- Email: [email protected]
Organizational boundaries and upward job shifts
SOCIAL
SCIENCE
RESEARCH
Organizational
lo,
67-82 (1981)
Boundaries and Upward Job Shifts GARY D. SANDEFUR University
of Oklahoma
Recent research has examined the role of organizations in the stratification system and the functioning of stratification systems in organizations. In this analysis, we examine the implications of organizational boundaries for upward job changes within and across organizations. To perform our analysis, we utilize a nonstationary, modified Markov mode1 that allows consideration of individual and job heterogeneity. The data are life histories of a sample of U.S. males between the ages of 30 and 39. Our results indicate that organizational boundaries create two kinds of resources: (1) general resources, and (2) organization-specific resources. General resources have a positive effect on upward movement within and across organizational boundaries. Organization-specific resources have a positive effect on upward movement within organizational boundaries, and a negative effect on upward movement across organizational boundaries-a situation ofgreat benefit to organizations.
I. INTRODUCTION
Recently there has been a resurgence of interest in the role of organizations in the stratification system and the functioning of stratification systems within organizations (Kanter, 1976, 1977a, 1977b; March and March, 1977, 1978; Pfeffer, 1977; Rosenbaum, 1979a, 1979b, 1979~; Stewman, 1975; Talbert and Bose, 1977; Stolzenberg, 1978). Such research has resurrected the concerns of Stinchcombe (1964), who pointed out the importance of organizations in the stratification process. This research also arises from a more general concern with the structures in which job, occupational, wage, and prestige attainment take place (Horan, 1978; Beck, Horan, and Tolbert, 1978; Bibb and Form, 1977). In this analysis we examine the role of organizational boundaries in the mobility process. We approach organizations as open, bounded systems ofjobs (Stewman, 1975), and we compare the process of movement within these systems of jobs to the process of movement across systems of jobs. There are two important reasons for suspecting that these processes are Thanks go to Alan Acock, Harold Grasmick, Win Steglich, Nancy B. Tuma, and anonymous reviewers for comments on an earlier draft of this paper. Work on this paper began while the author was receiving an American Sociological Association Minority Fellowship and a Ford Foundation Fellowship for Native Americans. Address reprint requests to Dr. Gary D. Sandefur, Department of Sociology, University of Oklahoma, Norman, OK 73019. 67 0049-089X/81/010067-16$02.00/O Copyright @ 1981 by Academic Press. Inc. All rights of reproduction in any form reserved.
68
GARY
D. SANDEFUR
different. First, whether an individual is employed by an organization or is employed outside the organization affects the kinds of information available to job controllers; therefore, the criteria used in selecting a person to fill a job depends on whether or not the person is already employed by the organization. Second, whether the advancement opportunity is within or outside the organization an individual is presently employed by also influences the decisions of the individual considering whether to seek or take advantage of opportunities to move upward. In sum, organizational boundaries are part of the structural context in which individual mobility takes place. The impact of organizational boundaries on the mobility process has implications for both organizational stratification studies and research on the segmented labor market. Much of the former research has concentrated on the effects of organizational characteristics such as size or industrial type on the effects of education (and other variables) on income (Pfeffer, 1977; Stolzenberg, 1978). Other research has focused on job shifts within one organization (Kanter, 1977a, 1977b; Rosenbaum, 1979a, 1979b; Stewman, 1975) or one system of jobs (March and March, 1977, 1978; White, 1970). However, as Rosenbaum (1979b) points out, the process of movement between systems of jobs is probably quite different from the process of movement within systems of jobs. Also, the proportion of job changing that is intraorganizational is likely to vary with organizational size and industrial type. Thus, research on the impact of organizational boundaries on job shift behavior should provide us with some important information about the nature of organizational stratification systems. Most research on labor market segmentation suggests that one important characteristic of the good labor markets (internal, primary or core) is the presence of job ladders (Beck et al., 1978; Edwards, Reich, and Gordon, 1975). Individuals whose careers take place primarily through job ladders will experience a great deal of intraorganizational mobility compared to individuals whose careers do not involve job ladders. Thus, the rate of intraorganizational movement is probably much higher in the good segments of the labor market. Understanding the processes of interand intraorganizational movement can move us one step closer to a full understanding of differences in labor market segments. Furthermore, such analyses can serve as one significant link between studies of stratification in organizations and studies of labor market segmentation. The intent of this paper is to demonstrate the utility of such an orientation by comparing the process of movement within organizational boundaries to that across organizational boundaries. Furthermore, we believe that the understanding of structural effects on mobility can be enhanced by employing dynamic models. Most past research on the structural contexts in which mobility takes place has employed cross-sectional
ORGANIZATION
69
BOUNDARIES
analyses (see, e.g., Bibb and Form, 1977; Stolzenberg, 1975, 1978; Beck er al., 1978). The life-history data used in this research allow us to examine the effects of both individual and job characteristics on job changes that occur in continuous time. Our approach involves identifying some important individual determinants of mobility and specifying how their effects are likely to depend on whether movement is within or across organizational boundaries. Focusing on job-person matches as the unit of analysis, we examine the factors involved in leaving a job and moving to one with a higher level of rewards within the same organization or in another organization. II. ORGANIZATIONAL
BOUNDARIES
AND UPWARD
JOB SHIFTS
The process of individuals moving among jobs and/or jobs moving among individuals has been viewed as one of matching the “right” job with the “right” individual (March and March, 1977, 1978; Rosenbaum, 1979a; Stewman, 1975; Tuma, 1976; White, 1970). Both individuals and jobs have characteristics which are important in the matching process, and which act as determinants of job shifts. In this analysis, we consider job rewards (wage and prestige), individual resources (any personal attributes that are evaluated by employers), age, and duration of job as important determinants of job changes. If we use rewards as a means of differentiating job shifts, we can identify three types. First a job shift can be upward. That is, an individual can move from one job to another with a higher level of rewards. Second, a job shift can be lateral, such that an individual moves from one job to another within an equivalent level of rewards. Finally, a job shift can be downward, in which an individual moves from one job to another with a lower level of rewards. In this analysis, we focus only on upward job shifts. Past mobility research has concentrated on upward mobility, and we wish to place our own research within the context of existing studies. Thus, we are most interested in demonstrating the effect of organizational boundaries on upward job shifts. Also, we believe lateral and downward job shifts to be distinct and important issues which deserve more attention than we can give them in one paper. We plan to examine these types of shifts in later research. We separate upward job shifts into those involving a change in income and those involving a change in prestige. Changes in occupational prestige can only occur through a job shift, whereas changes in income can occur with or without a job shift. Consequently, our dependent variable does not capture all the increases in wages that take place, but only those that also involve a change in jobs. Furthermore, as Rosenbaum (1979~) points out, change in the status or prestige of the position held by an individual can also take place without a change in the occupational prestige score.
