Their study Technology Diffusion, Human Capital and Employee Mobility investigates how the diffusion of new technologies within an industry changes the value of worker skills and, in turn, the mobility of workers between firms. New technologies do not affect all workers equally: some workers see parts of their work (partly) substituted by the technology, while others find their work complemented by it.

Shared middleware

The authors examine these dynamics in the console video game industry between 1995 and 2005, focusing on middleware tools such as RenderWare, Unreal Engine, and the Havok engine. Until the early 2000s, game developers mostly relied on proprietary middleware that each firm had built in-house for its own use. From 2001 onwards, such firm-specific tools were increasingly replaced by these third-party alternatives, which were licensed to developers across the industry and became shared industry resources. They automated much of the lower-level programming work involved in creating a game, partly substituting tasks performed by programmers, while the creative work of designing gameplay, characters, and storylines was complemented by them. Because middleware diffused much faster in shooter games than in other genres, the authors can compare worker mobility across parts of the industry with high and low technology diffusion.

Increased mobility

The central finding is that the diffusion of these shared tools was associated with a clear increase in the mobility of creatives, the workers complemented by the technology, compared to programmers, whose tasks were partly substituted by it. In other words, once a technology becomes an industry standard, it is mainly the workers whose skills it enhances who gain new opportunities to move between companies.

From a practical standpoint, the findings highlight a trade-off that firms face when adopting widely used third-party technologies instead of building proprietary ones. Shared tools make it easier to recruit talent that is already familiar with them, but they equally make it easier for competitors to poach one’s own employees, especially those whose value the technology enhances. Moreover, as standardised technologies make it harder for firms to differentiate themselves technologically, firms are forced to rely ever more heavily on precisely the human capital that has become more mobile and more difficult to retain.

Insights for the AI debate

Although the study focuses on middleware in the video game industry, these insights are relevant to current debates about artificial intelligence, which is likewise complementing some workers while substituting tasks of others, with potentially far-reaching consequences for who moves, who is hired, and who is retained in the labor market.