Are All Spillovers Created Equal? A Network Perspective on Information Technology Labor Movements

This study examines how characteristics of an interfirm labor-flow network affect firm productivity. Using employee job histories to trace labor movement between organizations, we construct labor-flow networks for both information technology (IT) and non-IT labor and analyze how a firm’s network structure for the two types of labor affects its performance. We find that hiring IT workers from a structurally diverse network of firms can substantially improve firm productivity, but that the same is not true for non-IT labor, where we find little benefit of network diversity. We hypothesize that these results reflect differences in the types of knowledge diffusion facilitated by different types of labor flows, with IT labor enabling the transfer of new and innovative firm practices, which benefits from diversity, while non-IT labor flows are more closely associated with implementation of complementary organizational practices, which may benefit from a critical mass of workers with a common knowledge base. Together, these results demonstrate the importance of incorporating a network perspective in understanding the full impact of spillover effects from organizational hiring activities.