70
GARY
D. SANDEFUR
For example, many professional managers and skilled workers stay in the same occupation throughout their entire careers, but also move upward in terms of organizationally defined prestige (Rosenbaum, 1979a). Also, some upward mobility, especially that which involves promotions within organizational boundaries may involve a downward shift in the occupational prestige score. Some of these changes will, of course, be reflected in upward shifts in income. However, it is important to remember that upward shifts in income and prestige do not capture all the possible types of upward mobility. These qualifications should be kept in mind in interpreting the results. Existing evidence indicates that the higher the level of job rewards, the less likely a job shift, ceterus paribus (Tuma, 1976). There are two major reasons for this. First, this relationship is partially due to regression toward the mean. That is, earnings will have a negative effect on shifts in earnings because of regression toward the mean, and prestige will have a negative effect on shifts in prestige for the same reason (Coleman, 1968). Second, most organizations have a pyramidal reward structure. If we analyze positions in the pyramid or individuals in these positions, we will usually find a strong correlation between prestige and income. However, as individuals rise through the pyramid the number ofjobs with higher rewards in their present firm or in other organizations decreases, and the rate of job shifts declines. These relationships do not indicate that being in a high prestige position limits earnings or limits increases in earnings, for increases in earnings can occur without a job shift. We expect organizational boundaries to have little effect on these relationships. That is, job rewards will have a negative effect on both upward shifts within and upward shifts across organizational boundaries. Organizational boundaries do have implications for the effects of individual resources on upward mobility. Our analysis of these effects is based on the assumption that individuals are evaluated on the basis of their value or potential value to the organization. Also, we assume that evaluations, promotions, and hirings are mechanisms through which firms exert “bureaucratic control” (Edwards, 1979). By bureaucratic control we, following Edwards, mean formalized and institutionalized management of labor with the ultimate goal of maximizing profits. There are several reasons for expecting organizational boundaries to have important implications for this process. First, as March and March (1978) point out, the rationality of the job-person matching process is subject to constraints and one important constraint is the imperfect nature of information available to job controllers when considering candidates for a position. This leads to mistakes in the matching process. Organizational boundaries create a situation in which the information available about an individual already employed by the organization is generally better than information available concerning individuals outside the boundaries of the
ORGANIZATION
BOUNDARIES
71
organization. Consequently, organizations are often interested in utilizing employees, rather than bringing in outsiders. For example, if an individual is employed within the boundaries of the organization, job controllers will usually have some fairly specific knowledge of the individual’s career history within the organization. The individual will have resources which are employer- or organization-specific, such as on-the-job training and experience. On-the-job training is usually organization-specific since it is to the advantage of employers to provide this kind of training (Becker, 1975). Such resources should have an important effect on upward shifts within organizational boundaries. Specifically, the higher the level of organization-specific resources, the more likely an upward job shift within the boundaries of an organization. If the individual is employed outside the boundaries of the organization, job controllers have much less perfect information available to them. As Rosenbaum (1979b) points out, a person may move to another organization and his/her career history may not be known or not be considered very important by job controllers who are evaluating his/her qualifications. Training and experience acquired in one organization are often not transferable or not as valuable in another organization. Moving to another organization involves the loss of the value of organization-specific resources. Consequently, we argue that the higher the level of organization-specific resources, the less likely an individual is to move outside the boundaries of the employing organization. In sum, firms retain valuable employees through a bureaucratically controlled system of returns to resources. Just as some resources are “specific,” other resources might be termed general in nature, since they are acquired outside the context of work organizations. In this analysis, we treat education as a general resource. Organizations use education as an indicator of general work-related abilities; however, there is considerable controversy over why education has this effect. Some research suggests that better educated employees are not generally more productive and in some cases are less productive than others (Berg, 1971). Based on this, some researchers argue that education serves as a “credential” that often has little correlation with the actual ability to perform a job (Berg, 1971; Collins, 1979). However, Layard and Psacharopoulos ( 1974) question the “ credentialing” or “screening” hypothesis. They find that, first, rates of return to uncompleted courses are as high as to completed courses. Second, standardized educational differentials rise with age, although employers have better information about older employees’ abilities. Third, if screening is the main function of education, it could be done more cheaply by simpler testing procedures; profits could be made by developing such tests; yet, no one has yet developed these tests. Though resolution of this issue is definitely important, either argument is consistent with a direct relation-
72
GARY
D. SANDEFUR
ship btween education and job shifting. In fact, it is likely that elements of both arguments are true (Layard and Psacharopoulos, 1974; Stiglitz, 1975). In contrast to organization-specific resources that are primarily valuable in intraorganizational shifts, we would expect education to positively affect both interorganizational and intraorganizational shifts. Furthermore, little evidence exists to suggest that education should have a larger effect on one type of shift as compared to the other. Collins (1979) argues that education is an important determinant of access to job ladders, and an important determinant of movement on job ladders. However, there is reason to suspect that education should have larger effects on prestige as opposed to income mobility. As Goodman (1979, p. 276) points out, “the effects of education [on income] operate primarily through occupation.” Thus, we would expect education to have larger “direct” effects on shifts in prestige than on shifts in income. Finally, let us consider the effects of age and duration. Past research indicates that age and duration have negative effects on job mobility (Tuma, 1976). Rosenbaum (1979~) found that corporations are less likely to promote individuals after they reach a certain age. Age should also impede movement to another organization, since, as Rosenbaum (1979b) points out, organizations are most interested in promoting and encouraging fairly young individuals. In sum, organizations act as if it is difficult to teach “an old dog new tricks.” Duration or job tenure serves as a measure of job-specific resources (Tuma, 1976). Also, as March and March (1977) point out, the match between the individual and job becomes more “attractive” to everyone concerned as the length of the match grows. There is reason to suspect that duration should have larger effects on shifts across organizational boundaries as compared to within organizational boundaries. First, the attractiveness of the match is a mutual attraction between an individual and an organization, as well as between an individual and a particular job. Second, duration is a measure of organization-specific as well as jobspecific resources. Thus, individuals will be reluctant to give up these resources and move to another organization. In sum, we suggest the following hypotheses: (1) the higher the level of job rewards, the less likely an upward job shift; (2) the higher the level of education, the more likely an upward job shift within or across organizational boundaries; education should have a larger effect on prestige mobility than on wage shifts; (3) the higher the level of organization-specific resources, the less likely an upward job shift across organizational boundaries; (4) the higher the level of organization-specific resources, the more likely an upward job shift within organizational boundaries; (5) the older an individual and the longer the duration of the job-person match, the less likely an upward shift; duration should have a larger effect on upward
ORGANIZATION
BOUNDARIES
movement across organizational boundaries within organizational boundaries. III. RESEARCH
73
than on upward movement
DESIGN
Data
The data consist of retrospective life histories of a random sample of U.S. males between the ages of 30 and 39 inclusive. In this paper, we look only at whites, though data on nonwhites were also collected. The data were collected in 1969 under the direction of the National Opinion Research Center. This undertaking was the first and only collection of retrospective life histories for a national sample in this country. Individuals were selected through standard multistage area probability methods as described in Blum, Karweit, and Sorensen (1969). The total number of white respondents was 85 1. After excluding jobs with missing information, military jobs, self-employment, and unemployment, 4743 jobs remained. The retrospective life histories contain information on a number of variables from age 14 to the date of the interview in 1969. Most respondents entered the labor force following World War II and had some labor force experience by 1969. One of the most appealing features of these data is that they contain information on the exact time of job changes along with a number of other pieces of information about each job. Method
A variety of statistical techniques can be utilized to analyze life-history (and other event-history) data because such data provide information on the states (e.g., kinds of jobs) occupied by every individual in the sample continuously over some interval of time. Our choice of method is based on our interest in the differences in moving across organizational boundaries as compared to moving within an organization. For example, in the course of a career, one individual can change jobs one or more times within an organization and, also, change organizations one or more times. The usual cross-sectional analyses would examine earnings at a particular point in the career as a function of individual and structural factors, ignoring the impact of previous interfirm and intrafirm job shifts. However, in our analysis, we are interested in the actual job shift behavior of individuals and how this is shaped by organizational boundaries. We use a method of event-history analysis described in detail by Tuma, Hannan, and Groeneveld (1979), which has many desirable properties and uses all information on the kinds of jobs held, the sequence of jobs and the timing of job changes. Most importantly, in this type of analysis, the events rather than individuals are the units of analysis. Thus, we are able to compare movement across organizational boundaries as a class of events
74
GARY
D. SANDEFUR
to movement within organizational boundaries as a separate class. Here we summarize the method. Let Pjk (t,? + At) denote the probability of a change from state (job)j at time t to state (job) k at time t + At; such probabilities are usually called transition probabilities. The limit of a transition probability as At approaches zero is called the instantaneous rate of a transition: lim P&,t +At) rjk(f) = At+o & . A variety of observable variables-including the duration in a state, the number of state changes in a period, and the state occupied at a given time-are random variables whose probability densities (or probabilities) are functions of the unobservable transition rates. Knowledge of the relationship between observable variables and transition rates allows the transition rates to be estimated from the data. We allow transition rates to be functions of a vector of variables X describing characteristics of jobj and the individual, and dj which represents the duration of jobj. In particular, we assume that each transition rate rjk is a log-linear function of X and dj: In ‘jr = BX + cdj = 6, + b,x, + . . . + ~MxM + cdj
(2)
or rjk
= exp (6, +
b,x,
+ * *. + b,x,
+ cdj).
(3)
Because event history data provide information on the duration in each job and on the kind of job entered after leaving a job, the method of maximum likelihood (ML) can readily be used to provide estimates of B that have the usual desirable properties of ML estimators-namely, consistency and asymptotic normality.’ Furthermore, standard errors of estimates can be obtained, allowing tests of hypotheses about c and about individual b’s. In addition, a likelihood ratio test can be used to compare nested models, for example, to test whether the addition of a set of variables X significantly improves the explanation of a transition rate. In applying the form of event-history analysis sketched above, the only data that are needed-other than information on X- is the time that jobs are entered and left (so that duration in a job (d,) can be computed) and the description of the states that are entered after leaving each job. These variables along with the explanatory variables are described in the next section. ’ Monte Carlo simulations have demonstrated that these estimates retain their desirable properties under a number of adverse conditions, including high levels of censoring, small sample size, collinearity among causal variables and the presence of confounding disturbances (Fennell, Tuma, and Hannan, 1978: Carroll, Hannan, Tuma, and Warsavage, 1978).
