Falling stars: Simulation of the effect of firm culture on employee performance

Many modern firms follow the strategy of recruiting talented employees from outside the firm in the hope of improving firm performance. This strategy is not confined to business alone, but can be found in such industries as sports, the arts and higher education. In order to gain a deeper insight into when this strategy would be successful, we designed an agent based model, featuring competition amongst firms requiring expertise along one or more dimensions. Firms can meet these expertise requirements through the formation of networks within the firm. These networks may make the recruitment of a star less successful than it might appear, as shown by Groysberg in a recent book on financial analysts.