Arne L. Kalleberg

University of North Carolina

David Knoke

University of Minnesota

Peter V. Marsden

Harvard University

* This paper was presented at the International Social Network Conference, London on July 6-10, 1995, and at the European/American workshop sponsored by the Netherlands Institute for Advanced Study in Wassenaar, The Netherlands on July 15-16, 1995. It is a modified version of a grant proposal that has been funded by the National Science Foundation's Human Capital Initiative and the Sociology Program. Correspondence regarding this paper should be addressed to Prof. David Knoke, Department of Sociology, University of Minnesota, Minneapolis, MN 55455.


Many companies are dismantling their internalized system of mutual obligations between employees and the firm, relying more on external labor markets to provide labor power in the form of contingent workers and training services. Our primary focus is on changes in the ego-centered networks of relations connecting employers to those organizations from which they recruit and train employees. To understand the durability of these relations and how networking processes change as a means of obtaining human resources, we present hypotheses about the conditions affecting the form and content of a focal organization's occupation-specific interorganizational relations, including the effects of environmental instability, tight labor markets, unionization, and institutional constraints. We will conduct a 1996-98 national panel survey of U.S. establishments to track these change.


A remarkable restructuring is under way in the American employment contract that emerged in the post-World War II era of rising productivity and U.S. economic dominance. That traditional system sought to reduce the costs and uncertainties implicit in casual, short-term, open-market labor relations by erecting internalized systems of mutual obligations between employees and their firms. To secure long-term supplies of skilled workers, the larger corporations offered job security, complex pay schedules, extensive internal labor markets, promotion opportunities, and elaborate training programs (Osterman 1984; Knoke 1996). Institutional forces propagated the traditional employment contract. Labor unions and governmental regulators pressured companies to adopt standardized employment practices (Baron et al. 1986; Kochan et al. 1986). Business associations, professional societies, and academic consultants touted "best practice"personnel systems, often modeled after the Japanese lifetime company employment contract (Wyatt Company 1993).

By the early 1990s, the traditional employment contract faced serious challenges. Blue-chip companies such as IBM, General Motors, and Kodak were downsizing or abandoning key elements of their elaborate human resource systems. Many conglomerate firms move toward undiversified structures (Davis et al. 1994). The rapid integration of the U.S. into the world economy generated intense financial pressures to re-engineer corporations into lean-and-mean competitors (Harrison 1994; Lawler 1992; Useem 1993). The drive for more efficient production prompted the wholesale adoption of new management techniques, encapsulated as a total quality movement and a return to core competencies (Lawler et al. 1992). The emergence of a new employment contract as an alternative to traditional internal labor markets involves a more casual relationship between employers and employees, in which external labor markets assume much greater importance. "[E]mployees are being pushed into taking more of the risks involved in doing business, job requirements are significantly more demanding, and employees must develop their own skills and careers" (Cappelli 1996. Campaigns to decentralize the organization often freeze hiring, cut salaries and benefits, terminate career trajectories, increase workloads, heighten stress, and undermine morale. White collar employees, especially middle managers, have been hit as severely as blue collar workers.

As internal labor markets are disassembled, corporations are expanding their use of "contingent" workers -- part-time or temporary employees and subcontracted workers employed by suppliers and help agencies (Osterman 1994). By 1994 Manpower, Inc., had supplanted the shrinking General Motors as the largest U.S. employer. The use of contingent workers is not limited to clerical employees, but embraces such high-skill occupations as engineering, computer programming, and drafting. In part, the rise of a contingent workforce reflects the corporate drive to lower costs. But, companies also turn to outside labor suppliers and subcontractors whenever their high performance work systems require specialized skills that are not readily available within the firm's pared-back core workforce. Other firms engage a contingent workforce to gain production flexibilities and to avoid the stringencies imposed by union contracts. The resulting employment relationship comprises a two-tier structure: a reduced core of employees who enjoy good job security and an expanded peripheral workforce that lacks pensions and health benefits.

We are conducting a research project to monitor these continuing changes in the employment contract, applying an interorganizational network perspective to explain two basic human resources practices: how employers interact with other organizations to obtain and train new workers. In effect, we ask how tightly workers are linked into their firms, how much firms invest in their internal workers, and how they make those investments. Understanding the conditions under which employers turn to outside organizations for assistance with these labor functions is the central focus of our research.


Our project is grounded in a network perspective on organizations, labor contracting, and job training. This section reviews the theoretical and empirical literatures relevant to formulating our research design and specifying testable hypotheses.

