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Recruiting for ideas: a difference-in-differences approach for estimating the effect of mobility on access to an inventor's prior knowledge

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When firms recruit inventors, they may acquire not only the use of their skills but also enhanced access to their stock of prior ideas. In this paper, we examine the extent to which mobility increases a hiring firm’s usage of a recruited inventor’s prior knowledge, estimating a boost of 197% on average. For this estimation, we employ a difference-in-differences approach novel to this research setting to model the mobility-knowledge flow relationship, comparing both pre-move and post-move citation rates for focal patents versus matched-pair control patents. Our empirical approach has two significant benefits. First, it does not suffer from the severe upward bias we show to be inherent in the commonly employed cross-sectional comparison of just the post-mobility citation rates for focal versus control patents. Second, it enables us to examine the temporal characteristics of the mobility effect, a particularly important issue given the dynamic nature of the knowledge flow process. Furthermore, unpacking the mechanisms behind a firm’s increased use of a mobile inventor’s stock of prior knowledge reveals that approximately 60% of this increase is actually due to continued self-citation by the mover herself, implying that a new recruit is often responsible for exploiting her prior knowledge without necessarily stimulating broader firm-wide learning. Moreover, such own-knowledge exploitation by the mobile inventor represents an even greater fraction of the firm’s increased use of her prior ideas in the years immediately following the mobility event. Finally, consistent with previous research emphasizing the role of mobility for exploration, we find that post-mobility increase in a firm’s use of the inventor’s prior knowledge is greatest, in percentage terms, for technological domains that are relatively new to the firm.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2009/2009-46.pdf

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Copyright INSEAD. All rights reserved