Can Opportunity Emerge From Disarray? An Examination of Exploration and Exploitation Following Star Scientist Turnover

Abstract

How do the specific characteristics of a departing star influence the effects of the star’s turnover on a firm’s innovation processes? Proposing a contingency model of key employee turnover, we argue and demonstrate that the individual characteristics of a star scientist who exits a firm determine the effects of the star’s turnover for the organization. Based on a longitudinal study of star scientist turnover in the biotechnology industry (1972-2003), we show that while star turnover disrupts existing innovation routines and thus decreases exploitation, this “shock” creates opportunities for the firm to search beyond existing knowledge boundaries, thereby increasing exploration. However, these effects are moderated by the departing star’s innovative and collaborative involvement within the firm. Specifically, the results indicate that a departing star’s innovative involvement strengthens the negative effects and weakens the positive effects of the star’s turnover on exploitation and exploration in the firm, respectively. On the other hand, a departing star’s collaborative involvement within a firm strengthens the negative effect of the star’s exit on exploitation but increases the positive effect of star turnover on exploration, thereby fostering opportunities for technological renewal. We suggest therefore that the prognosis for firms losing stars may vary, and may not always be dire. Our findings indicate that the short-term and long-term value of human capital is contingent on the social mechanisms surrounding its utilization. Thus, we offer a redirection for research and extend the resource-based view and human capital theory by introducing a resource dependence perspective into this theoretical context.