Interorganizational Networks

Both conventional economic and sociological theories of organizational behavior tend to overlook the importance of interorganizational networks for understanding firm labor contracting and job training practices. Economic theories of the firm are grounded in a formal microeconomic price theory that analyzes the economic incentives facing the single firm to explain its formal organizational structure, strategy, and performance (e.g., Carlton and Perloff 1994). The structuralism paradigm in sociology (e.g., Berg 1981; Farkas and England 1988) emphasizes how worker and firm outcomes vary with the enterprise's technological, administrative, and political arrangements. In their narrow focus on such structural features as formal job classification systems and internal labor markets, sociological explanations deflected research inquiry away from the role of interorganizational connections in shaping a firm's decisions. But, recent theoretical and empirical developments have begun turning some attention toward those issues (Granovetter 1988; Nohria and Eccles 1992).

Increasingly the hiring and allocation of labor, which comprise the largest cost component for most organizations, are neither wholly external to the organization (in which case only market relations would be relevant), nor entirely confined within isolated physical and organizational locations (in which case only a consideration of hierarchical relations would be required). Rather, the on-going transformation of the U.S. employment contract is generating new forms of labor exchange between organizations, whose significance may be better explained by interorganizational concepts and principles than by the atomistic actor approaches of conventional economic and sociological theories of the firm. A network perspective on organizational behavior, developed primarily by sociologists and organization researchers, demonstrates that the patterns of relationships among actors are indispensable for understanding a wide range of organizational phenomena (for overviews of the interorganizational network literature, see Baker 1992; Burt 1992; Granovetter 1985; Knoke and Guilarte 1995; Knoke and Kaufman 1990; Powell 1987, 1990). These applications of network ideas span such diverse organizational activities as: human capital formation (Marsden and Hurlbert 1988); mentoring (Noe 1988); women and minority employees (Ibarra 1993); managerial careers (Burt 1992); small business entrepreneurs (Aldrich 1989); technological innovation and transfer (Harianto and Pennings 1990); corporate alliances (Gerlach 1992); joint venturing (Barley et al. 1992); multinational corporate linkages (Ghoshal and Bartlett 1990); and governmental lobbying (Knoke et al. 1996). However, network researchers have been strikingly inattentive to interorganizational processes in both labor contracting and job training. While this lacuna means that we have no prior empirical foundation on which we can build, it also offers us a unique opportunity to make substantial contributions to these issues. Network ideas should prove most useful for tracking the evolving U.S. employment system as it produces complex structures of employer-employee relations that are simultaneously internal and external to the firm.

In the absence of being able to draw on the insights of a rich empirical literature on interorganizational networks, particularly as applied to company labor contracting and job training practices, we instead sketch the basic analytic concepts and network principles that should prove most relevant to our proposed substantive research. A social network comprises a set of actors and their dyadic relations. A relation or tie consists of an exchange of commodities or services between two actors, or work organizations in our case. The distribution of exchange ties varies conceptually along several key dimensions, which we intend to operationalize in our project: (1) intensity or frequency, the number of transactions occurring per unit of time; (2) duration, the span of time across which exchanges occur; (3) formalization, the extent to which a transaction is regulated by explicit rules and sanctions governing their occurrence; (4) range, the volume (number) and diversity (quality) of actors with whom exchanges occur; and (5) multiplexity or overlap, the presence of more than one type of exchange between a given dyad. The two substantive relations of interest for our project are the labor hiring and labor training ties between dyads, or pairs, of organizations.

Interorganizational networks may be viewed either from the perspective of a single actor embedded in a larger system (an ego-centered network) or from the full-system viewpoint (a global network). The latter perspective proves meaningful only where the analyst can bound a closed and relatively small organizational population whose members maintain dense ties to one another. When seeking to develop a representative portrait of the networks operative in a large and open population, as we do here, the ego-centered approach is more appropriate (for a good exemplar, see Kelley 1993). An ego-centered network consists of an ego (or focal) organization with its direct ties with a set of alter organizations. The labor contracting and training exchanges between a work organization and its providers are unlikely to be affected by ties among these alter organizations (since the competitors do not generally exchange labor or training among themselves) nor by these vendors' ties to still other organizations that lack direct ties to ego. Hence, we propose to investigate the "first-zone ego net," comprised only of direct ties between an employer and those organizations from which it obtains new employees and job training services.

