Investigating the Impact of No-poaching Agreements among Big Tech Firms on Entrepreneurial Activities of IT Professionals

This study investigates the impact of no-poaching agreements among big tech firms in Silicon Valley on IT professionals’ entrepreneurial activities. Furthermore, we explore which types of IT professionals are more likely to be affected by the no-poaching agreements by focusing on human capital characteristics. Using a difference-in-differences approach and leveraging data from a major online professional social network, we find that the no-poaching agreements among big tech firms have a positive impact on entrepreneurship among IT professionals. We argue that the restricted mobility to rival big tech firms, resulting from these no-poaching agreements, leads employees to pursue alternative career paths, such as establishing their own businesses. Moreover, our analysis indicates that the effects are more pronounced for IT professionals who have graduated from elite institutions or maintain more social connections. This research has important practical implications for policymakers and established firms.