This paper examines the impact of the state-level legal structure, namely the legal support for non-competition agreements, on research productivity. Specifically, we study how California’s unique lack of non-competition agreement laws influences product develop when controlling for local munificence and firm-level technological capability. Our results indicate that California’s unique legal structure is negatively associated with research productivity as measured by the number of products in development at the time a biotechnology firm goes public. Further, firm size moderates this relationship such that the effect is stronger for smaller biotechnology firms.

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Copyright © 2006 Babson College. This paper first appeared in Frontiers of Entrepreneurship Research 2006 26:14 (2006), 1-10.

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