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Inherited Advantage and Spinoff Success

Anders Broström, Hans Lööf () and Pardis Nabavi ()

No 437, 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 paper investigates how incumbent firm characteristics affect the viability of its spinoffs. The survival patterns of spinoffs with roots in exporting firms and in technologically innovative firms are compared to the survival of other spinoffs. Using comprehensive Swedish employer-employee panel data sets, three possible outcomes are identified: survival,acquisition and complete exit from the market. Experience from an exporting parent is positively associated with spinoff survival. These inheritance benefits do, however, decrease with the tenure of ex-employees. This suggests that inherited advantages in this case is not primarily driven by enhanced opportunities for on-the-job learning. Above-average attractiveness to employees, and associated ability sorting and opportunity costs mechanisms, provides explanations for the superior survival of spin-offs from exporting firms that seem more congruent with data. The study also suggest that technological innovativeness, captured by parent's patenting activity, is negatively associated with spinoff survival when controlling for exports. This result support the view that knowledge inside innovative firms is "sticky" and not easily transferable to new ventures by ex-employees.

Keywords: entrepreneurship; exports; organizational heritage; innovation; spinoff; entrepreneurial spawning (search for similar items in EconPapers)
JEL-codes: C25 F14 L26 M13 O33 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-04-27
New Economics Papers: this item is included in nep-ent, nep-ino, nep-knm, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0437

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