Scientific Labor Mobility, Market Value, and Knowledge Flows

This paper studies the relationship between a firm's market value and the mobility of scientific and technical personnel in its sectoral and geographic proximity. I uncover distinct positive and negative effects of mobility on market value that operate through various channels. I document a positive effect of scientific labor mobility on market value through knowledge assets embedded within technologically similar firms: firms having large stocks of external knowledge in their disposal benefit from increased mobility of scientific and technical personnel. On the other hand, firms that lack large external stocks of knowledge suffer a negative effect. The detrimental effect of mobility is larger for firms in more competitive industries, supporting the hypothesis that estimates capture the losses due to outbound knowledge and human capital. However, such losses are not significantly different for firms with different levels of R&D intensity. The positive and negative effects of scientific labor mobility, on average, are of similar magnitudes, making the average firm "break even" in terms of its net impact. These results are consistent with previous findings, and provide further insight into why innovative firms cluster in industrial districts.