The strategy literature often emphasizes firm-specific human capital as a source of competitive advantage based on the assumption that it constrains employee mobility. This paper first identifies three boundary conditions that limit the applicability of this logic. It then offers a more comprehensive framework of human capital-based advantage that explores both demand-and supply-side mobility constraints. The critical insight is that these mobility constraints have more explanatory power than the firm-specificity of human capital.

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We explore the strategic implications of firm compensation dispersion on the heterogeneous turnover outcomes of employee mobility and entrepreneurship. We theorize that individuals' turnover decisions are affected by the interaction of individual performance with the firm's compensation dispersion relative to its competitors. We test our theory using linked employer‐employee data from the legal services industry. We find that individuals with extreme high performance are less likely to leave firms that offer higher compensation dispersion than competitors, however, if they do leave these employers, they are more likely to create new ventures. In contrast, employees with extreme low performance are more likely to leave firms with more compensation dispersion than competitors, and these individuals are less likely to engage in new venture creation. Copyright © 2012 John Wiley & Sons, Ltd.

Our study examines the mediating effect of spin-out team characteristics on the relationship between founder quality and parent and spin-out performance. Since the ability to transfer or recreate complementary assets is a critical determinant of performance, we theorize and show that founders with greater ability impact both parent firm and spin-out performance by assembling teams that represent strong complementary human capital. Using linked employee-employer US Census data from the legal services industry, we find founding team size and tenure mediate the founder quality effect. Our findings have theoretical and practical implications for human resource strategies for both existing and entrepreneurial firms: the factor most salient to performance is not founder quality per se, but the manner in which it impacts the transfer and spillover of complementary human capital. Jelcodes:L84,-1 WHAT DO I TAKE WITH ME?: THE MEDIATING EFFECT OF SPIN-OUT TEAM SIZE AND TENURE ON THE FOUNDER-FIRM PERFORMANCE RELATIONSHIP "Not everyone can be a founder. We talk about the founders of startups and companies. We focus on the founders. The founders get press coverage. Sometimes they get rich. But for every founder, there is an early employee that takes near equal risks in joining an early-stage company." David Crow, StartupNorth (2009) Extant work on spin-outs-start-ups founded by a former employee of an established firm within the same industry-underscores the role of founders as conduits of knowledge from the parent firm to the new venture (Agarwal, Echambadi, Franco, & Sarkar, 2004; Franco & Filson, 2006; Klepper & Sleeper, 2005; Phillips, 2002). Moreover, work on entrepreneurship has focused on understanding which employees are most likely to leave and start entrepreneurial ventures; both Klepper and Thompson (2010) and Campbell, Ganco, Franco and Agarwal (2012) theorize why the best employees are the most likely to spin out. Not surprisingly, founder characteristics are also critical for firm performance: the departure of higher quality founders create greater adverse effects for the parent firm, and higher beneficial effects for the spin-out firm (Campbell et al., 2012; Klepper & Thompson, 2010; Phillips, 2002). The scholarly attention on founder characteristics is mirrored by the attention they receive in the popular press. Further, founders rarely venture out on their own (Wasserman, 2012), often turning to their colleagues to assemble a team (Wezel, Cattani, & Pennings, 2006; Groysberg, Nanda & Prats, 2009). For example, when Johnson and Johnson spun out in 1886 from Seabury and Johnson, all three members of the founding team and many of its first 14 employees came from the parent firm (Kilmer House, 2012). Walt Disney recruited Mickey Mouse co-creator Ub Iwerks, a fellow employee at Pesman-Rubin Commercial Art Studio, when founding Disney (Gabler, 2006). Similar accounts abound in the semiconductor industry, as exemplified by Gordon Moore and Robert Noyce hiring away Andrew Grove when leaving Fairchild Semiconductor to ...