How employee turnover impacts social capital and performance of companies

Abstract

Recently, The Wall Street Journal proclaimed there is a War for Internet Talent among companies in the Information and Communication Technology (ICT) sector. At the same time, talented employees often become entrepreneurial and establish their own startups. Thus, my research is motivated by these guiding questions: Which turnover patterns/trends can be observed in the ICT industry from a macro perspective (i.e., where does social and human capital flow)? To what extent can startup performance in this industry be explained by the social capital aggregated from the turnover history of its founders - that is, from the ties to former employers? Which employees are key resources in terms of their individual contributions to the aggregate social capital of their current employers? Do brokerage opportunities create turnover incentives for employees?As a first step to answering these questions, I aim to provide evidence that startup performance is not based exclusively on access to talent in the sense of individual human capital but is also determined by a social capital aspect resulting from their founder's career history. I apply social network analysis (SNA) combined with logistical regression on a large dataset of companies and people in the ICT sector to explore this topic.