Knowledge that Transforms

Research Summary Without compelling empirical proxies for economic profits, we may need to reconsider the decades of empirical research purporting to inform our theories of competitive advantage. The new stakeholder perspective suggests that stakeholders may capture significant shares of the firm's economic profits that should be incorporated into these proxies. In this article, we propose a novel empirical approach to measuring stakeholder rents and then apply our approach to measure workforce rents across the population of all Belgian firms employing workers from 2008 to 2016. Our results demonstrate substantial variance in workforce rents among firms, with some firms allowing most of the economic profits they generate to flow to the workforce. We discuss the implications of our findings in detail and lay out a pathway for future research. Managerial Summary This article examines the extent to which companies pay their workforces above (below) what the labor market demands as a way of exploring how much of the company's economic profits go to stakeholders other than shareholders. We demonstrate a wide range of over (under) payments to workforces in a large sample of Belgian firms from 2008 to 2016. One of the important contributions of our paper is developing a method to determine over (under) payments for the workforce, but our method can also be applied to other stakeholders. We hope our work provides an empirical approach for others to explore how stakeholders capture portions of the economic profits that companies create.

Research Summary This study investigates how people connecting with brokers who span structural holes in a firm's communication networks can enhance their innovative performance. Through sociometric data from a large software company, we observe that individuals who pay attention to information from brokers achieve higher innovative performance compared with those who ignore such information. The advantage of paying attention to brokers' information is more pronounced when people operate in highly constrained networks. Yet, our post hoc analysis reveals that people typically allocate less attention to information from brokers than from local colleagues—they systematically do the opposite of what they should do for innovative performance. Our findings regarding the role of attention for secondhand brokerage make significant contributions to studies of networks and innovation for behavioral strategy. Managerial Summary This study investigates how innovation is influenced by paying attention to brokers within a company. Brokers are individuals who bridge different groups, providing access to varied information. Analysis of internal data from a large software company reveals that employees who heed the ideas of brokers tend to be more innovative, especially in close‐knit networks. However, there is a notable tendency for people to ignore brokers, favoring information from familiar colleagues instead. This indicates a significant attention bias, where the potentially most valuable sources for innovation are often unattended. Our research highlights the critical need for a strategic approach to distributing attention within company networks, which can significantly boost innovative performance.

Research Summary We use a novel longitudinal dataset, constructed from 16 downloads of VentureXpert records collected over 20 years, to characterize the international migration of venture‐capital‐backed startups. We find that: (i) 1078 firms in our sample (1.4%) migrate; (ii) countries with high levels of in‐migration also have high levels of out‐migration; (iii) migrating firms move to places with more investors; (iv) pre‐move investors and their connections most strongly predict migration patterns; and (v) movers raise more money than non‐movers, primarily from investors at their destinations. Overall, these patterns appear inconsistent with those expected if startups move primarily in search of talent or customers. Instead, the flows across countries look more like international trade, with startups seeking capital, and social connections between investors defining the shipping lanes. Managerial Summary Although many high‐profile startups have relocated their headquarters from one country to another, systematic information on this phenomenon has been scarce. How frequently do these moves happen? Why do startups move? Over 20 years, we have built a database that can begin to answer these questions. International moves appear rare. When startups do move, they tend to move to places with more venture capital, particularly when their existing investors have connections in those places. Movers, moreover, raise more money than non‐movers, mostly from investors in their destination countries. Capital availability, rather than access to talent or proximity to customers, appears to be the strongest predictor of startup migration.