We develop and test a model of the patenting and R&D decisions of an innovating firm whose scientist-employees sometimes quit to join or start a rival. In our model, the innovating firm patents to protect Itself from its employees. We show theoretically that the risk of a scientist's departure reduces the firm's R&D expenditures and raises its propensity to patent an innovation. We find evidence from firm-level panel data that is consistent with this latter result. Our results suggest that scientists ' turnover is associated with cross-industry patenting variation and with recent economy-wide increases in patenting. Scientists' turnover may also partly account for why small firms have high patent-R&D ratios.
|Number of pages||20|
|Journal||RAND Journal of Economics|
|Publication status||Published - 2005 Jun|
ASJC Scopus subject areas
- Economics and Econometrics