Research on employee turnover suggests that turnover results in negative organization-level outcomes. This paper provides a firm-level analysis of the impact of the in- and outflows of human resources on productivity and how the presence of organizational slack resources moderates the effects of employee turnover. Drawing on a unique longitudinal dataset of 2,926 Danish manufacturing firms that combine individual-level data with firm-level data, the paper shows that job turnover has a substantial negative effect on total productivity but that the firm’s size, its capital intensity, and its age moderate this effect so that the negative consequences of employee turnover are less severe for larger, older and capital intensive firms. These moderating variables indicate the presence of slack resources in the firm, and thus that the accumulation of slack reduces the efficiency losses from employee turnover.
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7th Atlanta Competitive Advantage Conference, 2010