An Exploration into the Antecedents of Non-Compete Use
Torgnes, Knudsen & Vaidya (in progress) An Exploration into the Antecedents of Non-Compete Use
Non-competes are clauses in employee contracts aimed at restricting which industries and companies an employee can work for after leaving a firm. There is much research on the implications of non-compete use in firms, but surprisingly little that aims to understand why firms adopt such practices in the first place. Is the real motivation in line with assumed motivations derived from theory? Using unique Norwegian data, we set out to answer this question.
The extant literature on non-competes largely focuses on measuring the effects of non-compete enforcement policies. There is little research on the antecedents and details of actual non-compete use, i.e. what are the characteristics or driving forces that make some firms use non-competes while others do not and how exactly are firms using non-competes. Without sufficient knowledge of the antecedents and details of actual non-compete use, it is difficult to specify models predicting outcomes of non-compete use and non-compete enforcement policy. We use original survey data on non-compete use with 2,001 firms matched with government registry data containing a wealth of socio-economic data on the surveyed firms and their 50,051 employees to analyse the antecedents and relative characteristics of both users and non-users of non-competes
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