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From Internal to Network Labor Markets? Insights on New Promotion Processes from the Call Center Industry CHRIS BENNER* and FERRAN MANE Research on network forms of organization suggests that ‘‘business units’’ may be a more useful analytical unit than ‘‘firms’’ in understanding restructuring of internal labor markets. We find evidence for this proposition by analyzing promotion opportunities in 1760 call centers in sixteen countries. We find substantial differences in promotion opportunities internal to the unit versus elsewhere, related to the use of explicit versus tacit knowledge in performance evaluation, distinctions between unit-specific and general-firm knowledge, and networkbridging organizational characteristics.

Introduction OVER THE PAST 30 YEARS, THERE HAS BEEN A SUBSTANTIAL DEBATE ON how business restructuring has affected the existence of internal promotion opportunities (Camuffo 2002). Many analysts find a substantial shrinking in internal labor markets, as growing economic volatility, rapid technology change, and intensifying global competition have led firms to increase the use of contingent employment contracts, flatten organizational hierarchies, and outsource noncore business functions (Abraham 1990; Cappelli 1999; Cappelli et al. 1997; Carnoy, Castells, and Benner 1997). Other analysts, however, provide evidence that not only are internal labor markets alive and well in many core firms, but also that some firms are rebuilding internal career ladders—expanding promotion opportunities in an effort to retain good talent, provide motivation, and capture returns to investments in training and internal human capital development (Moss, Salzman, and Tilly 2000, 2008).

* The authors’ affiliation are, Department of Human and Community Development, 1309 Hart Hall, University of California, Davis, One Shield Ave., Davis, CA 95616. E-mail: [email protected]; Department of Economics, CREIP, Universitat Rovira i Virgili, Avda. de la Universitat, 1, 43204 Reus, Catalonia-Spain. E-mail: [email protected]. Ferran Mane acknowledges financial support from the Spanish Government through grant ECO2010-17113 ⁄ ECON as well as by the ‘‘Xarxa de Refere`ncia d’R+D+I en Economia i Polı´tiques Pu´bliques’’ of the Catalan Government. INDUSTRIAL RELATIONS , Vol. 50, No. 2 (April 2011).  2011 Regents of the University of California Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford, OX4 2DQ, UK.

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What both sides in this debate share is a central focus on the firm as the primary unit of analysis. Research in organizational sociology, economic geography, and other fields, however, has demonstrated the increasing importance of networks as important forms of economic organization (Powell 1990). Such networks are most often identified as existing across firm boundaries (Scott and Storper 1986; Storper 1997; Sturgeon 2003), yet research has also documented internal decentralized network structures, where separate business units are managed and evaluated separately, with largely autonomous decisionmaking authority (Antonelli 1988; Castells 1996; Hitt and Brynjolfsson 1997; Miles and Snow 1995). The presence of both internal and external network connections raises important questions about the extent to which we need to reconceptualize promotion opportunities as taking place in ‘‘network labor markets’’ rather than internal labor markets (Gray et al. 2007). Although there is a long tradition of research on cross-firm network-based occupational labor markets (e.g., Slocum 1974), there is little research that examines internal network promotion opportunities. Are there significant differences between vertical promotion opportunities within a single business unit versus promotion or mobility opportunities across business units within a firm? To what extent do traditional models that explain the prevalence of internal promotion opportunities apply in such crossbusiness unit movements? In this paper, we address these questions, using a detailed survey of over 1760 call centers in sixteen countries. Call centers are a particularly interesting context for addressing these questions for a number of reasons. First, they are a large and rapidly growing business function in many countries in the world, and a function that has emerged in a wide range of industry sectors—indeed in nearly every sector that has any customer service or dedicated marketing and sales activities. Secondly, they represent an emerging function that is both enabled by recent advances in information technology and in which employees fundamentally use new technologies as a core component of their work practices, which facilitates generating individual performance metrics that are easily accessible both internal and external to the call center unit itself. Thirdly, because of these characteristics, call centers can be relatively easily managed as a separate business unit, whether internal to the firm or outsourced. All these factors place call centers at the forefront of many corporate restructuring processes, and thus examining both internal and external promotion opportunities for call center agents might provide ‘‘leading edge’’ insights that might be relevant in other business functions as well. Overall, our data shows that in an average call center, 5.7 percent of call center agents are promoted internally to the call center in a year, while 4 percent are promoted elsewhere in the business. There are a variety of factors that are associated with both internal and external promotions that fit standard