ORGANIZATION
75
BOUNDARIES
Variables
Empirical measures of the variables are listed in Table 1. DURATION is obtained from information on the month and year a person enters a job and is last observed in this job. It is expressed in years. The measures of job rewards, PRESTIGE and WAGE, are those at the beginning of the job. PRESTIGE is measured by the Siegel (1971) occupational prestige index. WAGE is measured in dollars per hour and was obtained by dividing monthly earnings in dollars by hours worked per month. IV. RESULTS Upward Shifts in Prestige and Organizational Boundaries
Table 2 contains estimates of coefficients for a model of upward shifts in prestige within and across organizational boundaries. The likelihood ratio tests indicate that the set of explanatory variables significantly improves over a model in which these variables are excluded. The coefficients in Table 2 (and Table 3) are metric coefficients. Thus, we can compare the effects of each variable across columns, but we cannot compare the effects of different variables within columns, unless the variables are TABLE 1 Empirical Measures of Variables Variable RESOURCES EDUCATION PRIOR JOB
OJT (On-the-Job Training) REWARDS PRESTIGE WAGE
Indicator Years of education 1 = Employed by same employer immediately prior to present job 0 = Other 1 = Present job involves OJT 0 = Other Siegel ( 1971) Prestige Score Wage at beginning of job (dollars per hour)
AGE
Age in years at beginning of present job
DURATION
Years in present job
STATE ENTERED
0 = No move 1 = Upward move organizational 2 = Upward move organizational
within boundaries across boundaries
76
GARY D. SANDEFUR TABLE 2 Determinants of Rate of an Upward Job Shift in Prestige (N = 4743) Variables
Upward job shift across
Upward job shift within
RESOURCES EDUCATION PRIOR JOB OJT
.1817(.0145)” -.3268(.0843) -.4241(.1286)
REWARDS PRESTIGE WAGE
-.0838(.0035) -.1153(.0434)
-.0601(.0064)
AGE
-.0305(.0074)
-.0061(.0147)
DURATION
-.1714(.0179)
-.0839(.0280)
CONSTANT
-.1565(.1909)
-2.4530(.3937)
Likelihood ratio test (df = 7)
1278.9O(p<.OOl)
.1244(.0283) .9266(.1302)
-.0600(.2131)
-.2229(.0869)
185.63(p<.oOl)
n Numbers in parentheses are standard errors of the coefficients.
measured in the same metric. This presents no problem since the hypotheses we are interested in testing are stated primarily in terms of the differences of effects across columns. We hypothesized that individuals with comparatively high levels of rewards would be less likely to move to a more prestigious job than individuals in jobs with lower rewards. The results in Table 2 provide TABLE 3 Determinants of Rate of an Upward Job Shift in Wages (N = 4743) Variables
Upward job shift across
RESOURCES EDUCATION PRIOR JOB OJT
.0973(.0125)a -.4872(.0828) -.5%9(.1141)
REWARDS PRESTIGE WAGE
-.5823(.0439)
-.0065(.0038) -.1842(.0539)
AGE
- .0144(.0067)
-.0408(.0107)
DURATION
-.2172(.0171)
CONSTANT
-.3837(.1629)
Likelihood ratio test (df = 7)
-.0195(.0026)
846.24(p<.OOl)
(2 Numbers in parentheses are standard errors of the coefficients.
Upward job shift within .0791(.0195) 1.0890(.0900)
.2695(.1215)
-.1566(.0221) -2.207q.2650)
237.64@<.001)
ORGANIZATION
BOUNDARIES
77
strong support for this hypothesis. PRESTIGE and WAGE of present job have negative effects on upward shifts in prestige across organizational boundaries (- .0838 and -. 1153, respectively) and within boundaries (- .0601 and -.2229, respectively). We also argued that the effects would be similar for movement within and movement across organizational boundaries. PRESTIGE has larger negative effects on movement across organizational boundaries, whereas WAGE has larger negative effects on movement within organizational boundaries. Thus, there are differences but they do not show any consistent pattern. We argued that education would increase the rates of upward movement within and across organizational boundaries. The results in Table 2 support this hypothesis. EDUCATION has substantial positive effects on upward shifts in prestige across organizational boundaries (. 187 1) and within organizational boundaries (. 1244). The larger effect in the former situation was unanticipated. It may indicate that in the absence of a history in the organization, and the absence of measures of organizationspecific abilities, education takes on added significance as a measure of those qualities found desirable by organizations. In our next two hypotheses we argued that organization-specific resources would deter individuals from leaving one organization and moving to a better job in another organization, but would enhance the probability of moving upward within the same organization. In general, the results support these assertions. Both PRIOR JOB and OJT have negative effects on the rate of upward shifts in prestige across organizational boundaries (-.3268 and - .4241, respectively). PRIOR JOB has a positive effect on upward shifts in prestige within organizational boundaries (.9266) whereas OJT has a comparatively slight, statistically insignificant effect on upward shifts in prestige within organizational boundaries (- .0600). Individuals who have “invested” in an organization have little to gain by moving to another organization. Often skills and training are not transferable-a situation of great benefit to firms. On the other hand, workers who have been properly “socialized” and “consistently behave properly” are valuable to the corporation, and organizations will reward such individuals in order to retain them (Edwards, 1979). Finally we hypothesized that AGE and DURATION would have negative effects on the rate of upward job shifts. Furthermore, we suggested that DURATION would have a larger effect on upward movement across organizational boundaries. Our results support these assertions. AGE and DURATION have negative effects on upward job shifts across boundaries (-.0305 and -. 1714, respectively) and within boundaries (-.0061 and -.0839, respectively). DURATION has larger negative effects on upward shifts across organizational boundaries than on upward shifts within organizational boundaries. This again illustrates the operation of bureaucratic control mechanisms. By teaching individuals job-specific
78
GARY
D. SANDEFUR
skills, organizations create a supply of workers who find it difficult move elsewhere because their skills are nontransferable. Upward Shifts in Wages and Organizational
to
Boundaries
Table 3 contains the coefficients of a model of upward shifts in wages within and across organizational boundaries. The likelihood ratio tests indicate that the set of explanatory variables significantly improves over a model in which these variables are excluded. The overall pattern of results suggests that the process of increasing wages through job shifts is quite similar to that of increasing prestige through job shifts. The results for PRESTIGE and WAGE again support our assertion that the higher the level of rewards, the less likely an individual is to change jobs, ceterus paribus. We argued that education, as a general resource, should enhance the probability of moving upward within and across organizational boundaries. The results support this assertion. EDUCATION has a positive effect on upward shifts across organizational boundaries (.0973) and within organizational boundaries (.0791). As was the case with shifts in prestige, the effects are slightly higher for upward movement across organizational boundaries, indicating that general resources are considered more important by firms when organization-specific measures are not available. We also argued that education would have larger effects on shifts in prestige than on shifts in wages. If we compare Tables 2 and 3, we see that this is indeed the case. The effects of education are quite interesting when viewed in light of the arguments of Berg (1971), Collins (1979), Edwards (1979), and others. Many have argued that education serves as an important determinant of initial access to occupations and careers (Goodman, 1979). Our results show that education continues to have important effects through the career span. Also, though our results do not enable an evaluation of the “screening” hypothesis, conceptualizing mobility in terms of organizational boundaries does reveal one situation in which “screening” is probably a factor-movement across organizational boundaries. However, within an organization the effects of education are probably due to its association with real abilities, whether performance related or political, which enable an individual to advance through a bureaucratically controlled promotion process. In fact, the effort to resolve the “screening” controversy could benefit more from studies of job shifts than from studies of earnings. Through studies of job shifts, we can observe the effects of education at various points and in various situations in an individual’s career, rather than its cumulative effects over a period of time. We hypothesized that organization-specific resources would lower the rate of upward shifts in wages across organizational boundaries and
ORGANIZATION
BOUNDARIES
79
