Entrepreneurial Spillovers from Corporate R&D

This paper offers the first study of how changes in corporate R&D investment affect labor mobility. We show that increases in R&D spur employee departures to join start-ups’ founding teams. This appears to reflect employees taking the ideas, skills, or technologies created through the R&...

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Bibliographic Details
Published in:Journal of labor economics 2024-04, Vol.42 (2), p.469-509
Main Authors: Babina, Tania, Howell, Sabrina T.
Format: Article
Language:English
Subjects:
Diversification
Founding
Labor economics
Labor migration
Mobility
R&D
Research & development
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Summary:This paper offers the first study of how changes in corporate R&D investment affect labor mobility. We show that increases in R&D spur employee departures to join start-ups’ founding teams. This appears to reflect employees taking the ideas, skills, or technologies created through the R&D process but not especially valuable to the R&D-investing firm to start-ups. The employee-founded start-ups tend to be outside the R&D-investing employer’s industry, suggesting that the underlying ideas would impose diversification costs on the R&D-investing firm. The start-ups are more likely to be VC backed, high tech, and high wage, pointing to substantial spillover benefits.
ISSN:0734-306X
1537-5307
DOI:10.1086/723501