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from the tell-that-to-Intel,-Apple,-and-Adobe dept.
Natalie Kitroeff writes at Bloomberg that a new study says the secret to Silicon Valley’s triumph as the global capital of innovation may lie in a quirk of California’s employment law that prohibits the legal enforcement of non-compete clauses.
Unlike most states, California prohibits enforcement of non-compete clauses that force people who leave jobs to wait for a predetermined period before taking positions at rival companies. That puts California in the ideal position to rob other regions of their most prized inventors, “Policymakers who sanction the use of non-competes could be inadvertently creating regional disadvantage as far as retention of knowledge workers is concerned,” wrote the authors of the study "Regional disadvantage? Employee non-compete agreements and brain drain" (PDF). "Regions that choose to enforce employee non-compete agreements may therefore be subjecting themselves to a domestic brain drain not unlike that described in the literature on international emigration out of less developed countries."
The study, which looked at the behavior of people who had registered at least two patents from 1975 to 2005, focused on Michigan, which in 1985 reversed its long-standing prohibition of non-compete agreements. The authors found that after Michigan changed the rules, the rate of emigration among inventors was twice as a high as it was in states where non-competes remained illegal. Even worse for Michigan, its most talented inventors were also the most likely to flee. "Firms are going to be willing to relocate someone who is really good, as opposed to someone who is average," says Lee Fleming. For the inventors, it makes sense to take a risk on a place such as California, where they have more freedom. "If the job they relocate for doesn’t work out, then they can walk across the street because there are no non-competes
(Score: 2, Interesting) by Anonymous Coward on Friday March 20 2015, @03:52PM
The studies on why Silicon Valley has been more successful than similarly-endowed competitors (notably Boston's Route 128) goes back at least to the mid-90s, with the book Regional Advantage [harvard.edu] which discussed the free migration of engineers from company to company. This present study seems to take Saxenian's work as a starting point and tries to pinpoint the cause as something in the state legal code.
I'm dubious of the latter. California has always attracted restless non-conformists, visionaries and hippies in much greater quantities than most of the rest of the country (and world). The east coast has plenty of highly educated folks but is somewhat hidebound, especially in corporate life (perhaps not as bad as the US Midwest, though). I'm sure California has plenty of companies run as bureaucratic fiefdoms, but in relative terms, they're pretty friendly towards constant change.
(Score: 1) by demonlapin on Friday March 20 2015, @05:11PM
(Score: 3, Funny) by Leebert on Saturday March 21 2015, @02:39AM
Palo Alto sounds boring. :)