EconPapers    
Economics at your fingertips  
 

Disagreements, employee spinoffs and the choice of technology

Peter Thompson () and Jing Chen ()

Review of Economic Dynamics, 2011, vol. 14, issue 3, 455-474

Abstract: Most existing models of employee spinoffs assume they are driven by a desire to implement new ideas. However, history is replete with examples of spinoffs that were launched to continue with old ideas that their parents were in the process of abandoning. We develop a model of technology choice in which spinoffs may form to implement new or old technologies. A team of managers engaged in production using technology x, is considering switching to technology y. The value of y is not known and disagreements may emerge among team members. Managers who develop sufficiently strong disagreements with their colleagues choose to form new companies to implement their preferred strategy. Two distinct classes of spinoffs arise. In the first, a spinoff forms when an employee comes to believe it is worth adopting y but the firm does not. In the second, a spinoff arises when an employee sufficiently disagrees with the firmmodifier letter apostrophes decision to adopt y that he is willing to invest in order to continue with x. We explore the implications of the model for the comparative dynamics of spinoff formation, and the performance of firms. (Copyright: Elsevier)

Keywords: Spinoffs; Learning; Disagreement; Technology choice (search for similar items in EconPapers)
JEL-codes: D70 D83 L2 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2010.09.003
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code files for "Disagreements, Employee Spinoffs and the Choice of Technology" (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:09-182

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2010.09.003

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2021-10-18
Handle: RePEc:red:issued:09-182