Stakeholder Orientation as a Quality Signal in the Labor Market

Abstract

A firm’s stakeholder orientation is an instrument to acquire, govern, and retain human capital. This paper particularly focuses on how a firm utilizes its attention and activities with various stakeholders to prevent leakage of its newly acquired human capital through mergers and acquisitions (M&As). The findings from my analyses of a sample of 10,728 corporate scientists from 1,463 unique acquirors indicate that an acquiror’s stronger stakeholder orientation delays its target corporate scientist’s departure. Such an empirical setting helps solve the potential biases from self-selection and information asymmetry, and I thus conducted several supplementary analyses to rule out multiple alternative mechanisms (e.g. using different stakeholder orientation measures, using target’s stakeholder orientation). The main effect is moderated by the corporate scientist’s quality as an inventor, the pre-M&A alliance experience between the acquiror and the target, and the pre-M&A co-patenting experience between the acquiror and the acquired corporate scientist.