Entrepreneurial Spawning and Firm Characteristics

Michel A. Habib (), Ulrich Hege and Pierre Mella-Barral
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Michel A. Habib: Department of Banking and Finance, University of Zurich, 8032 Zurich, Switzerland; Center for Economic and Policy Research, London EC1V 3PZ, United Kingdom; and Swiss Finance Institute, 8006 Zurich, Switzerland

Management Science, 2013, vol. 59, issue 12, 2790-2804

Abstract: We analyze the implications of the decision to spawn or to retain a new product for the nature and evolution of the firm. In our model, a new product is spawned if the fit between the product and its parent firm organization is not adequate. We focus on the impact of the firm's history of spawning decisions on firm characteristics such as size, focus, profitability, and innovativeness, and analyze its role in shaping firm dynamics. In accordance with the empirical literature, our model predicts that older firms innovate less, spawn less, are more diversified and less profitable, and that firms with more valuable general or specialized resources innovate and spawn more. Echoing seemingly contradictory empirical findings, our model predicts that small, focused firms (large, diversified firms) innovate and spawn more, and are more profitable when sample heterogeneity is driven by the importance of organizational fit (the value of general resources). This paper was accepted by Bruno Cassiman, business strategy.

Keywords: spawning; spinoffs; spinouts; general and specialized resources; firm organization; organizational fit; firm size; focus; profitability; innovativeness; spawning dynamics (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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http://dx.doi.org/10.1287/mnsc.2013.1739 (application/pdf)

Related works:
Working Paper: Entrepreneurial Spawning and Firm Characteristics (2013)
Working Paper: Entrepreneurial Spawning and Firm Characteristics (2013)
Working Paper: Entrepreneurial Spawning and Firm Characteristics (2011)
Working Paper: Entrepreneurial Spawning and Firm Characteristics (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:59:y:2013:i:12:p:2790-2804

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