Market Demand, Competition for Knowledge Workers, and Impact on Invention: Evidence from Electric Vehicle Technologies.

This article investigates how an increase in downstream market demand within a technological domain can indirectly hinder technological progress in adjacent domains by intensifying competition for skilled knowledge workers. Using the 1990 California zero emission vehicle (ZEV) mandate as an exogenous shock that sharply increased demand for electric vehicle (EV) technologies, the study finds that while EV firms significantly boosted their inventive activities, firms in adjacent technological domains experienced a 517% higher likelihood of losing inventors to EV firms. Consequently, these affected firms produced 22% fewer inventions, especially in their core areas, and were 19% less likely to explore new technological fields. The negative spillover effects were more pronounced for firms in growing domains such as renewable energy and for smaller, younger firms, highlighting important implications for innovation policy and managerial strategies regarding competition for scarce innovation resources.