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theories of internal labor markets. Firms that have more complex service processes and higher agent skill levels, for example, or that have specific management practices related to improving agent performance, tend to also have greater promotion opportunities. We identify, however, three factors that seem to differ in how they affect internal versus external promotions. First, management practices that emphasize inter-personal observation and interaction for evaluating employee performance are much more important for explaining external promotions, whereas codified measures of agent performance only relate to internal promotions. Second, there is a clear distinction between call center specific skills, which are only significant in explaining internal promotions, versus more general firm knowledge, which also helps explain external promotions as well. Finally, there are a set of organizational characteristics, such as operating call centers in-house, that seem to facilitate greater connections between call centers, and other business functions in the firm, and thus are associated with external promotions more strongly than internal. While our empirical findings are specific to call centers, they raise import theoretical questions about the differences between vertical and horizontal mobility opportunities within firms, highlighting the need for further research on different promotion opportunities within intra-firm network labor markets.

Firm Restructuring and Promotions There is an extensive literature analyzing the determinants of promotions (Gibbons and Waldman 1999; Sørensen 1994; Waldman 2008). The most common framework is linked with the theory of internal labor markets, in which points of entry to the firm tend to lie at lower levels, and promotion is governed by internal firm administrative practices, rather than simply supply and demand dynamics on an open market (Doeringer and Piore 1971; Kerr 1954). Employers have tended to develop internal labor markets for essentially two broad sets of reasons: related to management practices as a way of reducing costs of external hiring processes and providing motivation for employees (Gordon, Edwards, and Reich 1982; Noyelle 1987; Pfeffer and Cohen 1984); and related to high levels of work complexity, as a way of retaining skilled employees and ensuring firms capture the benefits of investments in training and on-the-job learning (Becker 1964; Mincer 1994). During the 1990s, analysts began arguing that these systems of bureaucratic employment relations were eroding, replaced by firms using more contingent employment practices (Barker and Christensen 1998; Belous 1989; Hipple 2001) and bringing greater market pressure to bear on internal employment

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systems (Abraham 1990; Cappelli 1999; Cappelli et al. 1997). A variety of processes seemed to be related to this restructuring of employment systems, including: increased codification of knowledge and workers’ activities, making performance appraisal more possible through codified data-driven competitive systems, rather than bureaucratic management and oversight (Carayon 1993; Kvaloy and Olsen 2007; Nonaka and Takeuchi 1995); increased opportunities for occupational or regionally based career ladders in growing high-tech, media, and entertainment industries (Arthur and Rousseau 1996; Gibbs, Ierulli, and Milgrom 2003; Parker and Arthur 2000; Saxenian 1996; Slocum 1974); and an arguable decline in the value of firm-specific knowledge driven by rapid technological change, new production models, and new types of competition rooted in global, information-driven innovation processes (Block and Keller 2009; Chesbrough 2003; Reich 1991). For some, the trend toward more volatile labor markets and multi-firm career trajectories seems inexorable. Others, however, have identified limitations to the deconstruction of internal labor markets, even identifying cases where firms have re-created internal job ladders in an effort to respond to changing market conditions, institutional practices, and management strategies (Lane et al. 2003; Moss, Salzman, and Tilly 2000, 2008). There is substantial empirical evidence of corporate restructuring practices, but empirical data on a weakening of employer-employee ties are mixed, and debates on the extent of overall weakening employer-employee ties remain (Bernhardt and Marcotte 2000; Bernhardt et al. 2001; Farber 2007; Neumark 2000). What people on both sides of these debates about restructuring of employment systems share is a primary focus on firms as the unit of analysis (Chandler 1977). Yet a wide range of research from different perspectives has cast doubt on ideas that use the modern corporation as the central organizing principle in the economy. Within a broad neoclassical framework, an increasing interest in transactions costs has opened up the examination of the firm as a governance structure, recognizing a range of relationships between firms and markets as means of economic coordination (Williamson 1985, 1996). Network theory moves beyond a market-hierarchy spectrum, arguing that networks provide an entirely different form of economic governance and coordination (Castells 1996; Powell 1990). Relations of trust, ‘‘untraded interdependencies,’’ milieux of innovation, learning communities, firm culture— these are all analytical categories that have developed in recent years that recognize the fluid boundaries of firms while identifying sources of competitiveness and economic change that lie in the natures and types of inter- and intra-firm networks and communication processes (Castells and Hall 1994; Schoenberger 1997; Storper 1997).

