Mobility Restrictions and Entrepreneurial Detours: When Knowledge Access Drives Spinouts
12 Apr 2024 (Fri)
10:00am – 11:30am
LSK Rm5047
Prof. Martin Ganco, University of Wisconsin-Madison

A growing body of scholarship in strategic human capital examines the role of mobility frictions in protecting intellectual property (IP) and preventing knowledge expropriation by departing employees. We develop a theoretical framework arguing that mobility frictions may incentivize the employer to provide employees with increased access to valuable knowledge and resources. Such access may facilitate entry into entrepreneurship despite the frictions imposing costs on entrepreneurship. We explore this tension using a unique survey and focus on postemployment restrictive covenants (Mobility restrictions) such as noncompete, nondisclosure and nonsolicitation agreements. We find that employees who are subject to mobility restrictions have access to more valuable knowledge, have more business ideas (particularly unrelated to the parent firm) and are more likely to pivot their ideas when starting a business. This implies that mobility frictions imposed by the employer may facilitate knowledge transfer and entrepreneurial entry into contexts that are less likely to compete with the former employer.