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Graceful Exits and Missed Opportunities: Xerox's Management of its Technology Spin-off Organizations

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  • Chesbrough, Henry

Abstract

The Xerox Corporation has devised several strategies for managing the numerous spin-off firms that independently commercialized many of its technologies. From 1979 to 1998, thirty-five technology-based organizations emerged from Xerox's research centers. Contradicting the common perception that Xerox “fumbled the future†by letting its technology walk out the door, in fact the company set in motion a series of deliberate initiatives to manage its spin-off organizations. After initially adopting a laissez-faire approach, the company soon turned to ad hoc methods, which evolved into a formal internal venture capital structure and culminated in a triage process, with the result that only companies perceived by Xerox as fitting into its overall corporate strategy were retained. By using spin-offs to withdraw gracefully from areas it considered to be marginal, Xerox for feited the potential to realize value from their research. Some, but not all, of the spin-offs obtained venture capital financing from outside sources and thus prospered independently. Their success demonstrated the opportunity that Xerox missed in managing its spin-offs.

Suggested Citation

  • Chesbrough, Henry, 2002. "Graceful Exits and Missed Opportunities: Xerox's Management of its Technology Spin-off Organizations," Business History Review, Cambridge University Press, vol. 76(4), pages 803-837, January.
    • Handle: RePEc:cup:buhirw:v:76:y:2002:i:04:p:803-837_07
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    1. Heike Mayer, 2013. "Spinoff regions: entrepreneurial emergence and regional development in second-tier high-technology regions – observations from the Oregon and Idaho electronics sectors," Chapters, in: Frank Giarratani & Geoffrey J.D. Hewings & Philip McCann (ed.), Handbook of Industry Studies and Economic Geography, chapter 8, pages 207-229, Edward Elgar Publishing.
    2. Thomas Hellmann, 2007. "When Do Employees Become Entrepreneurs?," Management Science, INFORMS, vol. 53(6), pages 919-933, June.
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    4. Ashish Arora & Sharon Belenzon & Andrea Patacconi & Jungkyu Suh, 2020. "The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth," Innovation Policy and the Economy, University of Chicago Press, vol. 20(1), pages 39-93.
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    9. Czakon, Wojciech & Klimas, Patrycja & Kawa, Arkadiusz & Kraus, Sascha, 2023. "How myopic are managers? Development and validation of a multidimensional strategic myopia scale," Journal of Business Research, Elsevier, vol. 157(C).
    10. Katja Maria Hydle & Kjersti Vikse Meland, 2016. "Spinning Them Off: Entrepreneuring Practices in Corporate Spin-Offs," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 12(1), pages 57-73.
    11. Shankar, Raj K. & Shepherd, Dean A., 2019. "Accelerating strategic fit or venture emergence: Different paths adopted by corporate accelerators," Journal of Business Venturing, Elsevier, vol. 34(5), pages 1-1.
    12. Forough Zarea Fazlelahi & J. Henri Burgers & Martin Obschonka & Per Davidsson, 2023. "Spinoffs’ alliance network growth beyond parental ties: performance diminishing, then performance enhancing," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 743-773, June.
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    15. Chesbrough, Henry, 2003. "The governance and performance of Xerox's technology spin-off companies," Research Policy, Elsevier, vol. 32(3), pages 403-421, March.
    16. Ueda, Masako & Frantzeskakis, Kyriakos, 2007. "A Dynamic Equilibrium Model of Firm's Life Cycle and Mergers as Efficient Reallocation," CEPR Discussion Papers 6079, C.E.P.R. Discussion Papers.
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    24. Bruno Cirillo, 2019. "External Learning Strategies and Technological Search Output: Spinout Strategy and Corporate Invention Quality," Organization Science, INFORMS, vol. 30(2), pages 361-382, March.

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