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Much of the research in this area recognizes that networks do not just exist between firms, but that corporations themselves also frequently operate as internal networks (Imai 1992). Flattened hierarchies, decentralized business units, greater organizational flexibility, and autonomy were essential elements of many corporate restructuring efforts, as firms recognized the need to become more nimble themselves in order to take advantage of opportunities in rapidly changing markets (Antonelli 1988; Miles and Snow 1995). As Castells puts it ‘‘[t]o be able to internalize the benefits of network flexibility the corporation had to become a network itself and dynamize each element of its internal structure…often extended in the decentralization of its units and in the growing autonomy given to each of these units, even allowing them to compete against each other, albeit within a common overall strategy’’ (Castells 1996:164–65). From this perspective, the most important analytical unit is not very much the overall firm but the business unit or business function itself. As a result, in addition to the theoretical and case study research mentioned above, there is also a range of efforts underway to identify broad categories of business units (e.g., R&D, design, production, marketing and sales, distribution, customer service, firm infrastructure, human resources) that could be used for detailed data gathering and quantitative analysis of business unit dynamics (Brown 2008; Huws 2003; Porter 1998; Sturgeon and Gereffi 2009; Sturgeon, Van Biesebroeck, and Gereffi 2008). Efforts to use business functions as the unit of analysis, rather than firms, opens up new territory for our understanding of promotion opportunities and career paths as well. It raises questions whether there are significant differences in processes shaping within business function promotions (internal promotion), and across business function promotions (external promotion). To what extent do traditional models that explain the prevalence of internal promotion opportunities apply in such cross-business-unit movements? Call centers provide a particularly interesting business unit for examining changing factors shaping promotions opportunities. Call centers are workplaces consisting of dedicated phone-agent positions, in which employees integrate telephonic and computer technologies while interacting directly with customers. Call centers are most prominent in financial services, telecommunications, the travel industry, and information technology, but exist in nearly all industries that have substantial sales, customer service, or technical support needs for clients. As the actual work of call center agents takes place almost entirely in a tele-mediated environment, it can be easily monitored, with the opportunities for detailed metrics to be developed in analyzing work efficiency. As a result, call centers are particularly subject to both external outsourcing and to internal evaluation as autonomous ‘‘cost centers’’ within firm boundaries. Yet, at the same time, given the critical role sales, customer service, and technical support

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play in any enterprise, firms also need to ensure the call center operations are effectively networked with other firm activities. If there are substantial promotions from call centers to other parts of the firm, it would help reinforce the notion of a ‘‘network labor market’’ internal to firm boundaries but external to the business unit, whereas identifying different factors shaping promotion opportunities internal and external to the call center would also help shape this theory. Although there have been few studies specifically of promotions in call centers (although see: Gorjup, Valverde, and Ryan 2008; Moss, Salzman, and Tilly 2008; Sieben and de Grip 2004), the available studies indicate that the organizational characteristics associated with promotions seem to be quite similar to those shaping internal labor markets in other sectors. One set of factors is related to specific management practices. Management in call centers faces a wide range of choices in their operations management, with significantly different impacts on job quality and promotion opportunities (Appelbaum, Bernhardt, and Murnane 2003; Appelbaum et al. 2005). Some of these choices have to do with use of technology, such as demand modulation (e.g., redirecting customers to alternate channels of communication, or less busy times), multi-site routing and pooling, multi-skill call centers, and blending of inbound calls with other types of workflow, such as outbound calls and e-mail. Another set of choices relate to performance measurements, which can be simple measures of call times and abandonment rates, or more complex measurements, such as first-call resolution, the ability to cross-sell other services, and measures of customer satisfaction. Firms also have choices in the extent to which they increase employee involvement in work processes or implement autonomous work teams. Call centers can also be outsourced, with the nature of service agreements between the client and the outsourcer affecting the quality of work and the opportunities for advancement (Aksin, Armony, and Mehrotra 2007; Workman and Bommer 2004). Incentive systems are also important. These practices typically aim at resolving a set of tensions and trade-offs, such as between cost and quality, flexibility and standardization, constraining and enabling job design (Holman 2005; Houlihan 2002). Tayloristic practices are characteristic of many call centers with highly controlled work systems (Taylor 1999; Taylor and Bain 2005). But there is also evidence that high involvement practices like selective hiring and extensive training; job designs that include individual discretion and allow for ongoing learning; and incentives such as training, security, high pay levels, and trust-building performance measurement systems, are possible in at least some market segments (Batt and Moynihan 2002; Houlihan 2002). Another factor is clearly the level of skills required in the call center work. With more highly skilled work, employers have more incentive to develop

