Tuesday, November 1, 2016 | 2:00pm-3:30pm | Room 335, HSBC Business School Building

Abstract

The software industry is unique in terms of its “platform economics” where a few software giants control key technology platforms e.g., Microsoft Windows, upon which other software firms build complementary products. Such platform knowledge may thus create externalities for the software firms that recruit IT professionals from these platform providers. Yet, while prior studies have shown that productivity spillover takes place through IT labor mobility, the sources of such spillover have not been identified. This paper contributes to the literature by uncovering that IT labor productivity spillover in the software industry stems largely from the major software platform providers. Using a novel structural equation modeling approach and a large dataset on labor mobility derived from an online professional network, we show that hiring IT employees from four major software platform providers, Google, Apple, Microsoft, and Oracle, is associated with a statistically and economically significant increase in productivity of the recipient firms. Further, the spillover effect derives from IT employees with postgraduate degrees or work experience greater than 5 years. We thus explicate sources of IT labor productivity spillover for software firms and derive implications from the findings.