Employment Contracts

We use the interchangeable concepts "employment contract" and "labor contract" to encompass a broad range of employer-employee regimes, which may or may not be formalized as written contracts. These are bilateral arrangements involving reciprocal expectations and behaviors between management and labor. A labor contract represents what each party seeks to obtain from the employment relation by trading something of value to the other: employers exchange money, security, and other job rewards with employees in return for their efforts and sometimes their loyalties. Employment contracts often specify in considerable detail how work is to be organized, governed, evaluated, and rewarded (see Kalleberg and Reve 1993,pp. 11056; see also Rousseau 1989; Rousseau and Parks 1992).

Employment contracts vary along several key dimensions, including: the duration of the employment relation; whether workers are employees of the organization or independent contractors; whether employers directly provide job training or rely on outside organizational vendors of training; the extent to which contract terms are formalized and explicit as opposed to informal and implicit; whether employers or employees hold the balance of power in defining contract terms; the extent and nature of compensation; the extent to which the contract is subject to regulation by government agencies or unions. These dimensions of contracts may be interrelated. For example, decisions regarding compensation, duration of contracts, and the provision of training are intimately related to such issues as the balance of power and regulation. Our proposed research will focus mainly on duration, formal contracting, and job training because these relations have been especially vulnerable to the kinds of changes described above.

As noted in our overview of the shift from long to shortterm employment contracts during the past fifteen years, many U.S. work organizations have sought to move away from the traditional model where most employees (especially males) were connected to their employees on a fulltime, relatively permanent basis. This "old covenant," characterized by an exchange of job security for performance and loyalty, is being supplanted by a "new covenant" in which employers promise to train workers and help them to become "employable" in a variety of companies (Waterman et al. 1994), but make no guarantees of continued employment (O'Reilly 1994). To ensure steady supplies of qualified workers who are weakly attached to the organization, employers rely increasingly on temporary help agencies (Parker 1994). The duration of employers' relations with temp agencies varies considerably. On one end of the continuum, a focal organization buys the labor it needs at an auction on the open or "spot" market. Here, the hiring relationship has an extremely short duration. On the other end of the continuum, a focal organization keeps a temporary agency on retainer, thereby obtaining a reliable flow of workers as needed. This long-term relation enables the employer and the temp agency jointly to develop a projected plan for how many employees are needed at various times. Thus, close ties help employers to smooth out fluctuations in business cycles, since workers are added only when needed and subtracted as business falls off.

A second change in the contemporary employment contract is greater reliance by firms on individual and organizational contractors, as opposed to their own employees, in order to get work done. With an increased emphasis on core competencies now part of the business environment of the 1990s, employers increasingly find it more costeffective to hire outside people and organizations to perform certain routine, peripheral, and/or irregular sorts of work for them. Extant data do not permit reliable estimates of how many workers in the U.S. labor force are involved in various types of subcontracting relationships, though anecdotal evidence suggests that these kinds of network linkages are becoming more common. For example, a study of 442 firms by the Bureau of National Affairs found that 13% increased their use of temporary workers and outside contractors for administrative/business support contracts and production subcontracting (Abraham 1988). Employment in the business service sector, a primary locus of subcontracting relations, rose from 3.3 to 6.18 million workers from 1980 to 1991, an 87% increase (Parker 1994, p. 7). The 1991 National Organizations Survey (NOS; see Kallerberg et al. 1996) estimated that 19% of establishments frequently recruited some of their core workers through employment agencies, a lower percentage than those employers who used newspaper advertising and employee referrals, but more than reliance on business and professional contacts (Marsden 1994).

Job Training

National surveys of employees and organizations concur that larger workplaces, which maintain elaborate internal labor markets, sustain much broader formal job training efforts, both inside and outside the organization (Osterman 1995; Knoke and Kalleberg 1994; Knoke and Ishio 1994; Lynch 1994; Frazis, Herz and Horrigan 1995; Knoke 1996). Evidence from the 1991 NOS revealed widespread formal employee training programs, involving establishments employing 72% of the U.S. labor force (Knoke 1996). Company training activities are more likely to remain in-house whenever they involve firm-specific expertise, proprietary knowledge, and adequate time to create their own training staffs. A decision to purchase training services from external training vendors is more likely when firms have important needs that cannot be met within the time, staffing, and money available to produce proprietary programs. A variety of outside providers -- encompassing commercial training consultants, collaborative-customer firms, and nonprofits such as local community colleges, voc-tech schools, and community-based (low-income) organizations -- offer both highly specialized and generic training packages on as-needed bases (Carnevale et al. 1990, pp. 101-141). External vendors also include the larger organization ("parent") of which an establishment is a branch or subsidiary unit and labor unions that conduct collaborative training programs with the firm (Ferman et al. 1991).