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mechanisms, including promotion opportunities, that will keep and motivate skilled employees in their centers. Sometimes assessing the complexity of the skill required in call centers is complex, however, as the interactive element of the work brings in a wide range of cultural, linguistic, quality, communicative, and learning process factors (Jocoy 2003; Lloyd and Payne 2009; Russell and Thite 2008; Witt, Andrews, and Carlson 2004). This assessment is especially challenging for call centers in the global South that serve customers in the north, where inter-cultural communication can be particularly challenging and agents often have to adopt American and British identities on the phone (Mirchandani 2004; Poster 2007). The variation in skill requirements for different call centers can also lie along industry sector lines, and customer segment, such as the difference between mass market or large business customers (Batt and Moynihan 2002), and these differences in skills should be closely linked with employers, desires to retain skilled employees, and thus provide advancement opportunities. In addition to these factors related to human resource practices and knowledge levels, there are a variety of organizational characteristics that help shape employer choices in these areas. One factor is the presence of unions, although call centers have also been highly successful in pursuing a variety of strategies to keep unions at bay (Noranha and D’Cruz 2006; Todd et al. 2003). Unions tend to be prevalent in cases where the union contract pre-dated the creation of an internal call center, and call center employees are covered as part of that contract. Other factors shaping employer choices include the size of their operation, the quality of information available to managers, regional labor market institutions, labor market regulation, and the tightness of labor markets, among other factors. While these various factors have been shown to be related to promotion opportunities within call centers, there is yet to be any work examining whether these factors differ in explaining promotion opportunities internal to call centers or transfer opportunities from a call center to other parts of the business.

Research Project and Data Sources Our study was designed to examine how these factors of human resource practices, job skill complexity, and organizational characteristics shape promotion opportunities, and whether the factors differ for promotions internal to the call center versus promotions or transfers to somewhere else in the business. The data used in this article comes from the Global Call Center Project, a collaborative network of over fifty academic researchers from seventeen different

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countries.1 The focus of the project is to assess the development of the call center industry in each country, and to compare management strategies and employment systems and outcomes of these enterprises both within and across countries. A central component of the project was a survey of HR practices, technology use, and call center performance. The questionnaire was originally developed and used by the U.S. and UK teams and it was translated by each national team with some adaptation of questions to the national context. This process was supervised and monitored by the project leaders to assure comparability and methodology consistency across countries. Survey administration occurred from 2003 to 2006. The unit of analysis of the survey was the call center establishment (not the corporate level) and the respondent was the senior manager at each center. The questionnaire focuses on ‘‘core employees,’’ the largest group of employees serving as call center agents. While every effort was made to take a consistent approach to sampling and survey administration, country specificities generated some variation in data quality across countries (Batt, Holman, and Holtgrewe 2009).2 Overall weighted response rate was 72 percent; the unweighted country average was 54 percent. The final data set used in this paper is composed of 1766 call centers from sixteen countries. We must consider the data set as fairly representative of the call center industry in the group of countries considered, with some bias toward larger, more established centers, with more formalized human resource practices and higher wage levels, often part of large national or multinational corporations. Dependent Variables. The data set used in this paper allows us to clearly distinguish between the two promotion possibilities we are interested in: d

