Wednesday, July 13, 2011
Non-Compete Agreements and Innovation
New research by Harvard Business School Professor Lee Fleming and co-authors Matt Marx and Jasjit Singh examines the impact of laws regarding non-compete agreements. In some states, non-compete agreements are essentially illegal. In other states, they are legal. Not surprisingly, their research shows that inventors migrate to states which ban non-compete agreements. In fact, the most productive innovators tend to be most likely to be attracted to states which do not allow non-compete agreements. The researchers point out that California, for instance, does not allow non-compete agreements. Not surprisingly, then, Silicon Valley attracts so many entrepreneurs. Here in Massachusetts, journalist Scott Kirsner has been pushing for the state to get rid of non-compete agreements so as to foster innovation and entrepreneurship more effectively. This study should provide more support for Kirsner's argument.