The Effect of High-skilled Migrant Hires and Integration Capacity on Firm-level Innovation Performance: Is There a Premium?

We adopt an organizational learning approach to examine how firms’ recruitment of high-skilled migrants contributes to subsequent firm-level innovation performance. We argue that due to migrants’ often different experience from that of native high-skilled workers, their perspectives on problemsolving and access to non-overlapping knowledge networks will also differ. The implied complementarity between these worker types makes migrant hires a particularly valuable resource in the context of firm-level innovation. We hypothesize also that since the acculturation costs are relatively low for high-skilled migrants while the innovation-related benefits deriving from diversity are relatively high, innovation performance should increase a fortiori if the high-skilled migrant employees are from a dissimilar culture. Finally, we conjecture that firms with high integration capacity as a function of prior experience of employing high-skilled migrants should derive more innovation-related benefits from migrant hiring than firms with a low integration capacity. We track the inward mobility of high-skilled workers empirically using patents and matched employer-employee data for 16,241 Dutch firms over an 11-year period. We find support for our hypotheses.