The effects of employee mobility between competitors and cooperators on firm performance

This paper builds upon traditional resource based view (RBV) perspectives of the relationship between human assets and firm performance by developing theoretical predictions based on the social capital impacts of interorganizational employee mobility. Specifically, we explore how the movement of employees between competitors and potential cooperators (in client-supplier relationships) affects the external social capital shared by focal firms with specific clients. In addition, we argue that losing employees to competitors will generally be more deleterious to the performance of firms relative to employee turnover to other destinations. We test our theories with a unique dataset of patent attorney movements between patent law firms and Fortune 500 companies, and examine how employee mobility of different types influences law firm performance. Our results show that when a focal law firm either hires attorneys from and/or loses attorneys to a Fortune 500 company, this increases the amount of future business the law firm receives from that client. Gaining employees from competing law firms that have a client relationship with a company has a positive influence on future business from that client, and losing attorneys to any competitor has a negative influence on law firm performance. Our findings suggest that human resource research may benefit from utilizing social capital arguments to examine the effects of different types of employee mobility on firm performance.