Knowledge Diffusion through Employee Mobility
Posted: 14 Aug 2008
Date Written: July 1, 2000
In high-tech industries, one important method of diffusion is through employee mobility: many of the entering firms are started by employees from incumbent firms using some of their former employers' technological know-how. This paper explores the effect of incorporating this mechanism in a general industry framework by allowing employees to imitate their employers' know-how. The equilibrium is Pareto optimal since the employees "pay" for the possibility of learning their employers' know-how. The model's implications are consistent with data from the rigid disk drive industry. These implications concern the effects of know-how on firm formation and survival.
Keywords: Innovation, Diffusion, Research and Development, Industry Dynamics, Spinout, Techonological Change, Rigid Disk Drive
JEL Classification: L11, L63, J24, O31
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