Firms flush with resources tend to develop talent internally while younger firms, facing unpredictable workloads, will hire from the outside to fill their talent gap, according to a new University of South Florida study.
This build or buy strategy is the focus of a research article published in Human Resource Development International, co-authored by Amit Chauradia, an assistant professor of management at USF.
The article explores when firms choose to develop talent internally, known as a “build” strategy, versus hiring experienced employees from external labor markets, or “buying” talent.
“This research challenges the idea that talent strategy is purely a matter of culture or preference,” Chauradia said. “Instead, it shows that the decision to build or buy is shaped by the firm’s internal capacity and the volatility of the environment.”
Using data from 174 large U.S. law firms over an eight-year period, the study found that firms with more money and available senior staff tend to “build” talent by training and mentoring junior employees. In contrast, firms facing sudden or unpredictable workloads are more likely to “buy” talent by hiring experienced workers from outside to meet immediate needs.
Authors: Amit J. Chauradia, University of South Florida; Daniel M. Peat, University of Cincinnati; Aindrila Chatterjee, Institute of Management Technology Hyderabad.