Employee Poaching: Why It Can Be Predatory

Abstract

There is a growing concern over predatory hiring practices that are aimed at eliminating competitors. Using a duopoly model in which firm's profits depend on the quality of the worker–employer match, this paper studies the conditions under which predatory equilibrium exists. I find that predatory hiring can occur when the match between the worker and the new employer is relatively poor, and the old employer has a shallow pool of replacement candidates. Post-employment lawsuits do not affect the range of predatory equilibrium if the parties take into account expected damages payment. Copyright © 2013 John Wiley & Sons, Ltd.