Leaving Employment to Entrepreneurship: The Value of Co-worker Mobility in Pushed and Pulled-Driven Start-ups

By combining insights from the widespread research on entrepreneurial spin-offs and from the emerging literature on hiring choices in startups, we investigate the role of coworker mobility in pushed and pulled spin-off survival. Using rich register data and a multi-stage model addressing self-selection and endogeneity issues, we cover 28,353 spin-offs launched between 1992 and 2007. We find that spin-offs hiring coworkers from the parent firm survive longer. This survival bonus is greater in pushed-driven startups. We investigate two different mechanisms through which coworker mobility may improve spin-off survival – knowledge transfer and reduced searching costs. While both mechanisms play a role in explaining the survival bonus in pulled spin-offs, coworker mobility seems to help pushed spin-offs to survive mostly by reducing initial recruitment costs. This work provides novel insights on the role of context surrounding new venture creation and inter-firm labor mobility.