Work

When do spinouts benefit from market overlap with parent firms?

Year: 2022

Type: article

Abstract: We examine how market overlap with parent organizations impacts the performance of startups founded by the former employees of these incumbent firms. Building on knowledge inheritance and competitive dynamics theories, we propose that the degree to which the operating markets of spinouts overlap with their parent organizations has a curvilinear relationship with their likelihood of survival. Market overlap is beneficial to spinouts because it reduces uncertainty during the early stages of new venture development. However, substantial market overlap may spark hostile actions by the parent organizations, thereby creating disruptive competition that may lower the likelihood of spinouts' survival. Furthermore, we hypothesize that the previous hierarchical position of founders in parent organizations moderates the overlap–performance relationship. Using a sample of European biotech spinouts and their parent firms, we find support for our hypotheses.

Source: Journal of Business Venturing

DOI: 10.1016/j.jbusvent.2022.106249

Authors: Aliasghar Bahoo-Torodi, Salvatore Torrisi

Institutions: City, University of London, City St George's, University of London, Aalto University, University of Milano-Bicocca, Bocconi University

Language: English

Topic: Entrepreneurship Studies and Influences

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,960