Publications
Publications
- 2008
- HBS Working Paper Series
Structural Closure and Exposure: Formation of Structural Inequality in Managerial Labor Markets
By: Mikolaj Jan Piskorski
Abstract
Positional advantages arise when actors obtain rewards attached to positions they occupy, but these rewards are not merited by their performance. Existing theory suggests that in competitive markets there should be no positional advantages. This paper proposes a model of allocation of actors to positions to question this claim. The key result of this model indicates that for positions comprising assets that are costly to separate from each other, actors will be able to maintain their positions despite poor performance, leading to positional advantages. The model is tested by examining the allocation of top-level managers to firms in the American market for corporate control in the 1980s. Using a measure of separation costs derived from Burt's constraint theory, I find support for the hypothesis. The theory and results suggest that markets will not be able to eradicate positional advantages for positions that comprise two or more assets that are costly to separate from each other. For these positions, social mechanisms of aligning performance with rewards will be more useful.
Keywords
Compensation and Benefits; Jobs and Positions; Managerial Roles; Performance Improvement; Alignment; Competitive Advantage; Equality and Inequality
Citation
Piskorski, Mikolaj Jan. "Structural Closure and Exposure: Formation of Structural Inequality in Managerial Labor Markets." Harvard Business School Working Paper, No. 08-086, April 2008.