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Death Hurts, But It Isn't Fatal: The Postexit Diffusion of Knowledge Created by Innovative Companies

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Author Info

  • Hoetker, Glenn

    (U of Illinois at Urbana-Champaign)

  • Agarwal, Rajshree

    (U of Illinois at Urbana-Champaign)

Abstract

The innovative knowledge created by firms that ultimately exit their industries represents a source of technology that existing firms may build on. However, no empirical work has examined if such knowledge dies with an innovating firm or if significant diffusion of knowledge occurs even after a firm exits an industry. We base our theoretical predictions about the differing effects of firm exit on private and public knowledge and discuss implications for interfirm knowledge transfer. Using the disk drive industry as our empirical setting, we investigated the main and moderating effects of firm exit on the rate of knowledge diffusion to other firms. Our findings are consistent with prior work highlighting the importance of location and employee mobility in knowledge transfer. We also found evidence that the ability to use a firm as a template plays a critical role in successfully replicating its knowledge. Absent this template, knowledge "stickiness" reduces knowledge diffusion.

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Bibliographic Info

Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 05-0100.

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Date of creation: 2005
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Handle: RePEc:ecl:illbus:05-0100

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Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp
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  1. Martin, Xavier & Mitchell, Will, 1998. "The influence of local search and performance heuristics on new design introduction in a new product market," Research Policy, Elsevier, vol. 26(7-8), pages 753-771, April.
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  4. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-40, June.
  5. Ajay Agrawal & Iain Cockburn & John McHale, 2003. "Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital," NBER Working Papers 9950, National Bureau of Economic Research, Inc.
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  8. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819.
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Cited by:
  1. Erik Stam & Karl Wennberg, 2009. "The role of R&D in new firm growth," Jena Economic Research Papers 2009-004, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. Lee, Seung-Hyun & Yamakawa, Yasuhiro & Peng, Mike W. & Barney, Jay B., 2011. "How do bankruptcy laws affect entrepreneurship development around the world?," Journal of Business Venturing, Elsevier, vol. 26(5), pages 505-520, September.
  3. Dushnitsky, Gary & Lenox, Michael J., 2006. "When does corporate venture capital investment create firm value?," Journal of Business Venturing, Elsevier, vol. 21(6), pages 753-772, November.
  4. Rui Baptista & Miguel Preto, 2011. "New firm formation and employment growth: regional and business dynamics," Small Business Economics, Springer, vol. 36(4), pages 419-442, May.
  5. Vanhaverbeke, Wim & Li, Ying & Van de Vrande, Vareska, 2009. "The dual role of external corporate venturing in technological exploration," MPRA Paper 26488, University Library of Munich, Germany, revised 2010.

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