Posts Tagged ‘noncompetes’

Many large firms have their employees sign non-compete agreements which prohibit them from taking their knowledge and working for a competing firm within a certain time frame (often one year). They are often enforced rigorously as companies are fearful that they will lose important internal know-how to competitors. In fact, Microsoft recently sued Google after they hired a prominent executive, Dr. Kai-Fu Lee.

Mike Masnick over at TechDirt has provided some important synthesis of research on the topic and concluded that non-competes are burdensome limitations on human capital which stifle innovation. In Silicon Valley, non-compete agreements are frowned upon and often not enforced. In Massachusetts, on the other hand, they are popular and limit the ability of would-be entrepreneurs from leaving big firms to pursue a new idea. An increasing number of people are beginning to identify the absence of non-competes as an essential reason Silicon Valley has been so innovative.

Now, Harvard’s Berkman Center has jumped into the foray. At a recent panel discussion, they examined the disadvantages of non-compete agreements. Coverage by PC World and Bijan Sabet provides insight into the ideas which were freely exchanged.