Employee Tenure and Staff Performance: The Case of a Social Enterprise

While most of the studies analysing the tenure-performance relationship focus on workers of for-profit organizations, this paper examines such relationship in a sector where both social and financial performances are key and where employees are supposed to be pro-socially motivated: the sector of social enterprises. Our quantitative analysis based on a sample of 1,580 employee-quarter observations from an Ecuadorian institution supplemented by some interviews and focus groups show a linear negative relationship between employee's tenure and social performance and a complex relationship between employees' tenure and financial performance including two inflection points (financial performance decreasing first, then increasing very slighting, and decreasing again afterwards). We contribute to the literature in four different ways. First, we contribute to the literature in management by testing the effect of employees' tenure on performance in a new setting. Second, we are, to our knowledge, the first to test the impact of tenure not only on financial performance but also on social performance and on both performances taken simultaneously. Third, we are the first to argue that Besley and Ghatak (2005)'s model of motivated agents in mission-oriented firms does not fully fit when looking at employees in social enterprises. Fourth, our study takes part of the few studies on employees' behavior in social enterprises, and in microfinance in particular.