The aging firm

Prior research suggests that a firm's workforce age composition is a key factor influencing its performance through effects on technological adoption, organizational learning, employee job satisfaction, and turnover. However, the existing literature often assumes that the phenomenon of the “aging firm” – that is, an older workforce age composition within firms – primarily reflects broader demographic trends such as population aging or immigration patterns. This paper offers a new framework for understanding how firms may actively make strategic decisions about their workforce age composition. We argue that firms may, directly or indirectly, select a balance of younger and older workers based on a range of internal and external factors, including their production function (e.g., task requirements), human capital capabilities (e.g., hiring and training), and shifts in technology and policy (e.g., automation and retirement policy). By integrating these factors into a cohesive framework, we argue that a firm's workforce composition should result from a system of interrelated decisions that firms make that depend on their internal capabilities and evolve in response to external shocks.

Duke Scholars

Author Ines Black Fuqua School of Business