Innovation Investment and Labor Mobility: Employee Entrepreneurship from Corporate R&D

74 Pages Posted: 26 Dec 2018 Last revised: 9 Jun 2019

See all articles by Tania Babina

Tania Babina

Columbia Business School - Finance and Economics

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business

Date Written: May 15, 2019

Abstract

This paper studies how corporate research and development (R&D) investment affects labor mobility. We use employer-employee matched data in ordinary least squares and instrumental variables analyses to assess four hypotheses. R&D has no effect on worker retention, exit from employment, or mobility to incumbent firms. Instead, it increases employee departures to entrepreneurship, leading employees to join the founding teams of startups that are venture capital-backed, high tech, high wage, and in different sectors than the parent firm. These high-growth, high-risk startups emerging from R&D benefit from a focused, standalone incentive structure and have poor complementarities to the parent firm’s assets.

Keywords: Innovation, R&D, Entrepreneurship, Investment

Suggested Citation

Babina, Tania and Howell, Sabrina, Innovation Investment and Labor Mobility: Employee Entrepreneurship from Corporate R&D (May 15, 2019). Available at SSRN: https://ssrn.com/abstract=3295995 or http://dx.doi.org/10.2139/ssrn.3295995

Tania Babina

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Sabrina Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

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