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A Corporation's Culture as an Impetus for Spinoffs and a Driving Force of Industry Evolution

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  • Christian Cordes

    ()

  • Peter J. Richerson
  • Georg Schwesinger

    ()

Abstract

In infant industries, a great share of new market opportunities is depleted by firms that spinoff from incumbents. A model emphasizing the relation between incumbents' evolving corporate cultures and the generation of spinoffs explains this regularity in industry evolution. Organizations reach a critical size that entails the collapse of a cooperative culture and triggers the exodus of personnel founding own firms. Thereby, organizations with a cooperative culture active in a dynamic business environment provide ideal training grounds for potential founders. We relate our findings to empirical evidence on developmental patterns in industries, such as genealogies and performance of spinoffs.

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Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2011-11.

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Date of creation: Aug 2011
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Handle: RePEc:esi:evopap:2011-11

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Keywords: Spinoff Formation; Critical Firm Size; Firm Performance; Industry Evolution; Corporate Culture Length 23 pages;

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References

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Cited by:
  1. Georg Schwesinger, 2013. "Natural and Economic Selection - Lessons from the Evo-Devo and Multilevel Selection Debate," Jena Economic Research Papers 2013-014, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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