increase the rate of upward shifts within organizational boundaries. The results support these assertions. PRIOR JOB and OJT have negative effects on upward shifts in wages across organizational boundaries (- .4872 and - S969, respectively), and positive effects on upward shifts in wages within organizational boundaries (1.0890 and .2695, respectively). These effects reflect the importance of organization-specific resources as bureaucratic control mechanisms. Valuable employees are deterred from leaving the organization and rewarded for acquiring relevant skills and knowledge. The results for AGE and DURATION support our two assertions concerning their effects. AGE and DURATION have negative effects on upward shifts in wages across organizational boundaries (- .0144 and - .2 172, respectively), and within organizational boundaries (- .0408 and -. 1566). Again, DURATION has a larger negative effect on upward shifts across organizational boundaries, indicating the nontransferability of job-specific and organization-specific resources. V. SUMMARY
AND CONCLUSIONS
Past analyses have investigated stratification in organizations and various aspects of labor market segmentation. In this analysis, we have explored one area of overlap between these two types of studies-the role of organizational boundaries in the mobility process. We utilized a model for the analysis of event histories which allows consideration of the dynamics of the attainment process. Organizational boundaries, in effect, create two different kinds of resources: (1) general resources, such as education, which are measures of the ability to perform a wide variety of tasks in any organization; and (2) organization-specific resources, such as on-the-job training and experience with an employer, which are measures of the ability to perform tasks within a particular organization. Our research demonstrated that general resources are important determinants of upward job shifts within and across organizational boundaries. Organization-specific resources, on the other hand, have quite different effects on upward shifts across and upward shifts within organizational boundaries. The higher the level of organization-specific resources, the less likely an individual is to move upward across organizational boundaries. The higher the level of organization-specific resources, the more likely an individual is to move upward within organizational boundaries. These effects are due to the bureaucratic control mechanisms introduced by many organizations and the associated reward distribution system. Our analysis suggests questions for future research on labor market segmentation, organizations, and the connections between the two. Most discussions and analyses of the effects of labor market structure have focused on internal/external labor markets (Doeringer and Piore, 1971),
80
GARY D. SANDEFUR
the core and peripheral industrial sectors (Beck et al., 1978), or related concepts such as closed and open employment sectors (Sorensen and Tuma, 1978). Implicit in these analyses is the assumption that internal markets and closed employment relationships and much mobility in the core industrial sector occur within the boundaries of an organization in a system of positions. Our results suggest that education not only determines entry to such systems, but movement within them and among them. Furthermore, specific resources determine advancement within internal systems of jobs and make it difficult for individuals to leave these systems. Thus, future research should explicitly address the role of organization boundaries in the mobility process, and especially the role they play in creating and maintaining the differences in attainment processes characteristic of the segmented American labor market. REFERENCES Arrow, K. (1973), “Higher education as a filter,” Journal of Public Economics 2, 193-216. Beck, E. M., Horan, P. M., and Tolbert, C. M., II (1978), “Stratification in a dual economy: A sectoral model of earnings determination,” American Sociological Review 43, 704720. Becker, G. (1975), Human Capital, National Bureau of Economic Research, New York. Berg, I. (1971), Education and Jobs: The Great Training Robbery, Beacon, Boston. Bibb, R.. and Form, W. H. (1977), “The effects of industrial, occupation, and sex stratification on wages in blue-collar markets,” Social Forces 55, 974-9%. Blau, P., and Duncan, 0. D. (1967), The American Occupational Structure, Wiley, New York. Blum, Z. D., Karweit, N. L., and Sorensen, A. B. (1%9), “A method for the collection and analysis of retrospective life histories,” The John Hopkins University Center for the Study of Social Organization of Schools, Report No. 48, John Hopkins University, Baltimore, Md. Carroll, G. R., Hannan, M. T., Tuma, N. B., and Warsavage, B. (1978), “Alternative estimation procedures for event-history analysis: A monte carlo study,” Technical Report 70, Laboratory for Social Research, Stanford University, Stanford, Cahf. Coleman, J. (1968). “The mathematical study of change,” in Methodology in Social Research (H. M. Blalock, Ed.), pp. 428-478, McGraw-Hill, New York. Collins, R. (1979), The Credential Society, Academic Press, New York. Dhrymes, P. J. (1970), Econometrics: Statistical Foundations and Applications, Harper & Row, New York. Doeringer, P. B., and Piore, M. J. (1971), Internal Labor Markets and Manpower Analysis, Heath, Lexington, Mass. Duncan, 0. D., Featherman, D. L., and Duncan, B. (1972), Socioeconomic Background and Achievement, Seminar Press, New York. Edwards, R. C. (1979). Contested Terrain, Basic Books, New York. Edwards, R. C., Reich, M., and Gordon, D. M. (Eds.) (1975), Labor Market Segmentation, Heath, Lexington, Mass. Fennell. M. L., Tuma, N. B., and Hannan, M. T. (1977), “Quality of maximum likelihood estimates of parameters in a log-linear rate model,” Technical Report 59, Laboratory for Social Research, Stanford University, Stanford, Cahf. Goodman, J. D. (1979). “The economic returns of education: An assessment of alternative models,” Social Science Quarterly 60, 269-283.
ORGANIZATION
BOUNDARIES
81
Horan, P. M. (1978), “Is status attainment research atheoretical?” American Sociological Review 43, 334-341. Kanter, R. M. (1976), “The impact of hierarchical structures on the work behavior of women and men,” Social Problems 23, 415-430. Kanter, R. M. (1977a), Men and Women of the Corporation, Basic Books, New York. Kanter, R. M. (1977b), “Some effects of proportions on group life: Skewed sex ratios and responses to token women,” American Journal of Sociology 82, 965-990. Kanter, R. M. (1979). “Differential access to opportunity and power,” in Discrimination in Organizations (R. Alvarez and K. G. Lutterman, Eds.), pp. 52-69, Jossey-Bass, San Francisco. Layard, R., and Psacharopoulos, G. (1974), “The screening hypothesis and the returns to education,” Journal of Political Economy 82, 985-998. March, J. C., and March, J. G. (1977), “Almost random careers: The Wisconsin school superintendency, 1940-1972,” Administrative Science Quarterly 22, 377-409. March, J. C., and March, J. G. (1978), “Performance sampling in social matches: How managers get ahead or don’t,” unpublished manuscript. McGinnis, R. (1968), “A stochastic model of mobility,” American Sociological Review 33, 712-721. Pfeffer, J. (1977), “Toward an examination of stratification in organizations,” Administrative Science Quarterly 22, 533-567. Rosenbaum, J. E. (1979a), “Organizational career mobility: Promotion chances in a corporation during periods of growth and contraction,” American Journal of Sociology 85, 21-48. Rosenbaum. J. E. (1979b), “Tournament mobility: Career patterns in a corporation,” Administrative Science Quarterly 24, 220-241. Rosenbaum, J. E. (1979c), “Career paths and advancement opportunities,” in Discrimination in Organizations (R. Alvarez and K. G. Lutterman, Eds.), pp. 69-85, Jossey-Bass, San Francisco. Siegel, P. (1971). Prestige in the American Occupational Structure, Ph.D. dissertation, University of Chicago. Sorensen, A., and Kalleberg, A. (1976), “An outline of a theory of the matching of persons to jobs,” Institute for Research on Poverty Discussion Paper. Institute for Research on Poverty, University of Wisconsin-Madison. Sorensen, A., and Tuma, N. (1978), “Labor market structures and job mobility,” Institute for Research on Poverty Discussion Paper, Institute for Research on Poverty, University of Wisconsin-Madison. Spilerman, S. (1977), “Careers, labor market structure and socioeconomic achievement,” American Journal of Sociology 83, 551-593. Stewman, S. (1975). “Two Markov models of open system occupational mobility: Underlying conceptualizations and empirical tests,” American Sociological Review 40, 298321. Stiglitz, J. E. (1975), “The theory of ‘screening’, education. and the distribution of income,” American Economic Review 65, 283-300. Stinchcombe, A. L. (1964), “Social structure and organizations,” in Handbook of Organizations (J. G. March, Ed.), pp. 142-193, Rand-McNally, Chicago. Stolzenberg, R. M. (1975), “Occupations, labor markets and the process of wage attainment,” American Sociological Review 40, 645-665. Stolzenberg, R. M. (1978), “Bringing the boss back in: Employer size, employee schooling and socioeconomic achievement,” American Sociological Review 43, 813-828. Talbert, J., and Bose, C. E. (1977), “Wage-attainment processes: The retail clerk case,” American Journal of Sociology 83, 403-424.
82
GARY D. SANDEFUR
Tuma, N. (1976), “Rewards, resources and the rate of mobility: A nonstationary multivariate stochastic model,” American Sociological Review 41, 338-360. Tuma, N. B., and Hannan, M. T. (1979), “Approaches to the censoring problem in the analysis of event histories,” in Sociological Methodology (K. Schuessler, Ed.), pp. 209-240, Jossey-Bass, San Francisco. Tuma, N. B., Hannan, M. T., and Groeneveld, L. P. (1979), “Dynamic analysis of event histories,” American Journal of Sociology 84, 820-854. White, H. C. (1970), Chains of Opportunity: Systems Models of Mobility in Organizations, Harvard Univ. Press, Cambridge, Mass.
