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for their extremely helpful comments and suggestions on this paper. I would also like to thank the various people at Croesus, who helped me access and understand the data. ABSTRACT Individuals often enter similar jobs via two very different routes: internal mobility (promotions and transfers) and external hiring. Yet we know little about how the differences(More)
We develop a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model's key prediction using novel micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms.(More)
This paper studies how firms reorganize following diversification, proposing that firms use outsourcing, or vertical disintegration , to manage diseconomies of scope. We also consider the origins of scope diseconomies, showing how different underlying mechanisms generate contrasting predictions about the link between within-firm task heterogeneity and the(More)
This paper studies inherited agglomeration effects, how human capital that accrues to managers while working at a parent firm in an industry hub can be subsequently transferred to a spinoff. We test for inherited agglomeration effects in the context of the hedge fund industry and find that hedge fund managers who previously worked in New York and London(More)
Using the universe of patient transitions from inpatient hospital care to skilled nursing facilities and home health care in 2005, we show how integration eliminates task misallocation problems between organizations. We find that vertical integration allows hospitals to shift patient recovery tasks downstream to lower-cost organizations by discharging(More)
We propose that higher skilled firms diversify in equilibrium even though managers exploit idiosyncratic performance shocks to time diversification moves. We formalize this intuition in a mistake-free equilibrium and test our predictions using a large panel dataset on the hedge fund industry 1977-2006. The results show that returns fall following new fund(More)
Entrepreneurs often have prior experience at incumbent firms. We present a new mechanism by which prior employment can influence transitions into entrepreneurship. We propose that some employees divert effort toward unproductive activities to learn about their own fitness for alternative employment. Based on the results of this costly learning experience,(More)
We examine how information technology (IT) influences asset ownership through its impact on firms' and agents' capabilities. In particular, we propose that when IT is a substitute for agents' industry-specific human capital, IT adoption leads to increased vertical integration. We test this prediction using micro data on vehicle ownership patterns from the(More)
We examine how parent firm location influences the performance of subsequent entrepreneurial spawns into the hedge fund industry. We find that hedge fund managers who previously worked for parent firms located in the industry hubs—New York and London—outperform their peers, regardless of where the hedge fund is located. These results are robust to controls(More)