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Anti-Poaching Agreements, Corporate Hiring, and Innovation: Evidence from the Technology Industry

Author

Listed:
  • Daniel Ferrés

  • Gaurav Kankanhalli
  • Pradeep Muthukrishnan

Abstract

Using the 2010 prosecution of U.S. technology firms engaging in anti-poaching agreements as a shock, we study the impact of labor market collusion on corporate hiring and innovation. During the collusive period, cartel firms displayed elevated job posting rates relative to comparable firms that were not party to these agreements. Occupation-level tests show that the effects were amplified in job roles critical to the firms’ operations.Textual analysis of job-ad descriptions provides evidence that cartel firms enjoyed greater bargaining power in the hiring process, with workers being offered lower flexibility, non-wage benefits, and training opportunities. Notably, cartel firms exhibited superior innovative capabilities over the collusive period, while the dissolution of the agreements led to a curtailment in their innovation output. Our results reveal important linkages between firms’ anti-competitive conduct in labor markets and their innovation and market valuations.

Suggested Citation

  • Daniel Ferrés & Gaurav Kankanhalli & Pradeep Muthukrishnan, 2022. "Anti-Poaching Agreements, Corporate Hiring, and Innovation: Evidence from the Technology Industry," Documentos de Trabajo/Working Papers 2205, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    • Handle: RePEc:mnt:wpaper:2205
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    File URL: https://www2.um.edu.uy/fcee_papers/2020/Anti_Poaching_Agreements_Corporate_Hiring_and_Innovation_Evidence_from_the_Technology_Industry.pdf
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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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