Internal Labor Markets Under External Market Pressures

Abstract

Through an empirical investigation of 11 Korean firms before and after the Asian financial crisis, the author examines the impact of increasing external market pressures on internal labor market (ILM) practices. In addition, the merits of ILMs are tested by capturing the reactions of white-collar managers within these firms. The author posits that 1) firms may desert ILM practices in the face of external pressures but do so in varying degrees, and 2) despite reduced values placed on firm-specific human capital in the marketplace, ILM practices continue to have merit in promoting consummate cooperation and delaying perfunctory cooperation. The findings generally support the hypotheses, and implications of these results for theory and practice are discussed.