Revolving Doors, Corporate Performance, and Corruption of Markets

Abstract

Much debate has surrounded the issue of revolving doors (RDs) between private and public employment. Defenders of the practice argue that RDs enhance the performance of the firm. Elite theorists dispute this claim and contend that RDs distort economic and political marketplaces. An examination of the RDs of 3,815 officers of the top 200 U.S. firms reveals little support for the argument for improved performance. In contrast, the market distortion view receives some support. High-RD corporations cluster in concentrated markets, forge more connections with economic elites, and engage in monopolistic or monopsonistic practices. They are also more involved in questionable political activities, especially bribery of foreign governments.