Entrepreneurial Spillovers from Corporate R&D

Tania Babina and Sabrina T. Howell

Journal of Labor Economics, 2024, vol. 42, issue 2, 469 - 509

Abstract: 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.

Date: 2024
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