Labor mobility from R&D-intensive multinational companies: implications for knowledge and technology transfer

Abstract

Private sector R&D is largely concentrated in a few multinational companies (MNCs). The mobility of labor between these MNCs and the rest of the economy is therefore an important mechanism for the diffusion of knowledge and technology, but these flows are not without friction. This paper analyses in great detail the flow of labor between firms with specific emphasis on flows to and from R&D intensive MNCs. Using linked employer-employee data for Denmark, we match employees moving from R&D intensive MNCs to other employees switching jobs. We find that employees are more inclined to move between R&D intensive MNCs and their subsidiaries rather than between these firms and other firms in the economy. This is particularly true for high skill employees. Our results suggest that other domestic firms are to a larger extent kept out of the 'knowledge spillover' loop, which provide them with fewer opportunities to learn from the R&D intensive MNCs. In other words, R&D intensive MNCs and their subsidiaries form a kind of sub-labor market within the national labor market; employees exhibit higher mobility within this group of firms than between this group and the rest of the labor market.

Gender diversity, foreign direct investment spillovers, and productivity: Unraveling the role of female workers in Indonesia

“…Considering this significant spillover effect within a province ($$$ \mathrm{GSpill}\_\mathrm{Pro} $$$), MNCs can implement a gender‐inclusive culture and build an environment in which women thrive, resulting in spillovers for labor in domestic companies within the same region (Lee & Shin, 2020). Although the role of female workers in regional spillovers still depends on the sector in which the MNCs operate, some empirical observations show that spillovers can occur mainly in labor‐intensive industries located in close proximity (Holm et al, 2020; Suyanto et al, 2012; Suyanto et al, 2021). More women are involved in labor‐intensive industries in Java, such as textiles, food, and beverages.…”

“…Gender diversity significantly and favorably affects corporate productivity in Sub-Saharan African countries, as measured by added value and sales revenue per employee (Abbey & Adu-Danso, 2022). Holm et al (2020) contended that labor mobility among workers in MNCs is notably high, especially within R&D-intensive firms. This implies that other companies may be missing knowledge spillovers, indicating the limited learning impact of R&D-intensive MNCs.…”

R&D employee tenure in MNC subsidiaries: the role of institutional distance and experience

“…General Electric's Chinese and Indian subsidiaries constitute 63% of their global R&D staff (Gerybadze and Merk, 2014). To support such R&D activities, the retention of R&D employees is vital because their departure from subsidiaries may lead to the leakage of subsidiary‐level and/or company‐level knowledge and jeopardise MNCs' subsidiary‐level and global R&D investments (Singh, 2007; Spencer, 2008; Holm et al, 2020). Researchers (Kale and Little, 2007; Singh, 2007; Von Zedtwitz et al, 2007; Lopes and Simões, 2020) have discussed the high R&D employee turnover rates in MNC subsidiaries and how it can negatively impact MNCs' business and deplete their technology advantages over local firms in host countries.…”

Technological change and regional inequalities: Spatial diffusion of Artificial Intelligence across Danish regions

“…This channel allows for detailed explanations, demonstrations, and the opportunity for immediate feedback and clarification. A common branch of this literature investigates labor mobility as being a strong factor in enabling personal communication and face-to-face, supporting the diffusion of knowledge and technologies (e.g., Holm et al, 2020;Østergaard & Dalum, 2012).…”