Mobilizing Social Capital Through Employee Spinoffs / Marc-Andreas Muendler, James E. Rauch.

Format:

Book

Author/Creator:

Muendler, Marc-Andreas.

Contributor:

National Bureau of Economic Research.

Rauch, James E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18459.

NBER working paper series no. w18459

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

Many founding teams of new firms form at a common employer. We model team formation and the entry of employee spinoffs by extending the Jovanovic (1979) theory of job matching and employer learning. In our social-capital model employees learn about their colleagues' characteristics at a faster rate than the employer and recruit suitable colleagues to join the spinoff firm. For spinoff firms, our model predicts that the separation hazard is lower among founding team members than among workers hired from outside at founding, and that this difference shrinks with worker tenure at the firm. For parent firms, our model predicts that a worker's departure hazard to join a spinoff initially increases with worker tenure at the parent, whereas the separation hazard for conventional quits and layoffs decreases with worker tenure as in Jovanovic (1979). All these predictions are clearly supported in Brazilian data for the period 1995-2001. Calibration of our dynamic model indicates that employee spinoffs raise the share of workers in Brazil's private sector known to be of high match quality by 3.2 percent.

Notes:

Print version record

October 2012.