Abstract
We study how firm-specific complementary assets and intellectual property
rights affect the management of knowledge workers. The main results show
when a firm will wish to sue workers who leave with innovative ideas and the
effects of complementary assets on wages and on worker initiative. We show
that firms protected weakly by complementary assets must sue leaving workers
in order to obtain positive profits. Moreover, firms with more complementary
assets pay higher wages and have lower rates of turnover, but the higher pay
has a detrimental effect on worker initiative. Finally, our analysis suggests that
strengthening firms’ property rights protection reduces turnover costs but weakens
worker initiative.
rights affect the management of knowledge workers. The main results show
when a firm will wish to sue workers who leave with innovative ideas and the
effects of complementary assets on wages and on worker initiative. We show
that firms protected weakly by complementary assets must sue leaving workers
in order to obtain positive profits. Moreover, firms with more complementary
assets pay higher wages and have lower rates of turnover, but the higher pay
has a detrimental effect on worker initiative. Finally, our analysis suggests that
strengthening firms’ property rights protection reduces turnover costs but weakens
worker initiative.
| Original language | English |
|---|---|
| Pages (from-to) | 815-838 |
| Number of pages | 24 |
| Journal | Journal of Law and Economics |
| Volume | 55 |
| Issue number | 4 |
| Publication status | Published - Nov 2012 |