The 1991 NOS uncovered substantial reliance by establishments on external training providers (Knoke 1996). The relations were operationalized by two general items: (1) "Was any of this training conducted by staff from the (LARGER ORG), either on (ORG's) premises or by sending employees to (LARGER ORG)?"; (2) "Was any formal job training conducted on (ORG's) premises by outside agencies, consultants, or schools?" Even establishments that maintained their own in-house training staffs almost always collaborated with external vendors. Fewer than 3% of establishments relied solely on their own training staffs, while another 5% combined their training staffs with trainers from the parent organization. Nearly one-quarter of establishments had no training staffs of their own, but depended entirely on the larger organization's trainers; another third conducted joint training programs with their own staffs and those of an external vendor; and another third combined all three sources. A substantial size gradient was evident: more than 75% of the smallest establishments (under 5 employees), which generally lacked in-house staffs, purchased training exclusively from the two external sources; but more than 90% of the largest organizations (over 1,000 employees) always combined their own training staffs with those from parental and/or other external vendors.

We propose to conduct a more in-depth examination of interorganizational training arrangements than was feasible with the omnibus 1991 NOS. In place of its two general indicators of collaborative training, we will distinguish both the specific forms and the substantive contents of the training that a focal employer's purchases from particular training vendors for its various occupational categories. For example, we must separate multiplex relations (where one training vendor provides the training for all the occupations of a focal organization) from single-stranded or uniplex ties (where each occupational training program is provided by a different vendor).

Another conceptual distinction is how job training practices vary along such dimensions as internalization and formalization. To illustrate the range of increasingly formal interorganizational training ties, consider the following:

Ø The employer mandates that employees in an occupational category need training, but offers no resources for its provision. These employees must make their own arrangements to locate and pay for training by outside vendors.

Ø Employer underwrites training expenses for employees, for example, by reimbursing tuition for training courses. But, employees must still make their own arrangements with external training vendors.

Ø Employer directly negotiates a formal contractual agreement with an external vendor to train employees at off-site locations apart from work periods.

Ø Employer arranges for an external training vendor to provides on-site training during employees' work hours.

Ø Employer's training staff collaborates with an external vendor to conduct a jointly administered, on-site training program during work hours.

Ø Employer's training staff takes over the entire training effort from an external vendor, for example, by buying a training school.

Significance of Changing Employment Contracts

Employers' decisions about the form and duration of employment contracting, on the one hand, and whether they should rely on internal as opposed to external sources of training, on the other, are intimately related. For example, organizations that contract out more services and functions are also more likely to rely on external agents to provide contingent workers with the training necessary to accomplish these tasks. Moreover, a rational organization will not find it cost effective to use many of its own resources to train contingent workers because the firm cannot expect to recover its full investment through increased productivity.

A company's decision to change its employment contract is primarily motivated by the desire to decrease unit labor costs. These costs -- representing the ratio of payroll costs to productivity -- can be reduced in two ways: by lowering payroll costs and by increasing productivity. The first strategy reducing payroll costs is sometimes referred to as the "low cost route" to efficiency, because it reduces the quantity of work supplied (see Appelbaum and Batt 1994). This route is often cited as the motivation for externalizing labor by using contingent and/or contracted workers. The alternative road to enhancing performance -- increasing productivity and the quality of work -- relies heavily on giving employees and contractors considerable job training. While these two costcutting strategies may be manipulated independently, they may have related consequences: for example, reducing payroll by downsizing or scare tactics may also reduce worker productivity. Therefore, we must examine these dimensions of labor contracts simultaneously in our proposed research.

The changing employment contract is having a profound impact on individual workers' lives, on work organizations, and on the nation. The growth of contingent workers and contracting has considerably reduced individual opportunities for career advancement within organizations. Firm internal labor markets which formed the job ladders up which ambitious employees once climbed are rapidly being dismantled and replaced by shortterm, hazardous career lines where workers must take greater responsibility for their acquisition of new skills (see Waterman et al. 1994). Because workers can no longer expect to spend much of their lives working for one organization, they must be prepared to deal with the disruptions caused by moving from one place to another. They must plan for continual retraining throughout their work lives, often at their own expense.

