IDEAS home Printed from https://ideas.repec.org/a/oup/indcch/v33y2024i3p712-737..html
   My bibliography  Save this article

New hires, adjustment costs, and knowledge transfer—evidence from the mobility of entrepreneurs and skills on firm productivity

Author

Listed:
  • Emma Lappi

Abstract

This paper evaluates the productivity impacts and the subsequent adjustment costs associated with hiring different knowledge workers. I focus on the difference between hiring former entrepreneurs, employees who change jobs, and unemployed individuals. I am the first to evaluate the direct impact that hiring former entrepreneurs has on firm productivity and the heterogenous adjustment costs associated with the different types of new hires. I find no difference between the first-year adjustment costs of entrepreneurs and those of regular-wage employees. Hiring former entrepreneurs is a way to increase productivity after the first year of employment only if the former entrepreneurs are from the highest end of the ability distribution.

Suggested Citation

  • Emma Lappi, 2024. "New hires, adjustment costs, and knowledge transfer—evidence from the mobility of entrepreneurs and skills on firm productivity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 712-737.
    • Handle: RePEc:oup:indcch:v:33:y:2024:i:3:p:712-737.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/icc/dtad032
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    2. José Varejão & Pedro Portugal, 2007. "Employment Dynamics and the Structure of Labor Adjustment Costs," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 137-165.
    3. Bombardini, Matilde & Orefice, Gianluca & Tito, Maria D., 2019. "Does exporting improve matching? Evidence from French employer-employee data," Journal of International Economics, Elsevier, vol. 117(C), pages 229-241.
    4. Stefan Bender & Nicholas Bloom & David Card & John Van Reenen & Stefanie Wolter, 2018. "Management Practices, Workforce Selection, and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 371-409.
    5. Michel Serafinelli, 2019. ""Good" Firms, Worker Flows, and Local Productivity," Journal of Labor Economics, University of Chicago Press, vol. 37(3), pages 747-792.
    6. Marino, Marianna & Parrotta, Pierpaolo & Pozzoli, Dario, 2016. "Educational diversity and knowledge transfers via inter-firm labor mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 168-183.
    7. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(3), pages 437-467, June.
    8. Nicos Nicolaou & Scott Shane & Georgina Adi & Massimo Mangino & Juliette Harris, 2011. "A polymorphism associated with entrepreneurship: evidence from dopamine receptor candidate genes," Small Business Economics, Springer, vol. 36(2), pages 151-155, February.
    9. Pontus Braunerhjelm & Magnus Henrekson, 2013. "Entrepreneurship, institutions, and economic dynamism: lessons from a comparison of the United States and Sweden," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 107-130, February.
    10. Kong-Pin Chen, 2005. "External Recruitment as an Incentive Device," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 259-278, April.
    11. Julia I. Lane & John C. Haltiwanger & James Spletzer, 1999. "Productivity Differences across Employers: The Roles of Employer Size, Age, and Human Capital," American Economic Review, American Economic Association, vol. 89(2), pages 94-98, May.
    12. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, vol. 30(3), pages 325-325, March.
    13. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    14. Bruno Cirillo & Stefano Brusoni & Giovanni Valentini, 2014. "The Rejuvenation of Inventors Through Corporate Spinouts," Organization Science, INFORMS, vol. 25(6), pages 1764-1784, December.
    15. Werner Eichhorst & Paul Marx & Caroline Wehner, 2017. "Labor market reforms in Europe: towards more flexicure labor markets?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 51(1), pages 1-17, December.
    16. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-1143, Nov.-Dec..
    17. repec:cup:cbooks:9781107170667 is not listed on IDEAS
    18. Baptista, Rui & Lima, Francisco & Preto, Miguel Torres, 2012. "How former business owners fare in the labor market? Job assignment and earnings," European Economic Review, Elsevier, vol. 56(2), pages 263-276.
