In a recent article, I explored new research from the London School of Economics, which argued that the best jobs appeared to be at international firms.  The team found that when they compared 16 years of data on firms, workers, and international trade in Portugal, there was a clear distinction between firms that were operating internationally and those operating domestically.  Their analysis found that international firms consistently offered better opportunities and experiences to staff.

The researchers suggest that managers at international firms tend to enjoy higher salaries precisely because of the international experience these firms expect from, and utilize, in their managers.  The managers at these firms are required to have an ongoing accumulation of new skills, and are given ample opportunity to show those skills off.  This helps both the firm to grow, which in turn makes it easier for those managers to earn a higher income.

The impact of international firms on the success of staff was greater not only when compared to domestic firms, but also when comparing any differences between large and small firms, or even between firms with different management styles and structures.  The researchers suggest this makes sense in many ways, as the upper echelons of the various “best places to work” lists are typically dominated by multi-national firms, due in large part to the better management observed, and the diversity of experiences among the workforce.

Previous research from LSE also found that workers are paid around 20% more when working for the most innovative firms.  The research found that not only are the most innovative firms significantly more likely to have a higher-skilled workforce but that working alongside these highly skilled people raised the income of those in lower-skilled roles.

Joining prestigious firms

New research from the University of Cologne highlights another side of the equation, however, as while the most talented people do tend to join the most prestigious firms, this creates intense competition, which can make it harder to advance up the career ladder.  Suffice to say, however, if you are fortunate enough to secure such a promotion, it becomes more highly valued in the labor market.

The researchers suggest this results in the most talented people joining prestigious firms in a bid to secure that promotion, whereas less talented people join less competitive firms, where promotions are more likely, but less valued in the labor market.

The findings emerged from an analysis of footballers who were transferred into the German Bundesliga between 2010 and 2017.  They were particularly interested in the decisions from players about which club they should join, and the subsequent growth in their market value.

“We used football data in our analysis because the availability of detailed information regarding players’ characteristics and their performance allowed us to test the implications of out model in a very clean and direct way,” the researchers explain.

The research found that competition for playing time was harder at the most prestigious teams, so those players who did manage to break through at these clubs saw their market value rise the most, with this particularly so for younger players whose talent was more unknown.

“Workers face different challenges in different firms – in some, workers may find it relatively easy to progress since the level of competition is low and while at first this seems beneficial, other potential employees would not be overly impressed due to the lack of competition,” the researchers explain.