AOM Best Paper (& new WP!) Competing for Talent: Large Firms and Startup Growth
Excited that an abridged version of our working paper “Competing for Talent: Large Firms and Startup Growth” will be included in the “Academy of Management Proceedings” because it was selected as a ‘best paper’ (top 10% of submissions).
The full paper, which we recently released as a working paper, can be found here: SSRN. Further information are available on the research page, and a short Twitter summary is here.
Paper abstract: This paper explores the impact of large firms’ hiring in local labor markets on the salaries offered by startups and on startup growth and performance. We analyze firm data matched to help-wanted ads and find strong evidence of “crowding out.” A standard deviation increase in the share of ads posted by large firms raises startup pay offers by 5-10% for critical managerial, STEM, and sales jobs, and it reduces expected startup growth by 36%. Crowding is diminished by employee mobility and by spillovers to startups in closely related businesses. It is increased by big firm markups, which may have a large effect on startups. Results are robust to a shift-share instrumental variable strategy. Crowding has important implications for firm strategy, regional policy, and for understanding the slowdown in the aggregate growth of startup firms.