Martin Ganco

Performance Differentials Between Diversifying Entrants and Entrepreneurial start-ups: A Complexity Approach

We investigate the relationship between firms’entry characteristics and their subsequent performance as contingent on environmental turbulence and stage of industry life cycle by simulating industry as an NKC landscape. Diversifying entrants differ from entrepreneurial start-ups in terms of the complexity of their routines. We posit that diversifying entrants outperform entrepreneurial start-ups when turbulence is high. Further, learning—possible in later industry stages—disproportionately favors entrepreneurial start-ups.

Returning to the Frontier of Contingency Theory of Organizational and Institutional Designs

Much has been learned, and even more needs to be learned, about designing organizations and institutions. Since the 1960s this research has evolved from contingency to configuration, to complementarity, to complexity and creative theories of organizing. This chapter reviews these evolving theories (better called perspectives) and urges scholars to return to the frontier of organization studies by addressing an important new agenda in designing organizations with promising new research methods.

NK modeling methodology in the strategy literature: Bounded search on a rugged landscape

We discuss recent methodological advances in the NK modeling in the Strategy literature and analyze issues related to its current use including different implementation algorithms, relative versus absolute performance, establishing significance of simulation results and long- versus short-term performance measurements. To facilitate cross-pollination of ideas, we point to advances and extensions of the model developed in other fields that could be effectively utilized to answer Strategy-related questions. These include modeling the strength of interaction, varying the importance of decision elements, utilizing alternative functional forms, incorporating endogeneity in N and K parameters and embedding the NK model in a broader dynamic framework.

What do I Take with Me: The Impact of Transfer and Replication of Resources on Parent and Spin-Out Firm Performance

Focusing on entrepreneurial ventures created by employees leaving a firm, our study examines the differential impact of knowledge transfer and knowledge spillovers on both parent and spin-out performance. While extant research often uses knowledge transfer and spillover interchangeably, our study distinguishes between the two based on the “rivalness” of the relevant knowledge. We theorize that both knowledge transfer (proxied by the size of the exiting employee team) and knowledge spillovers (proxied by the experience of the exiting employee team) will aid spin-out performance. However, knowledge transfer, being more rival, will have a greater adverse impact than knowledge spillovers on parent firm performance. Using U.S. Census Bureau linked employee-employer data from the legal services industry, we find support for our hypotheses. Our study thus contributes to extant literature by highlighting a key dimension of knowledge — rivalness — and the differential competitive dynamics effect of resources with varying degrees of rivalness.

The Influence of Technological Interdependence on Employee Entrepreneurship and Mobility: Evidence from the Semiconductor Industry

The intra-industry activities of employees post-exit from incumbent firms have been identified as an important determinant of industry dynamics and structure. The post-exit founding of startups employee entrepreneurship is widely heralded as an important driver of innovation, firm creation and growth. Similarly, post-exit employee mobility to rival firms has been recognized as a crucial channel for knowledge spillovers. Far less is known, however, about how technology influences this flow of talent. This study investigates one attribute of technology - technological interdependence. Drawing on a unique database of intra-industry inventor entrepreneurship and mobility events as well as patent citations in the U.S. semiconductor industry, I find that the propensity to engage in employee entrepreneurship increases, but to join a rival firm, decreases with the technological interdependence of inventors prior patents. This study sheds new light on how technology shapes patterns of employee entrepreneurship and mobility with implications for knowledge flows and competitive dynamics.

Strategic human capital management in the context of cross-industry and within-industry mobility frictions

Covenants-not-to-compete play an important role in the strategic management of human capital because they have the dual effect of directing departing employees away from competitors and reducing mobility overall. We combine the literature on noncompetes with the literature on human capital transferability to develop a theory of how the enforceability of noncompetes differentially impacts the management of technical and business occupations. Using a difference-in-difference estimation strategy, we demonstrate that when noncompetes are more enforceable, their impact on new hire experience, wages, training, and tenure for technical employees is stronger than on business employees, which is in turn stronger than unaffected occupations. We argue that the heterogeneous responses to noncompete enforceability for technical and business occupations are consistent with cross-occupational differences in skill transferability.We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively isolate individual human capital, ultimately changing the firm’s make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms’ human capital management practices towards internal development of human capital relative to acquisition on the external market.

