Session 169

Spinoffs, Spinouts, and Labor Mobility

Track K

Date: Monday, October 8, 2012

 

Time: 13:30 – 14:45

Common Ground

Room: Club E


Facilitator:

  • Martin Ganco, University of Wisconsin-Madison

Title: Boundary-Crossing Job Mobility, New Product Area Entry and the Performance of Entrepreneurial Ventures

Authors

  • Gina Dokko, University of California, Davis
  • Geraldine Wu, New York University

Abstract: How does moving across career boundaries affect an entrepreneur’s new venture? An entrepreneur’s career experience is a critical resource for a startup, so when entrepreneurs cross industry or functional boundaries to lead startups, they may lack specific human capital that they need for performance. At the same time, the diverse experience they carry can enhance innovation in the startup. We highlight consequences for startups when their leader crosses career boundaries, using a multi-industry longitudinal sample of high-technology firms. We find that entrepreneurs who cross functional boundaries to lead startups are more likely to enter into new product areas. We also find that an entrepreneur’s industry boundary-crossing increases the probability of a failure for the startup, but that it also increases the probability of an IPO.

Title: Failure of Competitor Firms and the Mobility and Entrepreneurship of Employees of Healthy Organizations

Authors

  • Seth Carnahan, University of Michigan

Abstract: I show how an important change in the competitive environment – the unexpected failure of competitor firms – increases the likelihood that the employees of healthy organizations leave their jobs to create startups while decreasing the likelihood that they leave their jobs to join other established organizations. The paper underscores important differences in the labor markets for established firms and startup firms while providing evidence of creative construction: the death of one firm appears to provide the composite resources for the birth of others. To address endogeneity concerns, I instrument for the death of competitor firms with the unexpected death of their upper-level managers. I analyze confidential microdata on the legal services industry from the US Census Bureau.

Title: Making Sense of Performance Heterogeneity Among Entrepreneurial Spinoffs: A Natural Experiment Involving a Complete Population

Authors

  • Richard Hunt, Virginia Polytechnic Institute
  • Daniel Lerner, Deusto University

Abstract: Through the discovery and explication of a natural experiment comprised of a complete industry population, this paper presents empirical evidence challenging widely held beliefs related to intra-industry entrepreneurial spinoffs. Extant spinoff theory is heavily invested in the view that knowledge and capabilities are transferred from high-performing parent-firms to high-performing spinoffs in hereditary fashion, endowing spinoffs with a performance advantage over de novo entrants. Our analysis of all 612 firms in the Colorado asbestos abatement industry, including 448 spinoffs, paints a dramatically different picture. In the context of a complete population, we find that de novo entrants actually outperform spinoffs; parent-firm quality exerts no discernable influence on spinoff quality; and, founder capabilities, not parental lineage, are the primary driver of spinoff performance heterogeneity.

Title: The “Spin-out Entrepreneur”: Employees\' Knowledge Flow and Entrepreneurial Opportunities

Authors

  • Matteo Landoni, Catholic University of Milan
  • dt ogilvie, Rochester Institute of Technology

Abstract: An employee has the incentive to quit a company and start a new business venture when a discovery allows her to pursue an entrepreneurial opportunity. The discovery is the result of the employee’s knowledge accumulation made within the firm. We call the new venture started autonomously by a former employee a “spin-out.” While most studies analyze the nature of the spin-out at the firm level, we argue that the success of a spin-out can be better understood by analyzing the prior experience—in terms of knowledge accumulation—of the entrepreneur. The analysis of several spin-out companies in the IT and bio-tech industries helps to confirm some hypotheses built on the theory of spin-outs, contradict others, and give more insight on employees’ knowledge mobility.

Title: The Evolution of Israel Telecommunication Industry During Two Different Economic Regimes

Authors

  • Zur Shapira, New York University
  • Shmuel Ellis, Tel Aviv University
  • Israel Drori, The Free University-Amsterdam

Abstract: We analyze the Israeli Telecommunication Industry growth patterns over two economic periods: A centralized institutional period (1932-1977) and a competitive economic era (1977-2005). The 1977 political change led to a market economic regime and firms found themselves in a different economic environment, requiring new strategies to compete. We employ a genealogical approach to compare the growth potency across the two periods. We find that parents firms born in the competitive economic era developed into genealogies that grew much faster and larger than the genealogies of parent firms born in the institutional economic era. Entrepreneurial strategies of the genealogies are discussed.

All Sessions in Track K...

Sun: 08:00 – 09:15
Session 126: Entrepreneurship & Stakeholders - The Future Research Agenda
Sun: 09:30 – 10:45
Session 127: Teaching Strategic Entrepreneurship
Sun: 11:15 – 12:30
Session 128: Poverty, Informal Firms & Strategic Entrepreneurship
Sun: 15:15 – 16:30
Session 157: Financing Entrepreneurial Ventures
Session 161: Entrepreneurial Growth
Mon: 08:00 – 09:15
Session 158: Corporate Venture Capital
Session 175: Austrian Economics & Creative Destruction
Mon: 09:30 – 10:45
Session 178: Institutional Theory & New Ventures
Session 180: Pushing the Bounds of Agency Theory
Mon: 13:30 – 14:45
Session 159: Exploration, Exploitation, and Ambidexterity
Session 169: Spinoffs, Spinouts, and Labor Mobility
Mon: 16:30 – 17:45
Session 162: New Venture Strategy & Innovation
Session 163: Cognitive Perspectives
Tue: 08:00 – 09:15
Session 164: IPOs
Session 170: Emerging Markets
Tue: 11:00 – 12:15
Session 160: Corporate Venturing and Intrapreneurship
Session 179: Social Networks within and across Firms
Tue: 14:15 – 15:30
Session 166: Institutional Aspects of Entrepreneurship
Session 167: Firm Boundaries
Tue: 15:45 – 17:00
Session 174: Social Networks & Entrepreneurship
Session 176: Value Capture & Appropriability
Tue: 17:30 – 18:45
Session 168: Uncertainty, Ambiguity, and Sense-Making
Session 173: New Venture Creation


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