SCIENCE
RESEARCH
Organizational
lo,
67-82 (1981)
Boundaries and Upward Job Shifts GARY D. SANDEFUR University
of Oklahoma
Recent research has examined the role of organizations in the stratification system and the functioning of stratification systems in organizations. In this analysis, we examine the implications of organizational boundaries for upward job changes within and across organizations. To perform our analysis, we utilize a nonstationary, modified Markov mode1 that allows consideration of individual and job heterogeneity. The data are life histories of a sample of U.S. males between the ages of 30 and 39. Our results indicate that organizational boundaries create two kinds of resources: (1) general resources, and (2) organization-specific resources. General resources have a positive effect on upward movement within and across organizational boundaries. Organization-specific resources have a positive effect on upward movement within organizational boundaries, and a negative effect on upward movement across organizational boundaries-a situation ofgreat benefit to organizations.
I. INTRODUCTION
Recently there has been a resurgence of interest in the role of organizations in the stratification system and the functioning of stratification systems within organizations (Kanter, 1976, 1977a, 1977b; March and March, 1977, 1978; Pfeffer, 1977; Rosenbaum, 1979a, 1979b, 1979~; Stewman, 1975; Talbert and Bose, 1977; Stolzenberg, 1978). Such research has resurrected the concerns of Stinchcombe (1964), who pointed out the importance of organizations in the stratification process. This research also arises from a more general concern with the structures in which job, occupational, wage, and prestige attainment take place (Horan, 1978; Beck, Horan, and Tolbert, 1978; Bibb and Form, 1977). In this analysis we examine the role of organizational boundaries in the mobility process. We approach organizations as open, bounded systems ofjobs (Stewman, 1975), and we compare the process of movement within these systems of jobs to the process of movement across systems of jobs. There are two important reasons for suspecting that these processes are Thanks go to Alan Acock, Harold Grasmick, Win Steglich, Nancy B. Tuma, and anonymous reviewers for comments on an earlier draft of this paper. Work on this paper began while the author was receiving an American Sociological Association Minority Fellowship and a Ford Foundation Fellowship for Native Americans. Address reprint requests to Dr. Gary D. Sandefur, Department of Sociology, University of Oklahoma, Norman, OK 73019. 67 0049-089X/81/010067-16$02.00/O Copyright @ 1981 by Academic Press. Inc. All rights of reproduction in any form reserved.
68
GARY
D. SANDEFUR
different. First, whether an individual is employed by an organization or is employed outside the organization affects the kinds of information available to job controllers; therefore, the criteria used in selecting a person to fill a job depends on whether or not the person is already employed by the organization. Second, whether the advancement opportunity is within or outside the organization an individual is presently employed by also influences the decisions of the individual considering whether to seek or take advantage of opportunities to move upward. In sum, organizational boundaries are part of the structural context in which individual mobility takes place. The impact of organizational boundaries on the mobility process has implications for both organizational stratification studies and research on the segmented labor market. Much of the former research has concentrated on the effects of organizational characteristics such as size or industrial type on the effects of education (and other variables) on income (Pfeffer, 1977; Stolzenberg, 1978). Other research has focused on job shifts within one organization (Kanter, 1977a, 1977b; Rosenbaum, 1979a, 1979b; Stewman, 1975) or one system of jobs (March and March, 1977, 1978; White, 1970). However, as Rosenbaum (1979b) points out, the process of movement between systems of jobs is probably quite different from the process of movement within systems of jobs. Also, the proportion of job changing that is intraorganizational is likely to vary with organizational size and industrial type. Thus, research on the impact of organizational boundaries on job shift behavior should provide us with some important information about the nature of organizational stratification systems. Most research on labor market segmentation suggests that one important characteristic of the good labor markets (internal, primary or core) is the presence of job ladders (Beck et al., 1978; Edwards, Reich, and Gordon, 1975). Individuals whose careers take place primarily through job ladders will experience a great deal of intraorganizational mobility compared to individuals whose careers do not involve job ladders. Thus, the rate of intraorganizational movement is probably much higher in the good segments of the labor market. Understanding the processes of interand intraorganizational movement can move us one step closer to a full understanding of differences in labor market segments. Furthermore, such analyses can serve as one significant link between studies of stratification in organizations and studies of labor market segmentation. The intent of this paper is to demonstrate the utility of such an orientation by comparing the process of movement within organizational boundaries to that across organizational boundaries. Furthermore, we believe that the understanding of structural effects on mobility can be enhanced by employing dynamic models. Most past research on the structural contexts in which mobility takes place has employed cross-sectional
ORGANIZATION
69
BOUNDARIES
analyses (see, e.g., Bibb and Form, 1977; Stolzenberg, 1975, 1978; Beck er al., 1978). The life-history data used in this research allow us to examine the effects of both individual and job characteristics on job changes that occur in continuous time. Our approach involves identifying some important individual determinants of mobility and specifying how their effects are likely to depend on whether movement is within or across organizational boundaries. Focusing on job-person matches as the unit of analysis, we examine the factors involved in leaving a job and moving to one with a higher level of rewards within the same organization or in another organization. II. ORGANIZATIONAL
BOUNDARIES
AND UPWARD
JOB SHIFTS
The process of individuals moving among jobs and/or jobs moving among individuals has been viewed as one of matching the “right” job with the “right” individual (March and March, 1977, 1978; Rosenbaum, 1979a; Stewman, 1975; Tuma, 1976; White, 1970). Both individuals and jobs have characteristics which are important in the matching process, and which act as determinants of job shifts. In this analysis, we consider job rewards (wage and prestige), individual resources (any personal attributes that are evaluated by employers), age, and duration of job as important determinants of job changes. If we use rewards as a means of differentiating job shifts, we can identify three types. First a job shift can be upward. That is, an individual can move from one job to another with a higher level of rewards. Second, a job shift can be lateral, such that an individual moves from one job to another within an equivalent level of rewards. Finally, a job shift can be downward, in which an individual moves from one job to another with a lower level of rewards. In this analysis, we focus only on upward job shifts. Past mobility research has concentrated on upward mobility, and we wish to place our own research within the context of existing studies. Thus, we are most interested in demonstrating the effect of organizational boundaries on upward job shifts. Also, we believe lateral and downward job shifts to be distinct and important issues which deserve more attention than we can give them in one paper. We plan to examine these types of shifts in later research. We separate upward job shifts into those involving a change in income and those involving a change in prestige. Changes in occupational prestige can only occur through a job shift, whereas changes in income can occur with or without a job shift. Consequently, our dependent variable does not capture all the increases in wages that take place, but only those that also involve a change in jobs. Furthermore, as Rosenbaum (1979~) points out, change in the status or prestige of the position held by an individual can also take place without a change in the occupational prestige score.
