Teams and Bankruptcy

Teams and Bankruptcy

Ramin Baghai, Rui Silva, Luofu Ye

Series number :

Serial Number: 
626/2019

Date posted :

September 01 2019

Last revised :

September 01 2019
SSRN Share

Keywords

  • teams • 
  • Teamwork • 
  • Team-specific human capital • 
  • Bankruptcy • 
  • Labor productivity • 
  • innovation

We study how the human capital embedded in teams is reallocated in corporate bankruptcies using data on US inventors. We find that bankruptcies reduce team stability. After a bankruptcy, team-dependent inventors produce fewer and less impactful patents. This points to the loss of team-specific human capital as a cost of resource reallocation through bankruptcy.

However, this cost is limited by the ability of the labor market and the market for corporate control to preserve teams. Inventors with past collaboration are likely to move jointly to a new firm after bankruptcy, and the productivity of team inventors that relocate together increases.

Authors

Real name:
Rui Silva
Real name:
Luofu Ye