I mean there is the obvious part of the answer in that managers are the ones that are given the power to define that growth ladder, but I'm not sure this fully explains things. If people are transferring from technical positions to managerial positions then should they also not be aware that there is a lot of advantages to allowing people to keep climbing the ladder through technical positions? That institutional knowledge can be incredibly valuable. It's often what leads to those people being such wizards. They've been with the code for so long that they know where things will fail and what are the best parts to jump in to make modifications (and where not to!). But every time you transfer one of these people to a non-technical role that knowledge "rots". More in that code just keeps evolving while their knowledge of it remains mostly frozen.
Which what you say sounds like maybe the worse end of that. Taking that person with institutionalized knowledge and hyper focusing their capabilities on one aspect. That doesn't sound like an efficient use of that person. Though the knowledge transfer part sounds important for a company's long term success, but also not helpful if it's narrowly applied.