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The who, why, and how of spinoffs

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  • Michael S. Dahl
  • Olav Sorenson
Abstract
Studies have consistently found that entrepreneurs who enter industries in which they have prior experience as employees perform better. We nevertheless know little about what accounts for this effect. The presumed explanation has been that experienced entrepreneurs benefit from knowledge acquired in their former jobs. But they might also differ from entrepreneurs without industry experience on a variety of other dimensions: preferential access to resources or differing motivations, for example, may account for their decisions to enter known industries instead of new ones. Combining novel data from a representative survey of entrepreneurs with the matched employer–employee database of all residents in Denmark, we examined how entrepreneurs with prior industry experience differed from those without it, and the extent to which those differences could account for the performance premium associated with prior industry experience. We found that entrepreneurs with industry experience came from younger, smaller, and more profitable parent firms, and that they recruited more experienced employees, worked harder, and placed less value on having flexible hours. The recruitment of more experienced employees and the greater effort exerted appeared to account for at least some of the performance advantage associated with prior industry experience.

Suggested Citation

  • Michael S. Dahl & Olav Sorenson, 2014. "The who, why, and how of spinoffs," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(3), pages 661-688.
    • Handle: RePEc:oup:indcch:v:23:y:2014:i:3:p:661-688.
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    File URL: http://hdl.handle.net/10.1093/icc/dtt032
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    Citations

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    Cited by:

    1. Dalziel, Margaret & Basir, Nada, 2024. "The technological imprinting of educational experiences on student startups," Research Policy, Elsevier, vol. 53(2).
    2. Daniel Fackler & Claus Schnabel & Alexandra Schmucker, 2016. "Spinoffs in Germany: characteristics, survival, and the role of their parents," Small Business Economics, Springer, vol. 46(1), pages 93-114, January.
    3. Olav Sorenson, 2017. "Regional ecologies of entrepreneurship," Journal of Economic Geography, Oxford University Press, vol. 17(5), pages 959-974.
    4. Argote, Linda & Fahrenkopf, Erin, 2016. "Knowledge transfer in organizations: The roles of members, tasks, tools, and networks," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 146-159.
    5. Mariko Sakakibara & Natarajan Balasubramanian, 2020. "Human capital, parent size, and the destination industry of spinouts," Strategic Management Journal, Wiley Blackwell, vol. 41(5), pages 815-840, May.
    6. John Hagedoorn & Boris Lokshin & Stéphane Malo, 2018. "Alliances and the innovation performance of corporate and public research spin-off firms," Small Business Economics, Springer, vol. 50(4), pages 763-781, April.
    7. Roberto Grandinetti, 2022. "A Routine-Based Theory of Routine Replication," Sustainability, MDPI, vol. 14(14), pages 1-23, July.
    8. Olav Sorenson, 2018. "Social networks and the geography of entrepreneurship," Small Business Economics, Springer, vol. 51(3), pages 527-537, October.
    9. Egle Vaznyte & Petra Andries & Sarah Demeulemeester, 2021. "“Don’t leave me this way!” Drivers of parental hostility and employee spin-offs’ performance," Small Business Economics, Springer, vol. 57(1), pages 265-293, June.
    10. Vera Rocha & Luca Grilli, 2024. "Early-stage start-up hiring: the interplay between start-ups’ initial resources and innovation orientation," Small Business Economics, Springer, vol. 62(4), pages 1641-1668, April.
    11. Natarajan Balasubramanian & Mariko Sakakibara, 2021. "Incidence and Performance of Spinouts and Incumbent New Ventures: Role of Selection and Redeployability within Parent Firms," Working Papers 21-27, Center for Economic Studies, U.S. Census Bureau.
    12. Olav Sorenson & Michael S. Dahl & Rodrigo Canales & M. Diane Burton, 2021. "Do Startup Employees Earn More in the Long Run?," Organization Science, INFORMS, vol. 32(3), pages 587-604, May.
    13. Buenstorf, Guido & Costa, Carla, 2018. "Drivers of spin-off performance in industry clusters: Embodied knowledge or embedded firms?," Research Policy, Elsevier, vol. 47(3), pages 663-673.
    14. Coad, Alex & Kaiser, Ulrich & Kuhn, Johan, 2021. "Spin doctors vs the spawn of capitalism: Who founds university and corporate startups?," Research Policy, Elsevier, vol. 50(10).
    15. Iacopetta, Maurizio & Minetti, Raoul & Murro, Pierluigi, 2024. "Growing through spinoffs. Corporate governance, entry dynamics, and innovation," Journal of Economic Dynamics and Control, Elsevier, vol. 161(C).
    16. Ethan Gifford & Guido Buenstorf & Daniel Ljungberg & Maureen McKelvey & Olof Zaring, 2021. "Variety in founder experience and the performance of knowledge-intensive innovative firms," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 677-713, April.

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