70
GARY
D. SANDEFUR
For example, many professional managers and skilled workers stay in the same occupation throughout their entire careers, but also move upward in terms of organizationally defined prestige (Rosenbaum, 1979a). Also, some upward mobility, especially that which involves promotions within organizational boundaries may involve a downward shift in the occupational prestige score. Some of these changes will, of course, be reflected in upward shifts in income. However, it is important to remember that upward shifts in income and prestige do not capture all the possible types of upward mobility. These qualifications should be kept in mind in interpreting the results. Existing evidence indicates that the higher the level of job rewards, the less likely a job shift, ceterus paribus (Tuma, 1976). There are two major reasons for this. First, this relationship is partially due to regression toward the mean. That is, earnings will have a negative effect on shifts in earnings because of regression toward the mean, and prestige will have a negative effect on shifts in prestige for the same reason (Coleman, 1968). Second, most organizations have a pyramidal reward structure. If we analyze positions in the pyramid or individuals in these positions, we will usually find a strong correlation between prestige and income. However, as individuals rise through the pyramid the number ofjobs with higher rewards in their present firm or in other organizations decreases, and the rate of job shifts declines. These relationships do not indicate that being in a high prestige position limits earnings or limits increases in earnings, for increases in earnings can occur without a job shift. We expect organizational boundaries to have little effect on these relationships. That is, job rewards will have a negative effect on both upward shifts within and upward shifts across organizational boundaries. Organizational boundaries do have implications for the effects of individual resources on upward mobility. Our analysis of these effects is based on the assumption that individuals are evaluated on the basis of their value or potential value to the organization. Also, we assume that evaluations, promotions, and hirings are mechanisms through which firms exert “bureaucratic control” (Edwards, 1979). By bureaucratic control we, following Edwards, mean formalized and institutionalized management of labor with the ultimate goal of maximizing profits. There are several reasons for expecting organizational boundaries to have important implications for this process. First, as March and March (1978) point out, the rationality of the job-person matching process is subject to constraints and one important constraint is the imperfect nature of information available to job controllers when considering candidates for a position. This leads to mistakes in the matching process. Organizational boundaries create a situation in which the information available about an individual already employed by the organization is generally better than information available concerning individuals outside the boundaries of the
ORGANIZATION
BOUNDARIES
71
organization. Consequently, organizations are often interested in utilizing employees, rather than bringing in outsiders. For example, if an individual is employed within the boundaries of the organization, job controllers will usually have some fairly specific knowledge of the individual’s career history within the organization. The individual will have resources which are employer- or organization-specific, such as on-the-job training and experience. On-the-job training is usually organization-specific since it is to the advantage of employers to provide this kind of training (Becker, 1975). Such resources should have an important effect on upward shifts within organizational boundaries. Specifically, the higher the level of organization-specific resources, the more likely an upward job shift within the boundaries of an organization. If the individual is employed outside the boundaries of the organization, job controllers have much less perfect information available to them. As Rosenbaum (1979b) points out, a person may move to another organization and his/her career history may not be known or not be considered very important by job controllers who are evaluating his/her qualifications. Training and experience acquired in one organization are often not transferable or not as valuable in another organization. Moving to another organization involves the loss of the value of organization-specific resources. Consequently, we argue that the higher the level of organization-specific resources, the less likely an individual is to move outside the boundaries of the employing organization. In sum, firms retain valuable employees through a bureaucratically controlled system of returns to resources. Just as some resources are “specific,” other resources might be termed general in nature, since they are acquired outside the context of work organizations. In this analysis, we treat education as a general resource. Organizations use education as an indicator of general work-related abilities; however, there is considerable controversy over why education has this effect. Some research suggests that better educated employees are not generally more productive and in some cases are less productive than others (Berg, 1971). Based on this, some researchers argue that education serves as a “credential” that often has little correlation with the actual ability to perform a job (Berg, 1971; Collins, 1979). However, Layard and Psacharopoulos ( 1974) question the “ credentialing” or “screening” hypothesis. They find that, first, rates of return to uncompleted courses are as high as to completed courses. Second, standardized educational differentials rise with age, although employers have better information about older employees’ abilities. Third, if screening is the main function of education, it could be done more cheaply by simpler testing procedures; profits could be made by developing such tests; yet, no one has yet developed these tests. Though resolution of this issue is definitely important, either argument is consistent with a direct relation-
72
GARY
D. SANDEFUR
ship btween education and job shifting. In fact, it is likely that elements of both arguments are true (Layard and Psacharopoulos, 1974; Stiglitz, 1975). In contrast to organization-specific resources that are primarily valuable in intraorganizational shifts, we would expect education to positively affect both interorganizational and intraorganizational shifts. Furthermore, little evidence exists to suggest that education should have a larger effect on one type of shift as compared to the other. Collins (1979) argues that education is an important determinant of access to job ladders, and an important determinant of movement on job ladders. However, there is reason to suspect that education should have larger effects on prestige as opposed to income mobility. As Goodman (1979, p. 276) points out, “the effects of education [on income] operate primarily through occupation.” Thus, we would expect education to have larger “direct” effects on shifts in prestige than on shifts in income. Finally, let us consider the effects of age and duration. Past research indicates that age and duration have negative effects on job mobility (Tuma, 1976). Rosenbaum (1979~) found that corporations are less likely to promote individuals after they reach a certain age. Age should also impede movement to another organization, since, as Rosenbaum (1979b) points out, organizations are most interested in promoting and encouraging fairly young individuals. In sum, organizations act as if it is difficult to teach “an old dog new tricks.” Duration or job tenure serves as a measure of job-specific resources (Tuma, 1976). Also, as March and March (1977) point out, the match between the individual and job becomes more “attractive” to everyone concerned as the length of the match grows. There is reason to suspect that duration should have larger effects on shifts across organizational boundaries as compared to within organizational boundaries. First, the attractiveness of the match is a mutual attraction between an individual and an organization, as well as between an individual and a particular job. Second, duration is a measure of organization-specific as well as jobspecific resources. Thus, individuals will be reluctant to give up these resources and move to another organization. In sum, we suggest the following hypotheses: (1) the higher the level of job rewards, the less likely an upward job shift; (2) the higher the level of education, the more likely an upward job shift within or across organizational boundaries; education should have a larger effect on prestige mobility than on wage shifts; (3) the higher the level of organization-specific resources, the less likely an upward job shift across organizational boundaries; (4) the higher the level of organization-specific resources, the more likely an upward job shift within organizational boundaries; (5) the older an individual and the longer the duration of the job-person match, the less likely an upward shift; duration should have a larger effect on upward
ORGANIZATION
BOUNDARIES
movement across organizational boundaries within organizational boundaries. III. RESEARCH
73
than on upward movement
DESIGN
Data
The data consist of retrospective life histories of a random sample of U.S. males between the ages of 30 and 39 inclusive. In this paper, we look only at whites, though data on nonwhites were also collected. The data were collected in 1969 under the direction of the National Opinion Research Center. This undertaking was the first and only collection of retrospective life histories for a national sample in this country. Individuals were selected through standard multistage area probability methods as described in Blum, Karweit, and Sorensen (1969). The total number of white respondents was 85 1. After excluding jobs with missing information, military jobs, self-employment, and unemployment, 4743 jobs remained. The retrospective life histories contain information on a number of variables from age 14 to the date of the interview in 1969. Most respondents entered the labor force following World War II and had some labor force experience by 1969. One of the most appealing features of these data is that they contain information on the exact time of job changes along with a number of other pieces of information about each job. Method
A variety of statistical techniques can be utilized to analyze life-history (and other event-history) data because such data provide information on the states (e.g., kinds of jobs) occupied by every individual in the sample continuously over some interval of time. Our choice of method is based on our interest in the differences in moving across organizational boundaries as compared to moving within an organization. For example, in the course of a career, one individual can change jobs one or more times within an organization and, also, change organizations one or more times. The usual cross-sectional analyses would examine earnings at a particular point in the career as a function of individual and structural factors, ignoring the impact of previous interfirm and intrafirm job shifts. However, in our analysis, we are interested in the actual job shift behavior of individuals and how this is shaped by organizational boundaries. We use a method of event-history analysis described in detail by Tuma, Hannan, and Groeneveld (1979), which has many desirable properties and uses all information on the kinds of jobs held, the sequence of jobs and the timing of job changes. Most importantly, in this type of analysis, the events rather than individuals are the units of analysis. Thus, we are able to compare movement across organizational boundaries as a class of events
74
GARY
D. SANDEFUR
to movement within organizational boundaries as a separate class. Here we summarize the method. Let Pjk (t,? + At) denote the probability of a change from state (job)j at time t to state (job) k at time t + At; such probabilities are usually called transition probabilities. The limit of a transition probability as At approaches zero is called the instantaneous rate of a transition: lim P&,t +At) rjk(f) = At+o & . A variety of observable variables-including the duration in a state, the number of state changes in a period, and the state occupied at a given time-are random variables whose probability densities (or probabilities) are functions of the unobservable transition rates. Knowledge of the relationship between observable variables and transition rates allows the transition rates to be estimated from the data. We allow transition rates to be functions of a vector of variables X describing characteristics of jobj and the individual, and dj which represents the duration of jobj. In particular, we assume that each transition rate rjk is a log-linear function of X and dj: In ‘jr = BX + cdj = 6, + b,x, + . . . + ~MxM + cdj
(2)
or rjk
= exp (6, +
b,x,
+ * *. + b,x,
+ cdj).
(3)
Because event history data provide information on the duration in each job and on the kind of job entered after leaving a job, the method of maximum likelihood (ML) can readily be used to provide estimates of B that have the usual desirable properties of ML estimators-namely, consistency and asymptotic normality.’ Furthermore, standard errors of estimates can be obtained, allowing tests of hypotheses about c and about individual b’s. In addition, a likelihood ratio test can be used to compare nested models, for example, to test whether the addition of a set of variables X significantly improves the explanation of a transition rate. In applying the form of event-history analysis sketched above, the only data that are needed-other than information on X- is the time that jobs are entered and left (so that duration in a job (d,) can be computed) and the description of the states that are entered after leaving each job. These variables along with the explanatory variables are described in the next section. ’ Monte Carlo simulations have demonstrated that these estimates retain their desirable properties under a number of adverse conditions, including high levels of censoring, small sample size, collinearity among causal variables and the presence of confounding disturbances (Fennell, Tuma, and Hannan, 1978: Carroll, Hannan, Tuma, and Warsavage, 1978).
