Mobility Constraints, Interfirm Collaboration, and the Dual Role of Knowledge Centrality

Abstract

This paper investigates how constraints on employee mobility affect the joint development of technologies by firms. In addition, we explore how a firm’s geographic embeddedness and its centrality in the knowledge network of firms moderate this relationship. To obtain exogenous variation in the likelihood of employee mobility, we exploit a natural experiment provided by the legal adoption/rejection of the inevitable disclosure doctrine (IDD) by different U.S. states. Our results indicate that mobility constraints lead to a decrease in the rate at which firms identify and pursue collaborative opportunities that lead to shared IP rights. We also find that this negative effect is weaker for firms that are embedded in dense technology clusters. Finally, in line with our expectations, we found that a firm’s centrality in the knowledge network possesses a dual and to some extent paradoxical role in our results. On the one hand, in the presence of mobility constraints, firms central in the knowledge network experience a sharper decrease in the number of jointly owned patents. On the other, our results show that the attenuating effect of the local concentration of firms on the negative relationship between mobility constraints and shared IP rights is stronger for firms that are central within the knowledge network.