1

Promotion within the business unit (internal to the call center): This part is respondents’ answer to the question: ‘‘In the previous

Batt, Holman, and Holtgrewe (2009:460–63) provide a thorough description of the data set and the methodology used to create it. For detailed comments on the process of sampling and collecting data see each country report available at http://www.ilr.cornell.edu/globalcallcenter/. 2 Most countries do not have reliable data sets with the population of call centers. In addition, many call centers are part of larger organizations making it difficult to detect them. Variations in the strength of each country’s statistical and institutional system inevitably led to some country variation in comprehensiveness of the final database. Surveys were conducted mainly by telephone with some site visits included. However, for the recently industrialized countries (Brazil, India, South Africa, and South Korea) the surveys were conducted primarily via interviews on site because survey research is relatively undeveloped and mail and telephone surveys yield particularly low response rates. In countries where the call center industry is rather small, almost the whole population was surveyed, whereas in larger countries (namely the United States, France, and Germany), a random sample was used, and in Ireland and UK, all contactable companies.

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year, what percentage of your core permanent employees were promoted to other jobs in your call center?’’ Promotion external to the business unit (external to the call center): This part is respondents’ answer to the question: ‘‘In the previous year, what percentage of your core permanent employees were promoted outside the call center or transferred to other parts of the business?’’

For each type of promotion we created two variables: a dummy variable with value 1 if there is any promotion in the call center and a continuous variable with the percentage of core employees promoted. The first one is used when analyzing incidence of promotions and the second one when analyzing intensity (Olsen and Kalleberg 2004). Independent Variables. Following the discussion in the previous section, we selected and derived when necessary a group of variables to test our hypothesis on the determinants of promotions. We also included in our models a long list of control variables intended to capture the effect of the broad characteristics of the call center that may shape the opportunities (or expected impact) of implementing a promotion policy. We first describe our key variables and later those considered controls. Variables Measuring HR Practices and Work Organization: This group includes five variables. First a variable that measures how often employees are given statistics on their own performance (measured in a 1–5 scale with 5 meaning very often). Second, another one measuring how often core employees’ calls are listened to by a supervisor (on the same 1–5 scale). Third, we include a measure of working conditions related to workers, discretion over their own work time: using factor analysis we created an index based on three factors: discretion over daily work; over pace ⁄ speed of work; and over lunch ⁄ break schedule. Fourth, we include a variable with elements of how work is organized that have been related to the literature on high performance worksystems (HPW) (Appelbaum and Batt 1994; Osterman 1999). Specifically, we create a variable that is the average of two dummies: whether any core employees are part of self-managed or semi-autonomous teams and whether any employees are involved in quality circles or process ⁄ product improvement teams. This variable takes the value of 0 if no employees are involved in either HPW, 1 if some workers are involved in both types, and 0.5 if some workers are involved in one or the other, but not both. Finally, the last HR practice we include is union presence, which is a dummy variable with

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value 1 if the call center recognizes one or more trade unions for collective bargaining for core employees. Variables Measuring Work Complexity: We include seven variables that provide proxies of the complexity of the work that call center agents do. First, we have a measure of technological complexity created as an additive index of up to seven different technologies that agents may use (e-mail, fax, media blending, speech recognition, workflow management, electronic customer relationship management, voice-over IP, and web-enablement). Second, the average number of calls handled by an agent during a day. We also include two additional variables directly related to characteristics of the calls. First, basic type of calls are proxied by the variable how often agents have repeated interactions with customers (measured in a 1–5 scale with 5 meaning very often). We proxied a more complex type of call with the variable that measures the extent to which customer interactions with agents involved building relationships (measured in a 1–5 scale with 5 meaning very often). Correlation between these two variables is 0.17. We include a dummy indicating if the largest volume of calls is inbound, which typically relates to more complex calls as outbound (tele-marketing) calls typically have a standardized script or content, whereas incoming calls are typically more varied. In addition, we have two measures of the importance of training. The first training variable (a dummy variable with value 1 if the call center provides more days of initial training than the mean for the country) is related to the process of incorporating new employees, and to a large extent reflects how complex is the job developed in the call center. The second training variable (a dummy variable with value 1 if the call center provides more days of formal training to experienced core employees than the mean for the country) reflects the call center’s commitment to update and upgrade agents’ skills. Note that for these two variables we used a ‘‘relative’’ measure with respect to the country mean because we had to somehow take into account the different regulations and public subsidies that training has across countries. Therefore, these variables have to be considered as a measure of effort with respect to the call centers relevant for them (those from their own countries) because they share the same institutional framework. Control Variables: Finally, we include a number of control variables that can be classified into three groups: organizational characteristics, workforce characteristics, and markets. One key organizational characteristic is call center size measured as the total number of core employees. To complement the ‘‘pure’’ size control we also included age of the call center (as of 2005) and its square term. We also control for the percentage of managers and team