ORGANIZATION
75
BOUNDARIES
Variables
Empirical measures of the variables are listed in Table 1. DURATION is obtained from information on the month and year a person enters a job and is last observed in this job. It is expressed in years. The measures of job rewards, PRESTIGE and WAGE, are those at the beginning of the job. PRESTIGE is measured by the Siegel (1971) occupational prestige index. WAGE is measured in dollars per hour and was obtained by dividing monthly earnings in dollars by hours worked per month. IV. RESULTS Upward Shifts in Prestige and Organizational Boundaries
Table 2 contains estimates of coefficients for a model of upward shifts in prestige within and across organizational boundaries. The likelihood ratio tests indicate that the set of explanatory variables significantly improves over a model in which these variables are excluded. The coefficients in Table 2 (and Table 3) are metric coefficients. Thus, we can compare the effects of each variable across columns, but we cannot compare the effects of different variables within columns, unless the variables are TABLE 1 Empirical Measures of Variables Variable RESOURCES EDUCATION PRIOR JOB
OJT (On-the-Job Training) REWARDS PRESTIGE WAGE
Indicator Years of education 1 = Employed by same employer immediately prior to present job 0 = Other 1 = Present job involves OJT 0 = Other Siegel ( 1971) Prestige Score Wage at beginning of job (dollars per hour)
AGE
Age in years at beginning of present job
DURATION
Years in present job
STATE ENTERED
0 = No move 1 = Upward move organizational 2 = Upward move organizational
within boundaries across boundaries
76
GARY D. SANDEFUR TABLE 2 Determinants of Rate of an Upward Job Shift in Prestige (N = 4743) Variables
Upward job shift across
Upward job shift within
RESOURCES EDUCATION PRIOR JOB OJT
.1817(.0145)” -.3268(.0843) -.4241(.1286)
REWARDS PRESTIGE WAGE
-.0838(.0035) -.1153(.0434)
-.0601(.0064)
AGE
-.0305(.0074)
-.0061(.0147)
DURATION
-.1714(.0179)
-.0839(.0280)
CONSTANT
-.1565(.1909)
-2.4530(.3937)
Likelihood ratio test (df = 7)
1278.9O(p<.OOl)
.1244(.0283) .9266(.1302)
-.0600(.2131)
-.2229(.0869)
185.63(p<.oOl)
n Numbers in parentheses are standard errors of the coefficients.
measured in the same metric. This presents no problem since the hypotheses we are interested in testing are stated primarily in terms of the differences of effects across columns. We hypothesized that individuals with comparatively high levels of rewards would be less likely to move to a more prestigious job than individuals in jobs with lower rewards. The results in Table 2 provide TABLE 3 Determinants of Rate of an Upward Job Shift in Wages (N = 4743) Variables
Upward job shift across
RESOURCES EDUCATION PRIOR JOB OJT
.0973(.0125)a -.4872(.0828) -.5%9(.1141)
REWARDS PRESTIGE WAGE
-.5823(.0439)
-.0065(.0038) -.1842(.0539)
AGE
- .0144(.0067)
-.0408(.0107)
DURATION
-.2172(.0171)
CONSTANT
-.3837(.1629)
Likelihood ratio test (df = 7)
-.0195(.0026)
846.24(p<.OOl)
(2 Numbers in parentheses are standard errors of the coefficients.
Upward job shift within .0791(.0195) 1.0890(.0900)
.2695(.1215)
-.1566(.0221) -2.207q.2650)
237.64@<.001)
ORGANIZATION
BOUNDARIES
77
strong support for this hypothesis. PRESTIGE and WAGE of present job have negative effects on upward shifts in prestige across organizational boundaries (- .0838 and -. 1153, respectively) and within boundaries (- .0601 and -.2229, respectively). We also argued that the effects would be similar for movement within and movement across organizational boundaries. PRESTIGE has larger negative effects on movement across organizational boundaries, whereas WAGE has larger negative effects on movement within organizational boundaries. Thus, there are differences but they do not show any consistent pattern. We argued that education would increase the rates of upward movement within and across organizational boundaries. The results in Table 2 support this hypothesis. EDUCATION has substantial positive effects on upward shifts in prestige across organizational boundaries (. 187 1) and within organizational boundaries (. 1244). The larger effect in the former situation was unanticipated. It may indicate that in the absence of a history in the organization, and the absence of measures of organizationspecific abilities, education takes on added significance as a measure of those qualities found desirable by organizations. In our next two hypotheses we argued that organization-specific resources would deter individuals from leaving one organization and moving to a better job in another organization, but would enhance the probability of moving upward within the same organization. In general, the results support these assertions. Both PRIOR JOB and OJT have negative effects on the rate of upward shifts in prestige across organizational boundaries (-.3268 and - .4241, respectively). PRIOR JOB has a positive effect on upward shifts in prestige within organizational boundaries (.9266) whereas OJT has a comparatively slight, statistically insignificant effect on upward shifts in prestige within organizational boundaries (- .0600). Individuals who have “invested” in an organization have little to gain by moving to another organization. Often skills and training are not transferable-a situation of great benefit to firms. On the other hand, workers who have been properly “socialized” and “consistently behave properly” are valuable to the corporation, and organizations will reward such individuals in order to retain them (Edwards, 1979). Finally we hypothesized that AGE and DURATION would have negative effects on the rate of upward job shifts. Furthermore, we suggested that DURATION would have a larger effect on upward movement across organizational boundaries. Our results support these assertions. AGE and DURATION have negative effects on upward job shifts across boundaries (-.0305 and -. 1714, respectively) and within boundaries (-.0061 and -.0839, respectively). DURATION has larger negative effects on upward shifts across organizational boundaries than on upward shifts within organizational boundaries. This again illustrates the operation of bureaucratic control mechanisms. By teaching individuals job-specific
78
GARY
D. SANDEFUR
skills, organizations create a supply of workers who find it difficult move elsewhere because their skills are nontransferable. Upward Shifts in Wages and Organizational
to
Boundaries
Table 3 contains the coefficients of a model of upward shifts in wages within and across organizational boundaries. The likelihood ratio tests indicate that the set of explanatory variables significantly improves over a model in which these variables are excluded. The overall pattern of results suggests that the process of increasing wages through job shifts is quite similar to that of increasing prestige through job shifts. The results for PRESTIGE and WAGE again support our assertion that the higher the level of rewards, the less likely an individual is to change jobs, ceterus paribus. We argued that education, as a general resource, should enhance the probability of moving upward within and across organizational boundaries. The results support this assertion. EDUCATION has a positive effect on upward shifts across organizational boundaries (.0973) and within organizational boundaries (.0791). As was the case with shifts in prestige, the effects are slightly higher for upward movement across organizational boundaries, indicating that general resources are considered more important by firms when organization-specific measures are not available. We also argued that education would have larger effects on shifts in prestige than on shifts in wages. If we compare Tables 2 and 3, we see that this is indeed the case. The effects of education are quite interesting when viewed in light of the arguments of Berg (1971), Collins (1979), Edwards (1979), and others. Many have argued that education serves as an important determinant of initial access to occupations and careers (Goodman, 1979). Our results show that education continues to have important effects through the career span. Also, though our results do not enable an evaluation of the “screening” hypothesis, conceptualizing mobility in terms of organizational boundaries does reveal one situation in which “screening” is probably a factor-movement across organizational boundaries. However, within an organization the effects of education are probably due to its association with real abilities, whether performance related or political, which enable an individual to advance through a bureaucratically controlled promotion process. In fact, the effort to resolve the “screening” controversy could benefit more from studies of job shifts than from studies of earnings. Through studies of job shifts, we can observe the effects of education at various points and in various situations in an individual’s career, rather than its cumulative effects over a period of time. We hypothesized that organization-specific resources would lower the rate of upward shifts in wages across organizational boundaries and
ORGANIZATION
BOUNDARIES
79
