Scientific Labor Mobility, Market Value, and Knowledge Flows

Dindaroğlu, Burak (2014): Scientific Labor Mobility, Market Value, and Knowledge Flows.

Abstract

This paper studies the relationship between a firm's market value and the mobility of scientific and technical personnel in its sectoral and geographic proximity. I uncover distinct positive and negative effects of mobility on market value that operate through various channels. I document a positive effect of scientific labor mobility on market value through knowledge assets embedded within technologically similar firms: firms having large stocks of external knowledge in their disposal benefit from increased mobility of scientific and technical personnel. On the other hand, firms that lack large external stocks of knowledge suffer a negative effect. The detrimental effect of mobility is larger for firms in more competitive industries, supporting the hypothesis that estimates capture the losses due to outbound knowledge and human capital. However, such losses are not significantly different for firms with different levels of R&D intensity. The positive and negative effects of scientific labor mobility, on average, are of similar magnitudes, making the average firm "break even" in terms of its net impact. These results are consistent with previous findings, and provide further insight into why innovative firms cluster in industrial districts.

• Item Type: MPRA Paper
• Language: English
• Keywords: Scientific labor mobility; Market value; Knowledge Flows; R&D; Patents; Citations; GMM.
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J62 - Job, Occupational, and Intergenerational Mobility; L - Industrial Organization > L6 - Industry Studies: Manufacturing; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

References

Agrawal, A., Cockburn, I., McHale, J., 2006. Gone but not forgotten: knowledge flows, labor mobility, and enduring social relationships. Journal of Economic Geography 6:5, 571-591.

Albert, M.B., Avery, D., Narin, F., McAllister, P., 1991. Direct Validation of Citation Counts as Indicators of Industrially Important Patents. Research Policy 20, 251-259.

Almeida, P., Kogut, B., 1999. Localization of knowledge and the mobility of engineers in regional networks. Management Science 45:7, 905-917.

Arellano, M., 2003. Panel Data Econometrics. Oxford University Press, New York.

Arellano, M., Bond, S., 1991. Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies 58:2, 277-297.

Arellano, M., Bover, O., 1995. Another Look at the Instrumental Variable Estimation of Error Components Models. Journal of Econometrics 68, 29-51.

Arrow, K.J., 1962. Economic welfare and the allocation of resources for invention, in: Nel- son R.R. (Ed), The rate and direction of inventive activity: Economic and social factors. Princeton University Press, Princeton, NJ.

Azoulay, P., Graff Zivin, J.S., Sampat, B.N., 2011. The Diffusion of Scientific Knowledge Across Time and Space: Evidence from Professional Transitions for the Superstars of Medicine. NBER working paper no. 16683.

Balsvik, R., 2011. Is Labor Mobility a Channel for Spillovers from Multinationals? Evidence from Norwegian Manufacturing. The Review of Economics and Statistics 93:1, 285-297.

Bird, R.C., Knopf, J.D., 2010. The Impact of Labor Mobility on Bank Performance. Unpublished manuscript.

Blundell, R. Bond, S., 1998. Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics 87, 115-143.

Blundell, R. Bond, S., 2000. GMM Estimation with Persistent Panel Data: An Application to Production Functions. Econometric Reviews 19:3, 321-340.

Blundell, R., Griffith, R., Van Reenen, J., 1999. Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms. The Review of Economic Studies 66:3, 529-554.

Bloom, N., Schankerman, M., Van Reenen, J., 2013. Identifying Technology Spillovers and Product Market Rivalry. Econometrica 81:4, 1347-1393.

Breschi, S., Lissoni, F., 2001. Localized knowledge spillovers vs. innovative milieux: Knowledge "tacitness" considered. Papers in Regional Science 80, 255-273.

Breschi, S., Lissoni, F., 2009. Mobility of skilled workers and co-invention networks: an anatomy of localized knowledge flows. Journal of Economic Geography 9:4, 439-468.

Carr, C.A., Gorman, L.R., 2001. The Revictimization of Companies by the Stock Market Who Report Trade Secret Theft Under the Economic Espionage Act. Business Lawyer 57:1, 25-53.

Cassiman, B., Veugelers, R., 2006. In Search of Complementarity in Innovation Strategy: Internal R&D and External Knowledge Acquisition. Management Science 52:1, 68-82.

Cohen, W.M., Levinthal, D.A., 1990. Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly 35:1, 128-152.

Ejsing, A-K., Kaiser, U., Kongsted, H.C., Laursen, K. 2013. The Role of University Scientist Mobility for Industrial Innovation. IZA discussion paper no. 7470.

Ellison, G., Glaeser, E.L., 1997. Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach. Journal of Political Economy 105:5, 889-927.

