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The purpose of this paper is to advance the understanding of the mechanisms associated with learning-by-hiring.

The authors built a yearly dyad data structure of all of the hiring and sourcing firms in the US biotechnology sector between 1973 and 1999.

The authors found that hiring firm’s learning from a prior employer’s knowledge is limited in scope to the knowledge developed by the newly hired inventor, and could be attributed to new hire direct involvement. Learning from new recruit occurred only when incumbent inventors collaborate intensively with the hired inventor. Accordingly, what might seem like learning-by-hiring may result in hiring to avoid learning, unless the organization creates the social structures that facilitate the exchange of knowledge within and throughout the organization.

The results, thus, highlight the importance of aligning a firm’s social environment with its strategic goal to learn from its external competitors.

Recruitment is one means by which organizations can interact with and learn from their external environment. Incumbent inventors are more likely to learn from hired inventor knowledge through the development of a collaborative social culture that facilitates communication and trust in the process of transferring knowledge among individuals. The results, thus, highlight the importance of aligning a firm’s internal environment with its strategic goal to learn from its external competitors.

The authors suggest that access to new knowledge bases through hiring is not sufficient for learning purposes; internalizing a new hire’s knowledge also requires the internal mechanisms, structures, and cultures that motivate knowledge sharing and promote mutual trust.