Hi #EconTwitter #EconJobMarket, time for my #JMP thread!

Happy to share “How valuable are business networks? Evidence from sales managers in international markets” joint with @Clemcid

#InternationalTrade
http://sites.google.com/view/berengerepatault/

@Polytechnique #CREST @XDepEco @ENSAEparis

1/13

Meeting new buyers is crucial for firms to grow

However, goods markets are characterized by search frictions + contractual frictions, and such frictions are exacerbated in international markets

-> Broad question = What can firms do to meet new buyers?

2/13

Research Questions:

Can firms start selling to their rivals’ buyers by hiring their sales managers?

If so, do sales-manager transitions merely transfer buyers from one firm to another, or do they create economic value?

3/13

Data: 2 exceptional French datasets

- Firm-to-firm customs data: observe all European firms importing from French firms = buyers

- Matched employer-employee data: data on workers' transitions across firms

-> Sales manager's network = buyers of her previous firm

4/13

Empirical strategy: #EventStudy

- Analysis at a very disaggregated level: at the French firm x foreign buyer x year level

- Proba for a firm to start selling to a buyer, before and after recruiting a sales manager knowing this specific buyer

5/13

Contributions:

1. Quantification of the transferability of buyer-seller relationships across firms through sales-managers’ job-to-job transitions

2. Analysis of the consequences of this transferability for the buyer’s former suppliers

6/13

Main result 1:

Recruiting a sales manager ↑ the probability to start selling to a former client of the poached firm

Proba to sell to a buyer in her new firm = x11 when sales manager already knows the buyer

Effect = driven by young & productive recruiting firms.

7/13

Main result 2:

Business stealing is incurred by former employer of sales manager

But # of French suppliers of a given buyer ↑ after job-to-job transitions

-> Buyers do not fully substitute their former suppliers for their new supplier
-> Transitions are not zero-sum

8/13

Mechanisms:

- Country-product knowledge = only 20% of our main effect
-> Previous connection with a buyer is much more effective than general knowledge to build a new buyer-seller link

- Suggestive evidence that personal relationship btw sales manager and buyer matters

9/13

Policy implication 1:

Implications for legislation restricting labor mobility, such as non-compete agreements (nca)

-> We provide a rationale for firms to use nca

-> We shed light on one mechanism through which restricting labor mobility might prevent firms from growing

10/13

Policy implication 2:

Meetings and personal relationships btw sales managers and buyers are key

-> Export Promotion Agencies should devote a high part of their activities to match-making between buyers & sellers

11/13

Huge thanks to my references for their support: Pierre Cahuc @sciencespo, Samuel Kortum @YaleEconomics, Francis Kramarz #Crest, @IsabelleMejean @Polytechnique

12/13

For their enriching discussion on the paper, thanks to all #Crest faculty and PhD students, to the organizers of the Empirical Management Conference ( #NickBloom, @raffasadun, @renata_lemos, @johnvanreenen, @danielascur), to @borusyak, @johannesmboehm and so many others!

13/13