Ellison, G., Glaeser, E.L., Kerr,W.R., 2010. What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns. American Economic Review 100:3, 1195-1213.

Fallick, B., Fleischmann, C.A., Rebitzer, J.B., 2006. Job Hopping in Silicone Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster. The Review of Economics and Statistics 88:3, 472-481.

Garmaise, M.J., 2011. Ties that Truly Bind: Noncompetition Agreements, Executive Compensation, and Firm Investment. The Journal of Law, Economics and Organization 27:2, 376-424.

Giummo, J., 2003. An Empirical Examination of the Value of Patented Inventions Using German Employee Inventors' Compensation Records. Ph.D. dissertation, University of California at Berkeley.

Gilson, R.J., 1999. The Legal Infrastructure of High Technology Industrial Districts: Silicon Valley, Route 128, and Covenants not to Compete. New York University Law Review 74:3, 575-629.

Görg, H., Strobl, E., 2005. Spillovers from Foreign Firms through Worker Mobility: An Empirical Investigation. Scandinavian Journal of Economics 107:4, 693-709.

Griliches, Z., 1981. Market Value, R&D, and Patents. Economics Letters 7, 183-187.

Griliches, Z., 1992. The Search for R&D Spillovers. The Scandinavian Journal of Economics 94, Supplement, S29-S47.

Hahn, J., 1999. How Informative is the Initial Condition in the Dynamic Panel Model with Fixed Effects? Journal of Econometrics 93, 309-326.

Hall, B.H., 1993. The Value of Intangible Corporate Assets: An Empirical Study of the Components of Tobin's Q. UC Berkeley, Department of Economics working paper no. 93-207.

Hall, B.H., 1999. Innovation and Market Value. NBER working paper no. 6984.

Hall, B.H., Ja¤e, A.B., Trajtenberg, M., 2005. Market Value and Patent Citations. RAND Journal of Economics 36:1, 16-38.

Hall, B.H., Jaffe, A.B., Trajtenberg, M., 2001. The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools. NBER working paper no. 8498.

Hall, B.H., 2007. Measuring the Returns to R&D: The Depreciation Problem. NBER working paper no. 13437.

Hall, B.H., Vopel, K. Innovation, Market Share, and Market Value. Unpublished manuscript.

Harhoff, D., Narin, F. Scherer, F.M., Vopel, K., 1999. Citation Frequency and the Value of Patented Inventions. Review of Economics and Statistics 81:3, 511-515.

Hayashi, F., 1982. Tobin's Marginal q and Average q: A Neo-classical Interpretation. Econometrica 50:1, 213-224.

Hyde, A., 2003. Working in Silicon Valley, Economic and Legal Analysis of a High Velocity Labor Market. M.E. Sharpe, Armonk, NY.

Jaffe, A.B., 1986. Technological Opportunity and Spillovers of R&D: Evidence From Firms' Patents, Profits, and Market Value. The American Economic Review 76:5, 984-1001.

Jaffe, A.B., Trajtenberg, M., Henderson, R., 1993. Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations. Quarterly Journal of Economics 108:3, 577-598.

Jaffe, A.B., Trajtenberg, M., 2002. Patents, Citations and Innovations: A Window on the Knowledge Economy. MIT Press, Cambridge, MA.

Kim, J., Marschke, G., 2005. Labor Mobility of Scientists, Technological Diffusion, and the Firm's Patenting Decision. RAND Journal of Economics 36:2, 298-317.

Krugman, P., 1991. Geography and Trade. MIT Press, Cambridge, MA.

Lenzi, C., 2010. Workers' mobility and patterns of knowledge di¤usion: evidence from Italian data. Journal of Technology Transfer 35:6, 651-670.

Lenzi, C., 2013. Job Mobility, Patent Ownership and Knowledge Di¤usion: Evidence on a Sample of Italian Inventors. Industry and Innovation 20:4, 297-315.

Lewis, T.R., Yao, D., 2007. Innovation, Knowledge Flow, and Worker Mobility. Unpublished manuscript.

Laforgia, F., Lissoni, F., 2009. What do you mean by "mobile"? Multi-applicant inventors in the European bio-technology industry, in: Malerba, F., Vonortas, N.S. (Eds.), Innovation Networks in Industries. Edward Elgar, Cheltenham, UK.

Lucas, R.E., 1988. On the Mechanics of Economic Development. Journal of Monetary Economics 22, 3-42.

Lychagin, S.L., Pinske, J., Slade, M.E., Van Reenen, J., 2010. Spillovers in Space: Does Geography Matter? NBER working paper no. 16188.