increase the rate of upward shifts within organizational boundaries. The results support these assertions. PRIOR JOB and OJT have negative effects on upward shifts in wages across organizational boundaries (- .4872 and - S969, respectively), and positive effects on upward shifts in wages within organizational boundaries (1.0890 and .2695, respectively). These effects reflect the importance of organization-specific resources as bureaucratic control mechanisms. Valuable employees are deterred from leaving the organization and rewarded for acquiring relevant skills and knowledge. The results for AGE and DURATION support our two assertions concerning their effects. AGE and DURATION have negative effects on upward shifts in wages across organizational boundaries (- .0144 and - .2 172, respectively), and within organizational boundaries (- .0408 and -. 1566). Again, DURATION has a larger negative effect on upward shifts across organizational boundaries, indicating the nontransferability of job-specific and organization-specific resources. V. SUMMARY
AND CONCLUSIONS
Past analyses have investigated stratification in organizations and various aspects of labor market segmentation. In this analysis, we have explored one area of overlap between these two types of studies-the role of organizational boundaries in the mobility process. We utilized a model for the analysis of event histories which allows consideration of the dynamics of the attainment process. Organizational boundaries, in effect, create two different kinds of resources: (1) general resources, such as education, which are measures of the ability to perform a wide variety of tasks in any organization; and (2) organization-specific resources, such as on-the-job training and experience with an employer, which are measures of the ability to perform tasks within a particular organization. Our research demonstrated that general resources are important determinants of upward job shifts within and across organizational boundaries. Organization-specific resources, on the other hand, have quite different effects on upward shifts across and upward shifts within organizational boundaries. The higher the level of organization-specific resources, the less likely an individual is to move upward across organizational boundaries. The higher the level of organization-specific resources, the more likely an individual is to move upward within organizational boundaries. These effects are due to the bureaucratic control mechanisms introduced by many organizations and the associated reward distribution system. Our analysis suggests questions for future research on labor market segmentation, organizations, and the connections between the two. Most discussions and analyses of the effects of labor market structure have focused on internal/external labor markets (Doeringer and Piore, 1971),
80
GARY D. SANDEFUR
the core and peripheral industrial sectors (Beck et al., 1978), or related concepts such as closed and open employment sectors (Sorensen and Tuma, 1978). Implicit in these analyses is the assumption that internal markets and closed employment relationships and much mobility in the core industrial sector occur within the boundaries of an organization in a system of positions. Our results suggest that education not only determines entry to such systems, but movement within them and among them. Furthermore, specific resources determine advancement within internal systems of jobs and make it difficult for individuals to leave these systems. Thus, future research should explicitly address the role of organization boundaries in the mobility process, and especially the role they play in creating and maintaining the differences in attainment processes characteristic of the segmented American labor market. REFERENCES Arrow, K. (1973), “Higher education as a filter,” Journal of Public Economics 2, 193-216. Beck, E. M., Horan, P. M., and Tolbert, C. M., II (1978), “Stratification in a dual economy: A sectoral model of earnings determination,” American Sociological Review 43, 704720. Becker, G. (1975), Human Capital, National Bureau of Economic Research, New York. Berg, I. (1971), Education and Jobs: The Great Training Robbery, Beacon, Boston. Bibb, R.. and Form, W. H. (1977), “The effects of industrial, occupation, and sex stratification on wages in blue-collar markets,” Social Forces 55, 974-9%. Blau, P., and Duncan, 0. D. (1967), The American Occupational Structure, Wiley, New York. Blum, Z. D., Karweit, N. L., and Sorensen, A. B. (1%9), “A method for the collection and analysis of retrospective life histories,” The John Hopkins University Center for the Study of Social Organization of Schools, Report No. 48, John Hopkins University, Baltimore, Md. Carroll, G. R., Hannan, M. T., Tuma, N. B., and Warsavage, B. (1978), “Alternative estimation procedures for event-history analysis: A monte carlo study,” Technical Report 70, Laboratory for Social Research, Stanford University, Stanford, Cahf. Coleman, J. (1968). “The mathematical study of change,” in Methodology in Social Research (H. M. Blalock, Ed.), pp. 428-478, McGraw-Hill, New York. Collins, R. (1979), The Credential Society, Academic Press, New York. Dhrymes, P. J. (1970), Econometrics: Statistical Foundations and Applications, Harper & Row, New York. Doeringer, P. B., and Piore, M. J. (1971), Internal Labor Markets and Manpower Analysis, Heath, Lexington, Mass. Duncan, 0. D., Featherman, D. L., and Duncan, B. (1972), Socioeconomic Background and Achievement, Seminar Press, New York. Edwards, R. C. (1979). Contested Terrain, Basic Books, New York. Edwards, R. C., Reich, M., and Gordon, D. M. (Eds.) (1975), Labor Market Segmentation, Heath, Lexington, Mass. Fennell. M. L., Tuma, N. B., and Hannan, M. T. (1977), “Quality of maximum likelihood estimates of parameters in a log-linear rate model,” Technical Report 59, Laboratory for Social Research, Stanford University, Stanford, Cahf. Goodman, J. D. (1979). “The economic returns of education: An assessment of alternative models,” Social Science Quarterly 60, 269-283.
ORGANIZATION
BOUNDARIES
81
Horan, P. M. (1978), “Is status attainment research atheoretical?” American Sociological Review 43, 334-341. Kanter, R. M. (1976), “The impact of hierarchical structures on the work behavior of women and men,” Social Problems 23, 415-430. Kanter, R. M. (1977a), Men and Women of the Corporation, Basic Books, New York. Kanter, R. M. (1977b), “Some effects of proportions on group life: Skewed sex ratios and responses to token women,” American Journal of Sociology 82, 965-990. Kanter, R. M. (1979). “Differential access to opportunity and power,” in Discrimination in Organizations (R. Alvarez and K. G. Lutterman, Eds.), pp. 52-69, Jossey-Bass, San Francisco. Layard, R., and Psacharopoulos, G. (1974), “The screening hypothesis and the returns to education,” Journal of Political Economy 82, 985-998. March, J. C., and March, J. G. (1977), “Almost random careers: The Wisconsin school superintendency, 1940-1972,” Administrative Science Quarterly 22, 377-409. March, J. C., and March, J. G. (1978), “Performance sampling in social matches: How managers get ahead or don’t,” unpublished manuscript. McGinnis, R. (1968), “A stochastic model of mobility,” American Sociological Review 33, 712-721. Pfeffer, J. (1977), “Toward an examination of stratification in organizations,” Administrative Science Quarterly 22, 533-567. Rosenbaum, J. E. (1979a), “Organizational career mobility: Promotion chances in a corporation during periods of growth and contraction,” American Journal of Sociology 85, 21-48. Rosenbaum. J. E. (1979b), “Tournament mobility: Career patterns in a corporation,” Administrative Science Quarterly 24, 220-241. Rosenbaum, J. E. (1979c), “Career paths and advancement opportunities,” in Discrimination in Organizations (R. Alvarez and K. G. Lutterman, Eds.), pp. 69-85, Jossey-Bass, San Francisco. Siegel, P. (1971). Prestige in the American Occupational Structure, Ph.D. dissertation, University of Chicago. Sorensen, A., and Kalleberg, A. (1976), “An outline of a theory of the matching of persons to jobs,” Institute for Research on Poverty Discussion Paper. Institute for Research on Poverty, University of Wisconsin-Madison. Sorensen, A., and Tuma, N. (1978), “Labor market structures and job mobility,” Institute for Research on Poverty Discussion Paper, Institute for Research on Poverty, University of Wisconsin-Madison. Spilerman, S. (1977), “Careers, labor market structure and socioeconomic achievement,” American Journal of Sociology 83, 551-593. Stewman, S. (1975). “Two Markov models of open system occupational mobility: Underlying conceptualizations and empirical tests,” American Sociological Review 40, 298321. Stiglitz, J. E. (1975), “The theory of ‘screening’, education. and the distribution of income,” American Economic Review 65, 283-300. Stinchcombe, A. L. (1964), “Social structure and organizations,” in Handbook of Organizations (J. G. March, Ed.), pp. 142-193, Rand-McNally, Chicago. Stolzenberg, R. M. (1975), “Occupations, labor markets and the process of wage attainment,” American Sociological Review 40, 645-665. Stolzenberg, R. M. (1978), “Bringing the boss back in: Employer size, employee schooling and socioeconomic achievement,” American Sociological Review 43, 813-828. Talbert, J., and Bose, C. E. (1977), “Wage-attainment processes: The retail clerk case,” American Journal of Sociology 83, 403-424.
82
GARY D. SANDEFUR
Tuma, N. (1976), “Rewards, resources and the rate of mobility: A nonstationary multivariate stochastic model,” American Sociological Review 41, 338-360. Tuma, N. B., and Hannan, M. T. (1979), “Approaches to the censoring problem in the analysis of event histories,” in Sociological Methodology (K. Schuessler, Ed.), pp. 209-240, Jossey-Bass, San Francisco. Tuma, N. B., Hannan, M. T., and Groeneveld, L. P. (1979), “Dynamic analysis of event histories,” American Journal of Sociology 84, 820-854. White, H. C. (1970), Chains of Opportunity: Systems Models of Mobility in Organizations, Harvard Univ. Press, Cambridge, Mass.