TY  - JOUR
AU  - Singh, Jasjit
AU  - Agrawal, Ajay K
TI  - Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15869
PY  - 2010
Y2  - April 2010
DO  - 10.3386/w15869
UR  - http://www.nber.org/papers/w15869
L1  - http://www.nber.org/papers/w15869.pdf
N1  - Author contact info:
Jasjit Singh
INSEAD
Tel: (617) 495-6041
E-Mail: jasjit.singh@insead.edu

Ajay K. Agrawal
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
CANADA
Tel: 416/946-0203
Fax: 416/978-5433
E-Mail: ajay.agrawal@rotman.utoronto.ca
AB  - 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 approximately 202% on average. However, this does not necessarily reflect widespread "learning-by-hiring." In fact, we estimate that a recruit's exploitation of her own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruit's role to diminish rapidly as her tacit knowledge diffuses across her new firm, our estimates indicate that her 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 labor 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.
ER  -