In Search of New Knowledge:When Does Hiring Foreign R&D Workers Foster Exploration?

This paper studies how firms’ recruitment of high-skilled foreign R&D workers affects firm-level exploration. We contemplate that by hiring foreign R&D workers, firms gain increased access to geographical and technological distant knowledge which fosters their exploratory technology development activity. Examining a sample of 376 Danish R&D active firms over the period from 2001 to 2013, we present robust support for this hypothesis and provide evidence that the recruitment of foreign R&D workers spurs firm-level exploration more intensively than the recruitment of native R&D workers. Yet, we find that this is only the case when the recruited foreign R&D workers originate from geographical backgrounds that are represented to a lesser extent within firms’ incumbent R&D workforce. Interestingly, we show that - in contrast to native R&D hires - the recruitment of foreign R&D workers fosters firm-level exploration even when the cognitive distance between these hires and firms’ incumbent R&D workforce is low.