Mollie Jones

Annotated Bibliography
Bidwell, Matthew. "Paying More To Get Less: The Effects Of External Hiring Versus Internal
Mobility." Administrative Science Quarterly, 56.3 (2011): 369-407. Business Source
Complete. Web. 13 Feb. 2015.
This is a study conducted by Matthew Bidwell from Cornell University. The data
collected comes from U.S. investment banking arm of a financial services company from
2003 to 2009. This article focuses on the pay of external workers and their performance
in return. The overall point is that external hires get paid more than internal workers for
the same position but they perform worse. According to Bidwell, external hires need
about two years to get up to speed with the job they are hired into. This time is a high risk
period for these external hires because their efforts to catch up can lead to them being
fired. The reason for the higher pay for external hires comes from their higher levels of
education and experience compared to the internally mobile workers, but these education
levels are no predictor of their performance on the job. There are twice as many internal
promotions than there are external hires. The study also concludes that the external hires
make about 18% to 20% more than those who move up internally.
Krell, Eric. "Weighing Internal vs. External Hires." Society for Human Resource Management,
60.1 (2014). SHRM. Web.
This is an article written by Eric Krell who is a business writer based in Austin Texas.
This article is aimed at letting the reader know about the differences between external and
internal hires. It also lays out the different situations where a firm or company would
decide which type of employee they are looking for. According to Krell, a company will
mainly look for external hires when they are in need for new ideas or ideas/secrets
generating from the external hires past employers. He also addresses that a company will
prefer an incumbent when they are small on their time and budget for training, or they
need someone who has already built relationships within the company they are working
for. The overall idea is that people get either hired or promoted based on the skill set
needed for the job.
Roomkin, Myron, and Somers, G. "The Wage Benefits Of Alternative Sources Of Skill
Development." Industrial & Labor Relations Review 27.2 (1974): 228-241. Business
Source Complete. Web. 26 Feb. 2015.
This article is written by Myron Roomkin and Gerald G. Somers. Myron Roomkin is an
assistant Professor of Industrial Relations at the University of Chicago. Gerald Somers is
a Professor of Economics at the University of Wisconsin. This article specifically focuses
on the pay of incumbents based on their skill levels from pre-employee training and then
post training. This includes items such as college education, military experience, and high
school vocational training. This is a study done in a Wisconsin plant of the Gisholt
Machine Company. It is discovered that inly in situations where the employee is being
hired in at a high level position was the pre-training of the employee a factor on their pay
amount. This conclusion means that someone who has the same educational background
would receive a lower pay if being hired in at an entry position versus someone who is
hired in as a skilled craftsmen in the company.

Song, J., Almeida, P., and Wu, G. "Learning-by-Hiring: When Is Mobility More Likely to
Facilitate Interfirm Knowledge Transfer? Management Science 49.4 2003: 351-365.
JSTOR Journals. Web. 26 Feb. 2015.
This is an article written by Jaeyong Song, Paul Almeida, and Geraldine Wu. Paul
Almedia is a professor at McDonough School of Business. Geraldine Wu is a professor at
the Columbia University School of Business. Jaeyong Song is a professor at Yonsei
University. This article focuses on engineers getting hired into different companies and
being transferred to different firms. This occurs to spread knowledge to different firms in
the company or for another company to gain new knowledge from the engineer. This is in
support of Eric Krell stating that companies will hire externally in order to gain new
knowledge. This also sheds a new light on the subject by telling how a company may
transfer an employee to a different firm within the company to spread that employees
knowledge throughout the company.
Lazear, E. and Oyer, P. "Internal And External Labor Markets: A Personnel Economics
Approach." Labour Economics 11.5 (2004): 527-554. EconLit. Web. 05 Mar. 2015.
This is an article written by Edward P. Lazear and Paul Oyer, both employed by Stanford
University. This article focuses on how the internal employee wages are not affected by
the labor market where as the external hires are affected by the labor market. This will
result in a wage difference between the two. The data is taken from Sweden in the 1980s.
Since the external hires are coming from a labor market their wages are higher than the
incumbents of the company who have no labor market pressures on them whatsoever.
This is another revelation as to why external hires tend to receive higher pay rates.
Bidwell, M. and Keller, JR. "Within Or Without? How Firms Combine Internal And External
Labor Markets To Fill Jobs." Academy Of Management Journal 57.4 (2014): 1035-1055.
Business Source Complete. Web. 05 Mar 2015.
This article is written by Matthew Bidwell and JR Keller, both employed by the Wharton
School at the University of Pennsylvania. This article examines which jobs are more
likely to be filled by incumbents and which will be filled by external hires. They go into
depth on how the necessity of firm specific skills, varied performance, and the pool size
of internal employees can affect who gets the position. It is concluded that the companies
are more likely to hire externally when the pool of internal employees is younger less
experienced workers than if the pool of workers is filled with older more experienced
employees. This all shows that the pool of internal workers can greatly affect whether or
not the company will opt for an external hire.