Human Capital Complementarities and Employee Mobility

The loss of human capital though employee mobility is a major concern of firms. Most work on employee mobility investigates the mobility of employees independent co-workers, although it is known that employees can develop human capital complementary to that of co-workers. Using employer-employee matched data on R&D workers in acquisition targets, we investigate how the human capital available in the target affects R&D workers’ post-acquisition mobility. We argue that the organizational design—specifically the diversity of human capital—can create HC complementarities. These complementarities as well as characteristics of employees expertise, their tenure, and differences in expertise between firms affect who leaves post-acquisition. Thus, who leaves post-acquisition can be, at least partially, explained by the characteristics of the target’s human capital prior to acquisition. Implications for the literature on human capital and acquisitions are discussed.