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How anticipated employee mobility affects acquisition likelihood: Evidence from a natural experiment
Author(s) -
Younge Kenneth A.,
Tong Tony W.,
Fleming Lee
Publication year - 2015
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2237
Subject(s) - competition (biology) , natural experiment , workforce , contrast (vision) , economics , business , microeconomics , industrial organization , labour economics , marketing , ecology , statistics , mathematics , artificial intelligence , computer science , biology , economic growth
This study draws on strategic factor market theory and argues that acquirers' decisions regarding whether to bid for a firm reflect their expectations about employee departure from the firm post‐acquisition, suggesting a negative relationship between the anticipated employee departure from a firm and the likelihood of the firm becoming an acquisition target. Using a natural experiment and a difference‐in‐differences approach, we find causal evidence that constraints on employee mobility raise the likelihood of a firm becoming an acquisition target. The causal effect is stronger when a firm employs more knowledge workers in its workforce and when it faces greater in‐state competition; by contrast, the effect is weaker when a firm is protected by a stronger intellectual property regime that mitigates the consequences of employee mobility . Copyright © 2014 John Wiley & Sons, Ltd.