The Performance Effects of Internal Resource Redeployment versus External Resource Sourcing

Abstract

The reconfiguration of strategically important resources through internal redeployment or sourcing from the external market is a vital aspect of corporate development. However, empirical studies that directly ascertain the relative performance of internal resource redeployment over acquiring/borrowing resources on the external market are lacking. We overcome the empirical challenges associated with comparing the effectiveness of both reconfiguration modes by examining the redeployment of human resources—professional soccer players in the English Football League Championship—following a significant injury to a key player. This approach further allows us to develop theory regarding the roles of important resource-level characteristics, including fungibility and similarity, and to circumvent endogeneity issues related to the resource reconfiguration-performance relationship. This study thereby extends existing theory and produces novel findings that illuminate the importance of resource-level characteristics as drivers of the relative performance advantages of different reconfiguration modes. We discuss implications for the literature on resource reconfiguration and strategic human capital.