STRATEGY AND BUSINESS ECONOMICS


How does worker mobility affect business adoption of a new technology? Te case of machine learning


CHRIS FORMAN


PETER AND STEPHANIE NOLAN PROFESSOR Charles H. Dyson School of Applied Economics and Management


Cornell SC Johnson College of Business Cornell University


Strategic Management Journal, 45, 8, August 2024 LINK TO PAPER LINK TO CHRIS FORMAN VIDEO


Co-authors • Chris Forman


Peter and Stephanie Nolan Professor, Charles H. Dyson School


of Applied Economics and Management, Cornell SC Johnson College of Business, Cornell University


• Ruyu Chen, Institute for Human-Centered Artificial Intelligence, Stanford University, California


• Natarajan Balasubramanian, Whitman School of Management, Syracuse University, New York


Summary Te authors explore how worker mobility affects the adoption of emerging


technologies, focusing on machine learning. Tey use changes in state-level laws governing the enforceability of noncompete agreements as a natural experiment to assess how easier movement of workers between firms im- pacts technological uptake. Analyzing data from over 153,000 establishments between 2010 and 2018, they find that increased worker mobility is linked to a reduced likelihood of machine learning adoption. Tis effect is especially pronounced in larger establishments, industries that heavily rely on predictive analytics, and regions with many large competing firms. When workers are freer to leave, firms are more cautious about adopting complex technologies that require early investment.


Tis research highlights the tension between employee mobility and tech- nological progress. Adopting advanced technologies like machine learning often requires firms to invest in training workers, who gain critical expertise through hands-on experience. When those workers can easily take their newly acquired skills to a competitor, firms may hesitate to invest in the first place. In this way, policies that enhance worker freedom—though beneficial in many respects—can unintentionally slow the spread of transformative technologies. Te study sheds light on the complex role labor policies play in shaping inno- vation and economic development.


CONTENTS TO MAIN | RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2024 EDITION 56


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