Working Paper: CEPR ID: DP18578
Authors: Thomas Stebro; Olof Ejermo; Otto Toivanen
Abstract: We use a novel method to define the R&D team and use the unexpected death of an R&D worker to study its effect on the organization of R&D teams in profit-making firms. Average treatment effects on exit probability, entry probability, wages of stayers, and characteristics of leavers are null. Hires are slightly younger in treatment than control. Treatment effects do not vary by the size of the R&D team but vary in interesting ways by the characteristics of the deceased and with job market liquidity. Results suggest weak complementarity of personnel and almost perfect substitution of talent in business R&D. Management appears able to quickly adjust the team to the shock.
Keywords: innovation; knowledge spillovers; managerial response; organizational economics; peer effects; R&D teams
JEL Codes: J24; J30; J41; O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unexpected death of an R&D worker (J28) | impact on organization of R&D teams (O36) |
| loss of a team member through death (J17) | average probability of an R&D worker's departure (J63) |
| younger and lower-paid deceased (J26) | probability of departure for team members (J63) |
| characteristics of R&D team members who leave (O36) | characteristics of R&D team members before treatment (O32) |
| unexpected loss (G33) | age of new hires in R&D team (O32) |
| post-treatment wages of remaining team members (J33) | predictions from bargaining theory (C79) |
| management's adjustment to shock of losing collaborator (M54) | negative repercussions (F69) |
| management capability to handle shock (H12) | weak complementarity of personnel and almost perfect substitution of talent (D29) |