Employee Redeployment in Diversified Firms

This paper examines the link between product market diversification and employee redeployment. Prior work finds that firms can redeploy resources to react to inducements and performance advantages but may thereby compromise potential synergies. This paper argues that expected synergies are an additional mechanism for employee redeployment and depend on the origin and the destination of the redeployed employees. Using employer-employee data on Finnish multiunit firms, I find that employee redeployment across subsidiaries increases with firm diversification. In line with the argument that diversified firms may seek to increase their parenting advantage by redirecting resources from parent firms to subsidiaries, firm diversification is also positively linked with employee redeployment from parent units towards subsidiaries. The study contributes to the resource reconfiguration and diversification literature by examining and offering large-scale empirical insights into the corporate parent role and expected synergies in employee redeployment decisions.