The corporate preoccupation with becoming "lean and mean" by expanded use of contingent and contracted workers may also have negative consequences for organizations. There are many advantages for an organization to keeping a welltrained, loyal workforce. For example, temporary workers are often associated with higher supervision costs because temps have little basis for loyalty to a company and may not be sufficiently welltrained to do high quality work. Firms may discover that contingent workers actually cost more because they are less productive than long-term employees. A longitudinal study such we are proposing is necessary to track changes in organizational use of contingent workers and to determine whether they add or shed workers at various phases of the business cycle.

The contemporary move toward contingency and contracting can also be viewed as a societal effort to respond to competition in the world economy. If successful, these painful changes allegedly would resuscitate the stagnating U.S. standard of living, repaying workers for their sacrifices. But, there are also dangers associated with this strategy: either the reformation won't succeed and foreign nations will capture our markets, or the gains from reinvigorated system will be pocketed by owners and managers, not by ordinary workers (see Harrison 1994).


Drawing from the analytic perspectives summarized above, this section specifies some testable hypotheses about the sources of variation in work organizations' labor contracts and job training relations with other organizations. Because we expect that employers' strategic choices are driven primarily by external social forces, we do not state any expectations here about how internal organizational structures (e.g., division of labor, workforce composition) might affect interorganizational ties, although we will measure and control such factors when testing the relations hypothesized below. Also, we intend to test each general hypothesis for the various "classes of worker" (occupations) within the organizations. For example, strong interorganizational training might be found among the skilled crafts occupations, but may not emerge for clerical or managerial employees. To save space, we do not restate for every occupational category the four classes of research hypothesis below.

Organizational Environments

Theorists have proposed several analytic dimensions for conceptualizing organizational environments, such as uncertainty and complexity (Aldrich and Marsden 1988), which we will attempt to operationalize for this project. The concept of environmental instability refers to the degree of turnover in external elements. To the extent that an organization encounters rapid changes in production technologies, in the availability of financial and material resources, and in calculable markets for its products and services, the less likely it is to try dealing with these changes by itself. Under such conditions, we expect organizations increasingly to rely on other organizations for hiring and training employees competent to deal effectively with these environmental changes.

H1: The more unstable its environments, the more likely is an organization to develop labor contracting and job training relations with other organizations that exhibit greater intensity, duration, formalization, range, and multiplexity.

Labor Markets

When the supply of essential production or service workers available to an employer tightens (i.e., when the occupational unemployment rate decreases), organizations are forced to dip ever lower into the labor queue to find workers. As the labor pool shrinks ("scraping the bottom of the barrel"), the remaining workers are also less likely to have the requisite skills, experiences, and work commitments that make them valuable to firms. Consequently, companies find themselves investing more effort in searching, screening, socializing, and training new hires, including such basic skills as literacy, numeracy, and punctuality. During such restricted labor market conditions, employers are more likely to turn to such external suppliers as subcontractors, head-hunters, and temp agencies that pre-train temporary hires, as well as to purchase specialized training services from external vendors to bring new hires up to speed and to retrain older employees in new job functions.

H2: The tighter an occupational labor market, the more likely an organization is to form external arrangements for labor contracting and job training.

Labor Unions

Although only one-sixth of the U.S. labor force is unionized today, unions retain significant presences in several key industries, such as construction and manufacturing. Traditionally, unions resisted subcontracting and contingent employment as direct threats to their members' wages, working conditions, and job security. Although the evidence was more equivocal, unions were also believed to oppose programs that involve senior workers in training their own replacements (Mincer 1983). Many unions control apprenticeship programs that are completely independent from the firms where their participants are employed. But, the economic restructurings of the past two decades saw many unions making substantial concessions, such as two-tier wage systems and externalization of parts production, in order to hold onto core union jobs. The recent emergence of several highly visible joint-training programs, where unions and managers collaborate on design and administration, suggests that unions may be replacing adversarial with cooperative stances. These impacts may be most pronounced where rapidly changing technologies and foreign competitors challenge corporate viability.

H3: In unstable environmental conditions, unionized employers are more likely to establish joint job training programs and to engage in external labor contracting practices that preserve core union jobs.


