Resource title

Recruiting for ideas: how firms exploit the prior inventions of new hires (RV of 2009/46/ST)

Resource image

image for OpenScout resource :: Recruiting for ideas: how firms exploit the prior inventions of new hires (RV of 2009/46/ST)

Resource description

When firms recruit inventors, they acquire not only the use of their skills but also enhanced access to their stock of ideas. But do hiring firms actually increase their use of the new recruits’ prior inventions? Our estimates suggest they do, quite significantly in fact, by 202% on average. However, this does not necessarily reflect widespread “learning-by-hiring.” In fact, we estimate that a recruit’s exploitation of his own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruit’s role to diminish rapidly as his tacit knowledge diffuses across his new firm, our estimates indicate that his importance is surprisingly persistent over time. We base these findings on an empirical strategy that exploits the variation over time in hiring firms’ citations to the recruits’ pre-move patents. Specifically, we employ a difference-in-differences approach to compare pre-move versus post-move citation rates for the recruits’ prior patents and the corresponding matched-pair control patents. Our methodology has three benefits compared to previous studies that also examine the link between labour mobility and knowledge flow: 1) it does not suffer from the upward bias inherent in the conventional cross-sectional comparison, 2) it generates results that are robust to a more stringently matched control sample, and 3) it enables a temporal examination of knowledge flow patterns.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2010/2010-21.pdf

Resource license

Copyright INSEAD. All rights reserved