Personnel Recruitment, Knowledge Acquisition, and Product Innovation: The Mobility of Portfolio Managers and the Creation of International Stock Funds in the Mutual Fund Industry

Although the recruitment of talent from competitors is a practical strategy for firms to acquire the knowledge needed to introduce new products, it has received little attention in research on knowledge management. Our study shows that recruitment of portfolio managers with knowledge in a given domain enhances product innovation in that domain. The effect of recruits declines as the number of managers with expertise in the same domain grows, and as the mean tenures of managers in the firm increase. The industry tenure of recruits did not significantly increase product innovation by itself, but its impact declined as the number of managers with expertise in the same domain increased. Together, these findings demonstrate that recruitment is an important source of knowledge transfer across organizations and show the boundary conditions under which recruitment influences product innovation.