Firm hiring and training decisions are also shaped by prevailing societal and cultural beliefs about appropriate behaviors, thus conferring greater legitimacy on organizations that adopt conventional forms. A common theme is the importance of such elements as "symbolic systems, cognitive scripts, and normative codes" (Scott 1992, p. 3). Conveyed and sanctioned by peer organizations, regulatory bodies, and governmental authorities, these institutionalized standards compel increasingly uniform organizational practices, resulting in isomorphic structures and homogeneous behaviors among organizations operating within a common field. Scott and Meyer (1991) used institutional ideas to generate hypotheses about the likelihood that organizations will offer formal training programs. They argued that employers tend to copy generally valued models of employee instruction that are only ambiguously linked to firm-specific tasks and purposes, "with loose controls and evaluation systems in ways that are in many respects directly analogous to the operation of the traditional educational system" (1991, p. 322). For example, several major corporations operate company colleges replete with curricula, examinations, and degrees. In settings where institutionalization is most strongly entrenched, employer adherence to external normative standards is expected to be strongest.

H4: The more extensive the institutional constraints toward particular types of labor contracting and job training practices, the greater an employer's conformity to those norms.

Although the four broad hypotheses above are presented in ceteris paribus form, we will test them with multivariate methods that allow controls for other factors, especially internal organizational characteristics, and for specification of interactions or conditional effects. The hypotheses refer not only to comparative differences in labor contracting and job training between organizations at a given time, but also to changes in an organization's interorganizational relations over time as its environmental, labor market, unionization, and institutional conditions change. Because we seek to understand the durability of these relations and how networking processes change as a means of obtaining human resources, we need to test our research hypotheses using the longitudinal data collection design described in the next section.


This section outlines the sampling, measurement, and data collection procedures to be used in a longitudinal survey of a diverse national sample of U.S. establishments. We applied several of these methods in the 1991 National Organizations Survey (Kalleberg et al. 1996), but will modify and extend certain procedures to suit the unique focus of our current proposal.

A Longitudinal Organizational Survey

We will contract with the Minnesota Center for Survey Research (MCSR), a unit of the University of Minnesota, to conduct a two-wave panel survey of U.S. work establishments in 1996 and 1998. We expect MCSR to complete 1,000 interviews for the 1996 wave. Based on the 1991 NOS field experience, we anticipate a response rate above 70% of sampled organizations (selected as described in the next subsection). We also assume that 800 of the organizations participating in the first wave will complete interviews in the second wave. No replacements of second-wave refusals will be made. Within each establishment, MCSR will attempt to identify and interview the human resources manager or personnel director, since that person is likely to be the most knowledgeable informant about the organization's labor contracting and job training practices. In some organizations, perhaps a fifth of the cases, information will also be sought from training directors. In the majority of cases, data will be collected in computer-assisted telephone interviews lasting up to 45 minutes for the first wave (and 25 minutes for the second-wave interviews). Again based on the 1991 NOS, because some informants assert that they cannot afford the time for a phone interview, MCSR will ne prepared to mail printed versions of the CATI instrument to as much as a third of the original sample. MCSR will use standard follow-up procedures for both the telephone and mail portions of the study.

Sampling Organizations

We will use Dun and Bradstreet (D & B) Information Services to select the sample of establishments to be interviewed by MCSR (Osterman [1994, 1995] also conducted a survey using D & B files). D & B will draw a random sample of establishments stratified by employee size. Stratifying by size is essential because the overwhelming majority of work organizations in the U.S. is small (more than 80% have fewer than 20 employees) and thus are relatively undifferentiated with regard to many important aspects of the employment contract. To ensure that the sample contains many mid-sized and large organizations (which are more likely to train employees internally and to have diverse employment relations), D & B will sample organizations with probability proportional to size. (This design parallels the 1991 NOS multiplicity sample, which used the General Social Survey respondents to identify employers, thus assuring that the NOS establishments were drawn proportional to employee size; see Spaeth and O'Rourke 1994.) The resulting sample should be reasonably representative of U.S. profitmaking work organizations, since D & B's file contains nearly 15 million companies (see Kalleberg et al. [1990] for a discussion of the advantages and limitations of this sampling frame). D & B will also provide us with a sample of nonprofit work organizations, though their coverage of these kinds of organizations is not as exhaustive as the former.

For each organization sampled, Dun and Bradstreet's "Market Identifiers Plus" service will provide us several important pieces of information, including: company name, address and telephone number; up to four executive contacts (including the CEO); information on industry affiliation and parent company; banking and accounting firm relationships (a potentially valuable source of network information); size (in terms of number of employees as well as sales volume); year started; business trends for the past three years. In addition, historical information on the sampled organizations is available from the Dun's Historical Files. This historical information may prove useful for explaining present interorganizational training and other labor contract relations.

