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New firm formation in the wake of mergers and acquisitions: Are employees pushed or pulled into entrepreneurship?

Monia Lougui () and Anders Broström
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Monia Lougui: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology

No 427, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This study investigates the relationship between mergers and acquisitions (M&A) and employee entrepreneurship in human capital-intensive service sectors. We investigate two sets of theoretical mechanisms. First, M&As may push employees entrepreneurship by lowering the average barriers of leaving the current employment (i.e. being associated with general deterioration of working conditions). Second, M&A activities may generate new entrepreneurial opportunities, which are first and foremost accessible by employees directly affected by M&As. Results on employee entrepreneurship in 3 039 Swedish firms during the time period 2000-2009 confirm that the number of firms spawned from a specific incumbent increases following an M&A. Push-oriented factors are found to contribute to this effect, but a dominating part of the total effect remains unexplained. This suggests that pull-oriented explanations of opportunity creation in the wake of M&As constitute an important avenue for further research on employee entrepreneurship.

Keywords: employee entrepreneurship; mergers; acquisitions; opportunity costs; entrepreneurial opportunity (search for similar items in EconPapers)
JEL-codes: G34 L26 L80 M50 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2016-02-22
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-ino and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0427

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