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leaders over the total workforce, as the more the call center relies on high and middle level managers as a strategy to control and mobilize core employees the higher would be the probability to get promoted. Two important call center specific variables are whether the call center is in-house or a sub-contractor and if it is part of a larger organization or is an independent company (both are introduced as dichotomous variables). Batt, Doellgast, and Kwon (2006) carefully discuss why outsourced call centers are more likely to compete on costs through lower wages, more standardized work processes, and higher level of performance monitoring. This type of strategy does not rely on promotions to motivate (control) workers and uses a less skilled workforce. In terms of workforce characteristics, we include three measures that reflect the main characteristics of the current workforce in the call center: educational level, experience, and gender composition. For educational level, we include a series of dummies for the most usual education level of core employees (compulsory, upper-secondary, and tertiary education, with no qualification as the excluding category). Experience is measured as the percentage of core employees with tenure v2 (61) = 100.88

Yes 1762

Incidence (Probit)

Double-Hurdle

Yes 1732 2.51 )2633.3

Incidence and Intensity

Tobit

All models include core segment largest # calls dummies and country dummies. Numbers in parentheses below the coefficient are Huber-White standard errors that correct for clustering by country. Default categories: no education. *Significant at 10 percent; **significant at 5 percent; ***significant at 1 percent.

Markets Main sector served Sample size Sigma Log-L v2-test Tobit versus Double-Hurdle

Intensity (Truncated)

Tobit

AND

Incidence (Probit)

Double-Hurdle

External to the Call Center

CHRIS BENNER

Internal to the Call Center

TABLE 5 (cont.)

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HR practices, work complexity, and organizational ⁄ workforce characteristics affect promotion opportunities. In relation to HR practices, the only variable that is significant for both incidence and intensity of promotions, for both internal and external promotions, is our work discretion index. Interestingly, however, while discretion of work organization is negatively correlated with the incidence of promotions, it is positively correlated with the intensity of promotions in both cases. This finding suggests that there are perhaps two broad processes going on. For some call centers, work discretion becomes a ‘‘substitute’’ mechanism for promotions—a way of perhaps motivating people in the absence of promotion opportunities as a motivator. In other call centers that actually have promotions, work discretion becomes perhaps simply one component of a generally more positive work environment, which includes promoting more people, both internally and externally, to the call center. The other HR measures, including all mechanisms for monitoring individual performance and the use of high performance work practices, are significant only in relation to the incidence of promotions, but bear no relationship to the intensity of promotions. This finding suggests that employers who are interested in promoting call center employees also set up the systems to monitor those employees’ performance and put systems in place for employees to improve their skills and performance, but that the proportion of people promoted is related not very much to the systems in place, but instead most likely to the individuals’ performance. In short, it pays off, in terms of promotion opportunities, to work hard and do well in call centers that have systems for recognizing that work performance. It is interesting that the decision to recognize unions for the purpose of collective bargaining has a completely different effect. Union presence has no relationship with the incidence of promotions internally to the call center, but is negatively correlated to promotion opportunities—unions may be able to improve wages and working conditions, but hinder individuals’ advancement opportunities within the call center. They are, however, clearly associated with the presence of promotions external to the call center—perhaps providing one possible network path between different business units, although the simple presence of that cross-business unit path does not relate to the proportion of people being promoted. The results in our work complexity variables reinforces our initial analysis, with some further subtleties that help refine the distinction between businessunit related knowledge, and firm-related knowledge. Technological complexity remains important for explaining the incidence of external promotions, but not the intensity—knowledge of multiple different technologies in a call center is enough to make systems for external promotions worth setting up, but that

