Should Firms Avoid Relying on Key Employees? Evidence From Inventors

Analysing inventor careers in U.S. public firms, we find that higher inventor‐base concentration enhances corporate innovation productivity in subsequent years, a relationship that remains consistent across various model specifications. Concentration improves the retention of individual inventors and teams, supporting the employee retention hypothesis. However, firms with concentrated inventor bases tend to emphasize exploitation over exploration in their innovation efforts. Moreover, the impact of inventor‐base concentration is moderated by factors such as technology or product lifecycle length and conglomerate status. These findings underscore the critical role of human capital management in driving firm innovation.