Can They Take It With Them? The Portability of Star Knowledge Workers' Performance

TLDR

The study investigates whether star security analysts retain performance when changing employers. Star analysts who move to firms with lower capabilities or alone suffer performance declines lasting up to five years, while moves to better firms or with teammates show no decline; firm‑specific skills and capabilities drive performance, and hiring stars from superior competitors triggers negative stock reactions, suggesting stars may be perceived as value‑destroying.

Abstract

This paper examines the portability of star security analysts' performance. Star analysts who switched employers experienced an immediate decline in performance that persisted for at least five years. This decline was most pronounced among star analysts who moved to firms with lesser capabilities and those who moved solo, without other team members. Star analysts who moved between two firms with equivalent capabilities also exhibited a drop in performance, but only for two years. Those who switched to firms with better capabilities and those who moved with other team members exhibited no significant decline in short-term or long-term performance. These findings suggest that firm-specific skills and firms' capabilities both play important roles in star analysts' performance. In addition, we find that firms that hire star analysts from competitors with better capabilities suffered more extreme negative stock-market reactions than those that hire from comparable or lesser firms. These findings suggest that hiring stars may be perceived as value destroying and may not improve a firm's competitive advantage.