Former Employer’s Prestige, the TMT’s Post-Migration Rewards in the Biopharma Industry

Abstract

Recruiters and researchers of TMT (top management teams) tend to emphasize the human capital and social capital of the executive in the interfirm migration, but they ignore the role of the former employer’s prestige. We address this issue to argue that the former employer’s organizational prestige attracts the recruiter’s attention to the TMT, and we propose that the TMT from high-prestige organization attracts high rewards than the TMT from a low-prestige organization. We used data from the biotechnology sector on 1,468 TMTs, their 1,482 hiring events, 783 recruiters, 168 source employers—in the interfirm movement of the TMTs from 1997 to 2005. We used three measures for predictors of the organizational prestige of the former employer, and the regression analysis shows some reflections of those predictors of rewards of the hired executive. The result shows that the organizational age, size, and alliance network of the former employer emit value signals to the recruiter. These components of organizational prestige predict increase in the rewards after controlling for the human capital of the TMT. The study contributes to organizational context as a predictor of value, institutional theory, and general implications for practice and policy.