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alone is not enough to relate to the proportion of people promoted. However, the detailed knowledge of firm products and services that is required for handling inbound calls is not only the strongest variable linked with the incidence of external promotions, but also the intensity of external promotions, suggesting that this kind of knowledge is valuable beyond the call center in greater proportion. With respect to the training variables, for initial training, it seems that there is a positive effect on both incidence and intensity of internal promotion, but it is rather weak and statistically insignificant. It can be interpreted that there is a threshold of training that has to be provided to any beginner agent for her to be able to make and receive calls and that it has to be provided regardless of what the promotion policy is like. Over this threshold it starts to be correlated with the promotion policy. We can only observe the effect when we collapse both (incidence and intensity) weak effects into one measure (the Tobit coefficient). With respect to training for experienced agents, we can see that the variable is highly significant and big for the incidence model for external promotions, but does not have any impact on the intensity of the promotion policy. This result could reflect the fact that firms may consider agents in the call center as a ‘‘potential’’ workers for other divisions so they want them ready to move in case an opportunity appears. However, having more people ready for it does not impact on the actual number of opportunities, which would explain the negligible effect in the intensity model. Finally, in relationship to our control variables, the Double-Hurdle model confirms that the organizational variables with the strongest significant relationships (i.e., highest coefficient)—the call center being operated in-house, and part of a larger organizations—are only related to the existence of promotions in internal promotions, not the intensity, but are also related to the intensity of external promotions in the case of in-house call centers.5 Again, this relevance suggests that the network ties to other business units that being part of an in-house call center provides is relevant not just for the possibility of promotions, but for the number of people who might be able to take advantage of that connection. Our workforce characteristics also provide some useful nuance. Education level is significant only for the incidence of promotions for internal promotions, not for the intensity, and remains insignificant for any aspect of external promotions. Interestingly, the percent of agents who are 5

Note that the variable call center is part of a larger organization is not significantly correlated with the intensity of external promotions, although it is with the incidence. As the model controls for call centers operated in-house, those outsourced call centers that are part of a larger organization and predominantly large firms specializing in call center outsourcing, so the only promotions external to the call center are likely only related to managing larger call center operations. In this case, it is not surprising that there are no differences in significant levels for internal promotions and external promotions.

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women is only significant for the incidence of promotions, not intensity of promotions, in both internal and external promotions. This finding suggests that individual women have similar opportunities for promotion as men in call centers that have promotion systems in place, but that call centers without promotion systems in place are more likely to hire more women.

Conclusions The argument and evidence presented here has both empirical and theoretical implications. Empirically, within the call center environment, we hope to have demonstrated that there are important differences between the determinants of promotions internally to the call center versus promotions from the call center to another part of the business. These differences lie in three broad areas. First, HR practices that allow managers to have some qualitative assessment of employees’ performance, such as what emerges through actually listening to call center agents on the phone or promoting interactive team-work and quality circles, are associated with promotions both internally and externally to the call center, whereas evaluation systems that depend on more quantitative assessments of workers’ performance are only related to internal promotions. Second, in the area of work complexity, there is also a distinction between indicators of complexity that are specifically related to the interaction call center agents have on the phone (i.e., call center specific skills) versus indicators of work complexity that is likely to include more company or industry knowledge, or more general skills. The level of complexity of call center specific skills are most strongly related to internal promotions, whereas the indicators of more general skills are more strongly correlated with external promotions. Third, in terms of our control variables, the organizational structure, workforce characteristics, and market sector of call centers all have substantially different relationships with internal versus external promotions, with patterns that reinforce the notion the cross-business unit links, including different industry or sector contexts, is more strongly linked with external promotions than internal ones. More theoretically, our research raises the idea that ‘‘network labor markets’’ may be operating internally to firms in ways that require us to rethink our debates about the nature of the processes of restructuring of internal labor markets. Firms’ choice about promotion systems is not limited to simply variations along a spectrum between an internal promotion system versus hiring workers from the external labor market. The literature on network forms of organizations points to different forms of networks between business units within firms. Our research suggests that the human resource practices, work complexity, and organizational characteristics that shape opportunities for promotion or transfer

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