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This study adopts a competitive dynamics perspective to illuminate how and when different types of knowledge transferred by a spin-out trigger parent hostility. Specifically, we propose based on the awareness-motivation-capability framework that (1) transfers of market-related and technology-related knowledge will yield hostility and that (2) market commonality, resource similarity, and competitive intensity will exacerbate this effect. Findings from 207 spin-outs support several of our hypotheses. The study contributes to the extant literature by providing a more nuanced view on knowledge legacies, in particular regarding their interplay with a spin-out’s strategic positioning and resulting competitive reactions on part of the parent.
Symbiotic Spin-Outs: The Effects of Parent-Child Relatedness
Marco Antonio Galo,
ESSEC Business School Ha Hoang,
ESSEC Business School
In this paper, we explore the benefits and limitations of collaborative relationships between spin-outs and their parent firms. We argue that employee ventures created with the support of their parents (symbiotic spin-outs) will have better survival rates and higher short-term performance than independent ventures. In the long-run, however, the latter are expected to outperform the former. In addition, we argue that the formation of symbiotic spin-outs will positively impact the parent’s performance, while the creation of independent ventures will have an opposite effect. Using multiple waves of a representative survey of French startups, we identify and track the employee ventures and their parents by taking a bottom-up approach, which addresses limitations faced by previous studies using matched employer-employee datasets.
The Influence of Multiple Parent Imprints on New Organizations’ Survival
Christopher Albert Sabel,
BI Norwegian Business School
Organizations founded by experienced founders have received considerable attention, as they obtain parent imprints of experience and routines, which shape their trajectories, leading to increased survival. While previous studies depict the parent-progeny genealogy as dyadic relationship, it is often not only between a single parent and its spawn. Co-founders from different organizations imprint routines and experience from more than one parent into their newly founded organizations. Using Norwegian census data, the study tracks the population of 39900 organizations founded by experienced founders from 2004 to 2016 to examine the effects of founders’ diversity in parent background on survival of the new organization. We uncover a tension between paternal diversity and founders’ functional background that generates a tradeoff when implementing diverse multi-layered routines in new organizations.
How Transferable Is Human Capital? Evidence from Spinout Performance
University of California, Los Angeles Natarajan Balasubramanian,
This study examines how different types of human capital that spinout founders may have are associated with the performance of spinouts by using a U.S. matched employer-employee data set covering all industries. We evaluate several types of human capital and analyze whether these various types of human capital affect spinout performance differently, and how durable the potential impact of these types of human capital are. We find that spinout founders’ earnings has a positive and lasting effect on spinout performance. This effect is stronger when spinouts are formed in rapidly changing industries and within their parents’ industries. Spinout industry experience and group human capital appear to have positive effects for the performance of spinouts, especially when they are formed outside of the parent industry.