    19. Wennberg, Karl & Wiklund, Johan & DeTienne, Dawn R. & Cardon, Melissa S., 2010. "Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers," Journal of Business Venturing, Elsevier, vol. 25(4), pages 361-375, July.
    20. Pontus Braunerhjelm & Ding Ding & Per Thulin, 2016. "Labour as a knowledge carrier: how increased mobility influences entrepreneurship," The Journal of Technology Transfer, Springer, vol. 41(6), pages 1308-1326, December.
    21. repec:iab:iabjlr:v:51:i:1:p:art.3 is not listed on IDEAS
    22. Annette Alstadsæter & Martin Jacob, 2016. "Dividend Taxes and Income Shifting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 693-717, October.
    23. Kaiser, Ulrich & Malchow-Møller, Nikolaj, 2011. "Is self-employment really a bad experience?: The effects of previous self-employment on subsequent wage-employment wages," Journal of Business Venturing, Elsevier, vol. 26(5), pages 572-588, September.
    24. Philipp D. Koellinger & Julija N. Mell & Irene Pohl & Christian Roessler & Theresa Treffers, 2015. "Self-employed But Looking: A Labour Market Experiment," Economica, London School of Economics and Political Science, vol. 82(325), pages 137-161, January.
    25. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    26. Braunerhjelm, Pontus & Lappi, Emma, 2023. "Employees' entrepreneurial human capital and firm performance," Research Policy, Elsevier, vol. 52(2).
    27. Pontus Braunerhjelm & Ding Ding & Per Thulin, 2018. "The knowledge spillover theory of intrapreneurship," Small Business Economics, Springer, vol. 51(1), pages 1-30, June.
    28. Amit Jain, 2016. "Learning by hiring and change to organizational knowledge: Countering obsolescence as organizations age," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1667-1687, August.
    29. Zvi Griliches, 1957. "Specification Bias in Estimates of Production Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 39(1), pages 8-20.
    30. repec:bla:econom:v:56:y:1989:i:223:p:359-71 is not listed on IDEAS
    31. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    32. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5.
    33. Andrey Stoyanov & Nikolay Zubanov, 2012. "Productivity Spillovers across Firms through Worker Mobility," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 168-198, April.
    34. Nicos Nicolaou & Scott Shane & Lynn Cherkas & Janice Hunkin & Tim D. Spector, 2008. "Is the Tendency to Engage in Entrepreneurship Genetic?," Management Science, INFORMS, vol. 54(1), pages 167-179, January.
    35. Pierpaolo Parrotta & Dario Pozzoli, 2012. "The effect of learning by hiring on productivity," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 167-185, March.
    36. Daly, Moira, 2015. "The long term returns of attempting self-employment with regular employment as a fall back option," Labour Economics, Elsevier, vol. 35(C), pages 26-52.
    37. repec:cup:cbooks:9781316621714 is not listed on IDEAS
    38. Klepper, Steven & Miller, John H., 1995. "Entry, exit, and shakeouts in the United States in new manufactured products," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 567-591, December.
    39. Jaeyong Song & Paul Almeida & Geraldine Wu, 2003. "Learning--by--Hiring: When Is Mobility More Likely to Facilitate Interfirm Knowledge Transfer?," Management Science, INFORMS, vol. 49(4), pages 351-365, April.
    40. Elena Grinza, 2021. "Worker flows, reallocation dynamics, and firm productivity: new evidence from longitudinal matched employer–employee data [‘Optimal and dysfunctional turnover: toward an organizational level model,," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(1), pages 75-108.
    41. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    42. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-1260, December.
    43. Emma Lappi & Johan E. Eklund & Johan Klaesson, 2022. "Does education matter for the earnings of former entrepreneurs? Longitudinal evidence using entry and exit dynamics," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 827-865, July.
    44. Ouimet, Paige & Zarutskie, Rebecca, 2014. "Who works for startups? The relation between firm age, employee age, and growth," Journal of Financial Economics, Elsevier, vol. 112(3), pages 386-407.
    45. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
