Will We Ever Meet Again? The Relationship between Inter‐Firm Managerial Migration and the Circulation of Client Ties

Abstract

AbstractA large body of research shows that the migration of managers from one professional service firm to another weakens the old employer’s relationship with its clients, because migrating managers remove their relationship‐specific knowledge and expertise – i.e., human and social capital – from their old employers, redeploying it to their new employers. This study extends this research by introducing a bi‐directional perspective of social capital in which both firms and managers may exploit these relationship‐specific resources. We use theory on social capital to build arguments about how one form of manager mobility, manager migration between two service providers in a single market, can both lead and lag the movement of client ties between those providers, and signaling theory to hypothesize the conditions under which this is likely to occur. Analyses using longitudinal data on New York City advertising agencies generally support our arguments. Our findings contribute to theory and research on manager migration, social capital, and signaling, and raise new questions for how the portability of relationship‐specific social capital shapes markets.