Quantity, Variety, or both? “R&D Worker Flows, Diversity, and effects on Technological Performance”

Abstract

R&D employees are the source of firms’ inventive capabilities. The voluntary movement of R&D employees into and out of jobs creates a flow of workers that allow organizations to match the skills they need and those that employees provide, as well as to regenerate ideas and knowledge within the organization. Thus, this R&D workers’ flow, in terms of levels and variety, enable a dynamic rejuvenation of knowledge and social capital, which play an important role in driving innovation. This study conceptualizes the effect of R&D worker flows on the inventive output of firms, as resulting from the levels of these flows, as well as from their degrees of diversity. Using biannual data on French firms involved in R&D activities between 2007 and 2015, we suggest that the levels of R&D worker flows (both incoming and outgoing) have an inverted u-shaped effect on the inventive output of the firm. Our findings also suggest that the diversity of these flows (in terms of distinct knowledge backgrounds) moderates this effect, such as at low levels of worker flows a diverse composition of these flows improves team’s creativity and hence firm’s patenting output, while at high levels of workers flows it accentuates the complexity and management costs of the reorganization of working teams and thus, deteriorates the firm’s patenting output. We discuss the implications of these results for theory and policy.