The firm specificity of individual performance: Evidence from cardiac surgery

In many settings, firms rely on independent contractors, or freelancers, for the provision of certain services. The benefits of such relationships for both firms and workers are often understood in terms of increased flexibility. Less understood is the impact of freelancing on individual performance. While it is often presumed that the performance of freelancers is largely portable across organizations, it is also possible that a given worker's performance may vary across organizations if he or she develops firm-specific skills and knowledge over time. We examine this issue empirically by considering the performance of cardiac surgeons, many of whom perform operations at multiple hospitals within narrow periods of time. Using patient mortality as an outcome measure, we find that the quality of a surgeon's performance at a given hospital improves significantly with increases in his or her recent procedure volume at that hospital but does not significantly improve with increases in his or her volume at other hospitals. Our findings suggest that surgeon performance is not fully portable across hospitals (i.e., some portion of performance is firm specific). Further, we provide preliminary evidence suggesting that this result may be driven by the familiarity that a surgeon develops with the assets of a given organization.