Recruiting for ideas: how firms exploit the prior inventions of new hires (RV of 2009/46/ST)
Author: Singh, Jasjit ; Agrawal, AjayINSEAD Area: Strategy Series: Working Paper ; 2010/21/ST (revised version of 2009/46/ST) Publisher: Fontainebleau : INSEAD, 2010.Language: EnglishDescription: 48 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: 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 recruits exploitation of his own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruits 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. Previous title: Recruiting for ideas: a difference-in-differences approach for estimating the effect of mobility on access to an inventor's prior knowledge - Singh, Jasjit;Agrawal, Ajay - 2009 - INSEAD Working Paper| Item type | Current location | Collection | Call number | Status | Date due | Barcode | Item holds |
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Digital Library | Available | BC009099 |
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 recruits exploitation of his own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruits 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.
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