Sampling Occupations Within Organizations

The employees of the larger establishments comprise too many occupations for us to collect detailed information on all their labor contracts and job training. Hence, we will develop techniques to identify and sample a subset of referent occupations within each organization about which we will query the informants. We will conduct extensive pre-tests to develop effective "occupational name-generator" procedures suitable for both telephone interviews and mail questionnaires. One approach would be to uncover the main network among occupations inside the organization. First, we would ask each informant to identify a single "core occupation" that is crucial to the main product of service of the establishment. We would then solicit a list of occupations that are functionally related (interdependent on) that core occupation, along with judgments about how tightly or loosely connected each one is to the core occupation. Descriptive information would be collected about each occupation, such as the numbers of employees, their composition in terms of genders, races, ages, and other pertinent attributes.

An alternative approach to selecting the referent occupations would start with an informant providing three job titles whose work is "most directly involved" (e.g., central, essential) to the establishment's main product/service. Next, an equal number of jobs less directly involved (e.g., secondary, peripheral) would be identified, regardless of whether they are functionally integrated with the central occupations. We may decide also to ask about administrative/clerical occupations and "boundary spanning" positions, for example, jobs involving distribution in manufacturing organizations or sales in service enterprises. Regardless of which design we ultimately choose, our main objective is to select as referent occupations both core jobs (whose incumbents are very likely to have strong, long-term employment contracts involving extensive training) and secondary positions (very likely to exhibit the opposite configurations). We anticipate collecting detailed information about the contracts and training for up to six referent occupations in the larger establishments, perhaps focusing the informants' attention on recently hired workers about whom they should possess the most accurate information.

Generating Interorganizational Ego-Networks

For each of the referent occupations selected, we will collect information on the focal organization's ties to other organizations for labor contracting and job training services to these occupations. Thus, for each of the six occupations sampled within a large establishment, we will repeat a series of items about the organizations with which the focal establishment deals for labor contracts and for job training. We will ask informants to enumerate every alter-organization by name and to provide details about those alters' occupation-specific interactions with the focal organization. In particular, for each relationship we will operationalize such basic network properties as intensity (the frequency of contact; numbers of employees participating; funding amounts), duration (the period of time spanned by the relation), multiplexity (use of the same provider for several occupations), and formalization (existence of written contracts). In addition to the network measures, informants will also provide brief profiles of the alter organizations (e.g., their sizes, industries, public-private auspices). Thus, we will be able to construct a set occupation-specific, ego-centered interorganizational networks without the expense of contacting and querying every alter organization in the set. The following two subsections present more detail about measures specific to our substantive research foci.

Labor Contracting Relations

As noted above, we conceptualize the labor contract broadly to embrace more than formal written agreements. We will operationalize six central dimensions of the employment contract. Because these aspects likely vary from one occupation to another, we will use these items to collect network information on every referent occupation. The six dimensions of labor contracts, and illustrative questions, are:

(1) The focal organization's use of contingent workers. What is the percent parttime and percent temporary employees in each occupation? During the past two years, which alter organizations provided temporary personnel to the focal organization to do the work associated with each occupation? Did the ego or alter (temporary agency) set the hours and wages for occupational members? Which organization was responsible for evaluating the employees' work performances? Has the focal organization dealt with the alter for a long time, or did it contract with new alters every time a new job opened? What was the intensity and frequency of the ego organization's use of temporaries? Was the use of temporaries identical for each occupation?

(2) The focal organization's use of individual contractors, independent consultants, and other forms of subcontracting. To what extent did the ego organization contract for labor from an alter in which the latter assumes responsibility for managing, supervision, scheduling, and/or filling out forms (for example, as is common in the construction industry)? What were the duration, intensity, and frequency of subcontracting relationships? Were these subcontracting relations the same for each occupation?

(3) Contract formalization. Did the focal organization have written employment contracts with its "permanent" employees, its subcontractors, and/or its contingent workers? Did the extent of contract formalization differ from one referent occupation to another?

(4) Power balance in the employment relationship. Does the employer or employee primarily decide when to terminate the employment relation? Is there a tenure system or other form of job security? Can a person be fired for (what) cause? How often does the organization experience cyclical layoffs?

(5) Compensation and job rewards. What fringe benefits (e.g., pension rights, medical) and earnings do the referent occupation's incumbents receive?

