posted: 16 Dec 2016

See all articles by Giordano Mion

Giordano Mion

University of Sussex - Department of Economics; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Luca David Opromolla

Bank of Portugal; CEPR; UECE - Research Unit on Complexity in Economics

Alessandro Sforza

London School of Economics & Political Science (LSE) - London School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2016

Abstract

Better managers and managerial practices lead to better firm performance. Yet, little is known about what happens when managers move across firms. Does a firm hiring a good manager improve its performance? If yes is there some valuable knowledge the manager has acquired and successfully diffused to the new firm? In order to answer these questions we use information related to specific activities the manager was involved in when working for previous firms. More specifically, we use information on whether the manager has worked in the past for firms exporting to a specific destination country or a specific product. Our data is rich enough to allow controlling for both manager and firm unobservables and wash out any time-invariant ability of the manager as well as overall firm performance. We find that the export experience gained by managers in previous firms leads their current firm towards higher export performance, and commands a sizable wage premium for the manager. We use several strategies to deal with endogeneity including an exogenous event study: the sudden end of the Angolan civil war in 2002. We further refine our analysis by looking at different types of managers (general, production, financial and sales) and show how specific export experience interacts with the degree of product differentiation and/or the financial vulnerability of a firm's products as well as with rising import competition from China.

Keywords: export experience, firm performance, job mobility, knowledge diffusion, Managers

JEL Classification: F16, J31, L2, M2

Suggested Citation

Mion, Giordano and Opromolla, Luca David and Sforza, Alessandro, The Diffusion of Knowledge Via Managers' Mobility (December 2016). CEPR Discussion Paper No. DP11706, Available at SSRN: https://ssrn.com/abstract=2886518

Giordano Mion (Contact Author)

University of Sussex - Department of Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

HOME PAGE: http://sites.google.com/site/giordanomionhp/

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Germany

Luca David Opromolla

Bank of Portugal ( email )

Rua Francisco Ribeiro 2
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Portugal

CEPR ( email )

London
United Kingdom

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Alessandro Sforza

London School of Economics & Political Science (LSE) - London School of Economics ( email )

United Kingdom

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