Lateral hiring and the performance of professional service firms: the moderating effects of leverage ratio

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We theorized and tested the performance implications of the lateral hiring by professional service firms (i.e. law firms). Using a longitudinal dataset of lateral partner hires in 148 US law firms between the years of 2004 and 2008, the results indicated that the size of lateral hiring had a reversed U-shape relationship with the financial performance of a firm. In addition, the leverage ratio (i.e. the ratio between associate lawyers and partners) significantly moderated the reversed U-shape relationship between lateral hiring and firm performance, such that the placement of the bend in the curvilinear relationship, that is, the threshold, occurred more quickly at a low than at a high leverage ratio. This study contributes to the literature on strategic human resource management in professional service firms by providing empirical evidence on the effect of lateral hires and by emphasizing that lateral partner hiring should be considered with other important HR issues to fully capitalize lateral partners.
Publisher
ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
Issue Date
2016-02
Language
English
Article Type
Article
Citation

INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT, v.27, no.3, pp.338 - 354

ISSN
0958-5192
DOI
10.1080/09585192.2015.1045006
URI
http://hdl.handle.net/10203/207663
Appears in Collection
MT-Journal Papers(저널논문)
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