Abstract

We measure the effects of employee exit to startups on parent firms. While employee exit to startups has often been found to be the driving force behind the formation of industry clusters, important centers for innovative activities, little is known about the effects that such exit process have on the parent firms of the exiting employees. Information is confined to individual industries, and is not easy to generalize. Is startups’ success born at the expense of their parent firms, or are parent firms able to cope with the exit of their departing employees? In this study, we answer this and associated questions by making use of a large employer-employee matched dataset for Portugal, which allows us to estimate the effects of employee exit for different outlets (startups, progeny, incumbents) for several industries.

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