Mairesse, J., Hall, B.H., 1996. Estimating the Productivity of Research and Development in French and United States Manufacturing Firms, in: van Ark, B., Wagner, K. (Eds.), International Productivity Differences, Measurement and Explanations. Elsevier Science, Amsterdam.

Malsberger, B., 2004. Covenants Not to Compete: A State-by-State Survey. BNA Books, Washington, DC.

Marshall, A., 1920. Principles of Economics. Macmillan, London, UK.

Marx, M. 2011. The Firm Strikes Back: Non-compete Agreements and the Mobility of technical Professionals. American Sociological Review 76:5, 695-712.

Marx, M., Strumsky, D., Fleming, L., 2009. Mobility, Skills, and the Michigan Non-Compete Experiment. Management Science 55:6, 875-889.

Marx, M., Fleming, L., 2012. Non-compete Agreements: Barriers to Entry... and Exit? in: Lerner, J., Stern, S. (Eds.), Innovation Policy and the Economy, Volume 12. University of Chicago Press, Chicago, IL.

Marx, M., Singh, J., Fleming, L., 2012. Non-competes and brain drain: evidence from a natural experiment. Unpublished manuscript.

Møen, J., 2005. Is Mobility of Technical Personnel a Source of R&D Spillovers? Journal of Labor Economics 23:1, 81-114.

Nelson, R.R., Winter, S.G., 1982. An Evolutionary Theory of Economic Change. Harvard University Press, Cambridge, MA.

O'Mahony, M., Vecchi, M., 2009. R&D, knowledge spillovers and company productivity performance. Research Policy 38, 35-44.

Pakes, A., Nitzan, S., 1983. Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises. Journal of Labor Economics 1:4, 345-65.

Palomeras, N, Melero, E., 2010, Markets for Inventors: Learning-by-hiring as a Driver of Mobility. Management Science 56:5, 881-895.

Polanyi, M., 1966. The Tacit Dimension. Doubleday, New York, NY.

Poole, J.P., 2011. Knowledge Transfers from Multinational to Domestic Firms: Evidence from Worker Mobility. The Review of Economics and Statistics 95:2, 393-406.

Romer, P.M., 1986. Increasing Returns and Long-Run Growth. Journal of Political Economy, 94:5, 1002-1037.

Rosenthal, S.S., Strange, W.C., 2001. The Determinants of Agglomeration. Journal of Urban Economics 50, 191-229.

Salinger, M.A., 1984. Tobin's q, Unionization, and the Concentration-Profits Relationship. RAND Journal of Economics 15:2, 159-170.

Saxenian, A., 1994. Regional Advantage, Culture and Competition in Silicon Valley and Route 128. Harvard University Press, Cambridge, MA.

Singh, J., 2005. Collaborative Networks as Determinants of Knowledge Di¤usion Patterns. Management Science 51:5, 756-770.

Singh, J., Agrawal, A.K., 2011. Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires. Management Science 57:1, 129-250.

Singh, J., Marx, M., 2013. Geographic Constraints on Knowledge Spillovers: Political Borders vs. Spatial Proximity. Management Science 59:9, 1120-1700.

Song, J., Almeida, P., Wu, G., 2003. Learning-by-Hiring: When Is Mobility More Likely to Facilitate Interfirm Knowledge Transfers? Management Science 49:4, 351-365.

Stephan, P.E., 1996. The Economics of Science. Journal of Economic Literature 34:3, 1199-1235.

Stolpe, M., 2002. Determinants of knowledge diffusion as evidenced by patent citations. Research Policy 31, 1181-1198.

Stuart, T., Sorenson, O., 2003. The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms. Research Policy 32, 229-235.

Trajtenberg, M., 1990. A Penny for Your Quotes: Patent Citations and the Value of Innovations. RAND Journal of Economics 21:1, 172-189.

Wernerfelt,B., Montgomery, C.A., 1988. Tobin's q and the Importance of Focus for Performance. The American Economic Review 78:1, 246-250.

Wildasin, D.E., 1984. The q Theory of Investment with Many Capital Goods. The American Economic Review 74:1, 203-210.

Zellner, C., Fornahl, D., 2002. Scientific Knowledge and Implications for Its Diffusion. Journal of Knowledge Management, 6:2, 190-198.

Zucker, L.G., Darby, M.R., Armstrong, J., 1998. Geographically Localized Knowledge: Spillovers or Markets? Economic Inquiry 36:1, 65-86.

Zucker, L.G., Darby, M.R., 2009. Star scientists, innovation and regional and national migration, in: Audretsch, D.B., Litan, R., Strom R. (Eds), Entrepreneurship and Openness, Theory and Evidence. Edward Elgar Publishing, Northhampton, MA.