Strategic Human Capital Management in the Context of Industry-Specific Skills and Within-Industry Mobility Barriers

Covenants-not-to-compete play an important role in the strategic management of human capital because they have the dual effect of directing departing employees away from competitors and reducing mobility overall. We combine the literature on noncompetes with the literature on human capital transferability to develop a theory of how the enforceability of noncompetes differentially impacts the management of technical and business occupations. Using a difference-in-difference estimation strategy, we demonstrate that when noncompetes are more enforceable, their impact on new hire experience, wages, training, and tenure for technical employees is stronger than on business employees, which is in turn stronger than unaffected occupations. We argue that the heterogeneous responses to noncompete enforceability for technical and business occupations are consistent with cross-occupational differences in skill transferability.We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively isolate individual human capital, ultimately changing the firm’s make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms’ human capital management practices towards internal development of human capital relative to acquisition on the external market.

Redirect and Retain: Why and How Firms Capitalize on Noncompete Enforceability in Technical and Business Occupations

Covenants-not-to-compete play an important role in the strategic management of human capital because they have the dual effect of directing departing employees away from competitors and reducing mobility overall. We combine the literature on noncompetes with the literature on human capital transferability to develop a theory of how the enforceability of noncompetes differentially impacts the management of technical and business occupations. Using a difference-in-difference estimation strategy, we demonstrate that when noncompetes are more enforceable, their impact on new hire experience, wages, training, and tenure for technical employees is stronger than on business employees, which is in turn stronger than unaffected occupations. We argue that the heterogeneous responses to noncompete enforceability for technical and business occupations are consistent with cross-occupational differences in skill transferability.We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively isolate individual human capital, ultimately changing the firm’s make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms’ human capital management practices towards internal development of human capital relative to acquisition on the external market.

Redirect and Retain: How Firms Capitalize on Within and Across Industry Mobility Frictions

Covenants-not-to-compete play an important role in the strategic management of human capital because they have the dual effect of directing departing employees away from competitors and reducing mobility overall. We combine the literature on noncompetes with the literature on human capital transferability to develop a theory of how the enforceability of noncompetes differentially impacts the management of technical and business occupations. Using a difference-in-difference estimation strategy, we demonstrate that when noncompetes are more enforceable, their impact on new hire experience, wages, training, and tenure for technical employees is stronger than on business employees, which is in turn stronger than unaffected occupations. We argue that the heterogeneous responses to noncompete enforceability for technical and business occupations are consistent with cross-occupational differences in skill transferability.We develop and test a theory examining how frictions that restrict mobility across industries and frictions constraining mobility within an industry can co-occur to effectively isolate individual human capital, ultimately changing the firm’s make-versus-buy decision for human capital. Empirically, we demonstrate that when cross-industry frictions in the form of limited skill transferability and within-industry frictions in the form of noncompete enforceability are both present employees exhibit longer tenures, firms hire workers with less initial experience, firms change the amount and nature of training provided, and wages marginally increase. These findings suggest that sufficiently strong and complementary mobility frictions shift the emphasis of firms’ human capital management practices towards internal development of human capital relative to acquisition on the external market.

Entrepreneurial Teams' Acquisition of Talent: A Two-Sided Approach

While it is crucial for startups to hire high human capital employees, little is known about what drives the hiring decisions. Considering the stakes for both startups and their hires (i.e., joiners), we examine the phenomenon using a two-sided matching model that explicitly reveals the preferences of each side. We apply the model to a sample of startups from five technological manufacturing industries while examining a range of variables grounded in prior work on startup human capital. The analysis is based on the Longitudinal Employer Household dynamics from the U.S. Census Bureau. Our findings indicate that, in the context of entrepreneurship, both startups and joiners rely heavily on signals of quality. Further, quality considerations that are important for the match play a minimal role in determining earnings. Our approach refines our understanding of how entrepreneurial human capital evolves.