    46. Kameshwari Shankar & Suman Ghosh, 2013. "A Theory of Worker Turnover and Knowledge Transfer in High-Technology Industries," Journal of Human Capital, University of Chicago Press, vol. 7(2), pages 107-129.
    47. Nile W. Hatch & Jeffrey H. Dyer, 2004. "Human capital and learning as a source of sustainable competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 25(12), pages 1155-1178, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Braunerhjelm, Pontus & Lappi, Emma, 2023. "Employees' entrepreneurial human capital and firm performance," Research Policy, Elsevier, vol. 52(2).
    2. Louise Lindbjerg & Theodor Vladasel, 2021. "Hiring Entrepreneurs for Innovation," Working Papers 1309, Barcelona School of Economics.
    3. Ge, Chunmian & Huang, Ke-Wei & Kankanhalli, Atreyi, 2020. "Platform skills and the value of new hires in the software industry," Research Policy, Elsevier, vol. 49(1).
    4. Emma Lappi & Johan E. Eklund & Johan Klaesson, 2022. "Does education matter for the earnings of former entrepreneurs? Longitudinal evidence using entry and exit dynamics," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 827-865, July.
    5. Emma Lappi, 2023. "Help from the past—coworker ties and entry wages after self-employment," Small Business Economics, Springer, vol. 60(3), pages 1171-1196, March.
    6. Sundriyal, Vivek Kumar & Gabrielsson, Jonas, 2024. "The employment consequences of founding an incorporated business among STEM founders: Evidence from Swedish microdata," Technovation, Elsevier, vol. 133(C).
    7. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 49055, University Library of Munich, Germany, revised 12 Aug 2013.
    8. Pekka Ilmakunnas & Mika Maliranta, 2016. "How does the age structure of worker flows affect firm performance?," Journal of Productivity Analysis, Springer, vol. 46(1), pages 43-62, August.
    9. Nicola Gagliardi & Elena Grinza & François Rycx, 2021. "Can You Teach an Old Dog New Tricks? New Evidence on the Impact of Tenure on Productivity," Working Papers CEB 21-007, ULB -- Universite Libre de Bruxelles.
    10. Nicola Gagliardi & Elena Grinza & François Rycx, 2023. "Workers’ tenure and firm productivity: New evidence from matched employer‐employee panel data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 62(1), pages 3-33, January.
    11. Marino, Marianna & Parrotta, Pierpaolo & Pozzoli, Dario, 2016. "Educational diversity and knowledge transfers via inter-firm labor mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 168-183.
    12. Failla, Virgilio & Melillo, Francesca & Reichstein, Toke, 2017. "Entrepreneurship and employment stability — Job matching, labour market value, and personal commitment," Journal of Business Venturing, Elsevier, vol. 32(2), pages 162-177.
    13. Merida, Adrian L. & Rocha, Vera, 2021. "It's about time: The timing of entrepreneurial experience and the career dynamics of university graduates," Research Policy, Elsevier, vol. 50(1).
    14. Varshney, Mayank & Jain, Amit, 2023. "Understanding “reverse” knowledge flows following inventor exit in the semiconductor industry," Technovation, Elsevier, vol. 121(C).
    15. Lovász, Anna & Rigó, Mariann, 2013. "Vintage effects, aging and productivity," Labour Economics, Elsevier, vol. 22(C), pages 47-60.
    16. Jürgen Bitzer & Erkan Gören & Sanne Hiller, 2015. "Absorption of Foreign Knowledge: Firms’ Benefits of Employing Immigrants," Working Papers V-386-15, University of Oldenburg, Department of Economics, revised Oct 2015.
    17. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry," Working Paper Research 281, National Bank of Belgium.
    18. Thierry Lallemand & François Rycx, 2009. "Are Older Workers Harmful for Firm Productivity?," De Economist, Springer, vol. 157(3), pages 273-292, September.
    19. Doan, Tinh & Nguyen, Ha, 2013. "Productivity dispersion and the roles of quality of labour input and competition: A case of Vietnamese manufacturing sector," MPRA Paper 48357, University Library of Munich, Germany.
    20. Braunerhjelm, Pontus & Ding, Ding & Thulin, Per, 2020. "Labour market mobility, knowledge diffusion and innovation," European Economic Review, Elsevier, vol. 123(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:indcch:v:33:y:2024:i:3:p:712-737.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/icc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.