Downstream customer firms’ bargaining power can lead to suboptimal diversification in upstream suppliers’ innovation when customers cannot commit to a long-term relationship. After the revelation of financial fraud by a major customer, suppliers surprisingly outperform a control group in terms of sales growth, Tobin’s q, and survival likelihood over a 10-year period. Our results suggest that, before a fraud revelation, supplier managers’ short decision horizons and aversion to short-term risk enable influential customers to demand relation-specific innovation, leading to suboptimal diversification. When customer importance weakens, suppliers engage in riskier and novel innovation, thereby stimulating sales growth.

We examine the impact of abortion restrictions on the geographic mobility of college‐educated skilled women. Exploiting the staggered adoption of Targeted Regulation of Abortion Providers (TRAP) laws across US states that restrict women's access to abortion, we find that skilled women who relocate exhibit a greater propensity to move to states without TRAP laws (non‐TRAP states) than they did prior to the TRAP law adoption. This pattern is stronger among women in more liberal and less religious areas than among women in more conservative and more religious areas. These findings are consistent with the view that relocation decisions are often driven by the alignment between personal values and the local policy environment. We use the audit industry as a specific setting to address the implications for employer performance. We find that TRAP law adoption increases female auditor turnover at local offices relative to same‐firm offices in non‐TRAP states, and the resulting loss of human capital lowers audit quality.