Heterogeneous Innovation and Labour Mobility

Abstract: Knowledge is a necessary and critically important factor in generating growth and increased prosperity. The extent to which such effects are materialized depends however on its diffusion and how it transcends into innovation, entrepreneurship and growing firms. This doctoral thesis consists of four papers that examine how labor mobility and innovation strategies influence the performance at the firm level with respect to new ventures, firm level growth and innovativeness. The first paper provides empirical support of the validity of the knowledge-based spillover theory of entrepreneurship by employing a detailed database. The results indicate that both inter-regional labor inflows and intra-regional labor mobility exert a strong positive effect on entrepreneurship, while inter-regional outflows negatively affect entrepreneurial entry. The second paper examines the influence of the labor mobility of knowledge workers on innovation at the firm level. New evidence are provided that reveals a positive and significant impact of labor mobility on firms’ innovations measured as patent applications. In the third paper the influence of labor mobility between multinational enterprises (MNEs) and other firms on innovation is investigated. Looking at firms having different owner structures, empirical evidence are provided that particularly domestically owned MNEs generate strong knowledge spillovers to non-MNEs that translates into innovations. The fourth paper examines the relationship between innovation and firm growth. We implement a classification of innovations based on whether they are explorative or exploitative. The more radical explorative innovations are shown to have a persistent growth effect in the long term, while exploitative innovation increases the labor demand predominantly in the short term.