Laws that stop people from being 'poached' by rivals are forcing companies to just buy out their suppliers instead.
March 19, 2026
Original Paper
When Talent Poaching is off the Table Do Restrictions on Talent Movement Prompt Vertical Integration?
SSRN · 6435883
The Takeaway
When courts make it harder for workers to change jobs, firms lose their ability to hire outside talent. To compensate for this lost innovation and bargaining power, companies stop being independent and instead vertically integrate, fundamentally changing the structure of the corporate world due to labor restrictions.
From the abstract
This paper examines whether restrictions on talent poaching prompt firms to increase vertical integration. Exploiting the staggered adoption of the Inevitable Disclosure Doctrine (IDD) by U.S. state courts as an exogenous shock to talent mobility, we find that competitors of IDD-protected firms significantly increase vertical integration. Mechanism analyses suggest that this response is driven by weakened supply chain bargaining power and reduced innovation efficiency resulting from limited acce