An Examination of the Firm-level Performance Impact of Cluster Hiring in Knowledge-intensive Firms

This research investigates the firm-level performance impact of cluster hiring approaches to the acquisition of strategic human capital in knowledge-intensive firms. We theorize that factors such as novelty and legitimacy, appropriation, and integration impact the ability of cluster hires to generate economic value. In turn, we hypothesize that the composition of the cluster hire (degree of expertise overlap and degree of co-mobility) and its fit with the strategic human capital at the hiring firm are likely to influence these factors to affect firm performance. The results from an archival study of cluster hires in 112 domestic U.S. law firms lend credence to the overarching perspective put forth in this paper, and demonstrate that the performance impact of cluster hiring is contingent on its composition and fit with the existing strategic human capital at the hiring firm. Specifically, we find that while the co-mobility dimension has a negative impact on firm performance, the degree of expertise overlap is positively related to firm performance when it adds strategic human capital to an area where the hiring firm has little or no presence. Additionally, we find that expertise overlap positively impacts firm performance when the cluster hire involves low levels of co-mobility.