(6) Are contracts regulated by the government (e.g., Fair Labor Standards; Affirmative Action)? by unions?

Job Training Relationships

To place the interorganizational training practices into clearer context, we also must measure the extent to which formal training takes place inside an establishment (we assume that all informal training, which is very hard to measure, takes place inside the organization). The interview's training section will begin with the filter item similar to one used in the 1991 NOS: "Apart from on-the-job training, in the past two years did (ORG) provide any employees with formal job training, either on or off the premises?" If an ego organization conducted no formal training programs (slightly more than a quarter of the size-weighted 1991 NOS establishments), the questionnaire will skip to the next section. For focal organizations with some formal training, the informant first will be asked about any training that was conducted on-site entirely by the establishment's own training staff (not counting staff on loan from the parent organization). For example, which of the referent occupations were trained in what particular kinds of skills? What were the main reasons for providing the training? How many employees took part in each program and how were they selected? What was the duration of each training program? What training staff resources were applied in each instance? What kinds of evaluations of training outcomes were made?

Next, for each referent occupation, informants will be asked whether their establishment conducted any training during the past two years, either on- or off-site, in conjunction with such alter organizations as labor unions, parent organizations, and public- and private-sector providers (for example, community colleges, commercial vendors, and customer firms). After interviewers have inventoried the names of all provider organizations, they will ask the informants for details on each external training relation: At what physical sites did training occur? Which organizations trained which occupations in what particular skills? Why did the focal organization choose this particular provider? Were any alternative providers available in the market, and did the focal organization investigate using these sources instead? How often has the ego organization used this provider in the past? What were the financial arrangements and the contractual stipulations governing the exchange? Did the focal organization's training staff collaborate in delivering the vendor's service? How many employees were trained and how were they selected? What was the duration of each program? How satisfied was the organization with the training?

Other Measures

In order to test the research hypotheses outlined above, we will collect information on such environmental characteristics as: concentration, competition and other features of product markets; the organization's exposure to sources of prevailing standards, accrediting bodies, regulatory agencies, and other indicators of institutionalization; unions; changes in technology (such as the use of computers and automation); labor market supply and demand in the different occupations; and the ego organization's relations with customers and suppliers in output and input markets. We must also control for variation among establishments' internal organizational structures and workforce composition. We will draw many items from the 1991 NOS survey to measure a variety formal organizational structures, including: vertical and horizontal differentiation; centralization of decisionmaking; firm internal labor markets; and formalization. Other NOS indicators will measure an organization's workforce composition in terms of gender and race, and the overall proportions in parttime, temporary, and subcontracting relations. (See Marsden et al. [1994] for the 1991 NOS organizational structure and environment indicators.)


We will begin by analyzing the crosssectional and retrospective data gathered in the first wave of the survey. The research hypotheses stated above will be examined using multivariate methods such as we used in analyzing the 1991 NOS. Because our proposed survey design specifies that data will be gathered about several occupations within each organization studied, multilevel analyses (Bryk and Raudenbush 1992) will be used where appropriate in studying questions about training and labor contracting. An additional payoff to the project will come with analyses of the longitudinal data that will become available with the completion of the second wave of interviews. We will then be able to examine questions about the stability of particular contracting and training relationships over the twoyear period, and study factors associated with the initiation of new relationships as well as the termination of old ones. At a different level, we will be able to study changes in the use of "labornetworking" as a strategy, irrespective of whether there are exchanges in the specific partners involved with a focal organization. Will the apparent current movement toward increased use of subcontractors and contingent/temporary workers continue into the late 1990s? Where is it expanding most rapidly, and which employers are turning to still newer strategies to increase worker performance and firm flexibility?

We will examine the over-time changes in ego-centered organizations' network properties by estimating equations taking the following general form:

where: (1) the two N's are an occupation-specific network measure for establishment i at 1998 and 1996, respectively, and whose coefficient reveals the stability of the relation over time; (2) the X's are measures of k antecedent organizational and environmental characteristics whose coefficients reveal the truth-value of the research hypotheses (or are present as control variables, such as size and age); (3) the NX 's are product terms whose coefficients indicate whether a dependent network property is conditioned by an interaction between the network and the antecedent organizational and environmental factors; and (4) sigma is a measure controlling for sample-selection bias that may arise because of attrition through organizational death and/or refusal during the two-year panel (Heckman 1979). As with the 1991 NOS, the results of our analyses will be presented initially at professional conferences and eventually published in article and book form.


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