Stage 3: the bargaining between the employee and providers of complementary assets.
If there is disagreement in stage 2, the employee leaves the firm and her payoff is determined through bargaining with a provider of the complementary assets needed to create a start-up. If the (former) employee is not able to obtain the necessary complementary assets from the current negotiation partner, she has to find another provider. This needs search time, and therefore the payoff earned by the employee after the search has to be discounted by a factor α ∈ [0, 1]. Th larger the number of potential providers of the needed complementary assets is, the shorter is the necessary search time, and the larger is α. Hence, α, which is the key primitive in our analysis, captures the availability of complementary assets. For simplicity,we assume that the outcome of the bargaining in stage 3 between the employee and the provider of the complementary assets is determined by the symmetric Nash bargaining solution.