When do spinouts benefit from market overlap with parent firms?
Loading...
Access rights
openAccess
publishedVersion
URL
Journal Title
Journal ISSN
Volume Title
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
This publication is imported from Aalto University research portal.
View publication in the Research portal (opens in new window)
View/Open full text file from the Research portal (opens in new window)
Other link related to publication (opens in new window)
View publication in the Research portal (opens in new window)
View/Open full text file from the Research portal (opens in new window)
Other link related to publication (opens in new window)
Date
2022-11
Major/Subject
Mcode
Degree programme
Language
en
Pages
17
Series
Journal of Business Venturing, Volume 37, issue 6, pp. 1-17
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.Description
Funding Information: Both authors contributed equally and the names are listed in alphabetical order. We would like to thank our editor Mirjam Knockaert and three anonymous reviewers for their constructive comments during the review process. We are also grateful to Rajshree Agarwal, Gautam Ahuja, Thomas Astebro, Martin Ganco, Tobias Kretschmer, Keld Laursen, and Franco Malerba for their valuable comments on earlier versions of the paper. A previous version of this article was circulated with the title “The Double-Edged Sword of Knowledge Inheritance: Knowledge Overlap and Spin-outs' Performance”. The usual disclaimer applies. Publisher Copyright: © 2022 The Authors
Keywords
Biotech, Competitive tension, Knowledge inheritance, New ventures' performance, Spinouts
Other note
Citation
Bahoo-Torodi, A & Torrisi, S 2022, ' When do spinouts benefit from market overlap with parent firms? ', Journal of Business Venturing, vol. 37, no. 6, 106249, pp. 1-17 . https://doi.org/10.1016/j.jbusvent.2022.106249