Theroutinemay be stablebut the advantage is not: Competitive implications of key employee mobility

Abstract

We extend our theoretical understanding of the effect of key employee mobility on organizational performance. We find that when an organization with an advantageous set of routines loses a key employee to a competitor, the advantaged organization's competitive position is reduced vis̀-a-vis the hiring competitor. What is more interesting is that we also show that the diffusion of an advantageous set of routines through the mobility of key employees may affect competitive advantage in at least two additional ways. Our findings result from an analysis of 412 competitive events between the San Francisco 49ers and all other teams in the National Football League during the 24-year period when the San Francisco 49ers perfected the routines of a strategic innovation that has become known as the West Coast Offense. First, we find that there is a loss of advantage for the organization when competitors increasingly compete against additional organizations that hired key employees from it. Second, we find that there is a loss of advantage for the organization when competitors expect future competition against additional organizations that hired key employees from it. Our results challenge the traditional argument that socially complex routines create sustainable competitive advantages because they are not easily imitated and do not rely on any single individual. Instead, we show that routines are stable to the loss of key employees, but the advantages derived from them are not. Copyright © 2009 John Wiley & Sons, Ltd.