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Innovativeness and performance of Finnish corporate spin-offs in knowledge-based industries

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Helsinki University of Technology | Master's thesis
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TU-91

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en

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101+

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Corporate spin-offs offer a possibility to combine the advantages of small entrepreneurial organizations and have an access to the parent firm's resource base when commercializing innovations. Founding conditions within the parent firm can have an impact on the future performance and innovativeness of spin-offs. This study applies the resource based theory to identify such parent firm related factors. The analyzed factors include prior performance, innovativeness, autonomy, relatedness, social capital, spin-off motives, transferred resources, parent's share of ownership and post-spin-off operational linkages between the spin-off and the parent firm. The primary data for this study was collected in a survey sent to the CEOs or founders of 118 firms that were confirmed spin-offs. Of these 57 responded. Corporate spin-off firms seem to perform slightly better than the median firms in the industry. Nearly 80 percent of the spin-offs have a formal relationship with the parent 2-4 years after the separation. However, vast majority of them do not share resources with the parent firm. Spin-offs receive a higher share of their revenue from new products after the separation and use a higher share of their revenue on R&D activities. Both innovativeness and performance seem to improve after the separation from the parent. The spin-off decision seems to be more beneficial for projects that do not success well within the parent firm. Empirical results of the study show that the prior inventiveness is associated positively with post-spin-off innovation activities. The results imply the existence of several relationships between founding conditions and post-spin-off success but most of them failed to come across the statistically significant level. However, our results indicate that the prior distribution and marketing relatedness is associated positively with overall innovativeness and the production and technology relatedness to improvements in innovativeness.

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Parhankangas, Annaleena

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Parhankangas, Annaleena
Lehtoranta, Olavi

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