Spin-offs: theory and evidence from the early U.S. automobile industry
AbstractWe develop "passive learning" model of firm entry by spin-off : firm employees leave their employer and create a new firm when (a) they learn they are good entrepreneurs (type I spin-offs) or (b) they learn their employer's prospects are bad (type II spin-offs). Our theory predicts a high correlation between spin-offs and parent exit, especially when the parent is a low-productivity firm. This correlation may correspond to two types of causality: spin-off causes firm exit (type I spin-offs) and firm exit causes spin-offs (type II spin-offs). We test and confirm this and other model predictions on a unique data set of the U.S. automobile industry. Finally, we discuss policy implications regarding "covenant not to compete" laws. ; Also issued as a Payments System Research Working Paper
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 08-15.
Date of creation: 2009
Date of revision:
Other versions of this item:
- Zhu Wang & Luis Cabral, 2013. "Spin-offs: Theory and Evidence from the Early U.S. Automobile Industry," 2013 Meeting Papers 942, Society for Economic Dynamics.
- NEP-ALL-2009-01-10 (All new papers)
- NEP-BEC-2009-01-10 (Business Economics)
- NEP-COM-2009-01-10 (Industrial Competition)
- NEP-CTA-2009-01-10 (Contract Theory & Applications)
- NEP-ENT-2009-01-10 (Entrepreneurship)
- NEP-MIC-2009-01-10 (Microeconomics)
- NEP-TID-2009-01-10 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 645-666, August.
- April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 841-860, December.
- Satyajit Chatterjee & Esteban Rossi-Hansberg, 2008.
"Spinoffs and the market for ideas,"
08-26, Federal Reserve Bank of Philadelphia.
- Satyajit Chatterjee & Esteban Rossi-Hansberg, 2007. "Spin-offs and the market for ideas," Working Papers 07-15, Federal Reserve Bank of Philadelphia.
- Esteban Rossi-Hansberg & Satyajit Chatterjee, 2007. "Spin-offs and the Market for Ideas," 2007 Meeting Papers 86, Society for Economic Dynamics.
- Satyajit Chatterjee & Esteban Rossi-Hansberg, 2007. "Spin-offs and the Market for Ideas," NBER Working Papers 13198, National Bureau of Economic Research, Inc.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988.
"Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries,"
1-88-2, Pennsylvania State - Department of Economics.
- Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
- April Mitchell Franco & Darren Filson, 2000.
"Knowledge diffusion through employee mobility,"
272, Federal Reserve Bank of Minneapolis.
- April M. Franco & Matthew F. Mitchell, 2008. "Covenants not to Compete, Labor Mobility, and Industry Dynamics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(3), pages 581-606, 09.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
- repec:rje:randje:v:37:y:2006:i:4:p:841-860 is not listed on IDEAS
- Luís Cabral & Zhu Wang & Daniel Yi Xu, 2013.
"Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry,"
NBER Working Papers
18973, National Bureau of Economic Research, Inc.
- Luis Cabral & Zhu Wang & Daniel Yi Xu, 2013. "Competitors, complementors, parents and places: Explaining regional agglomeration in the U.S. auto industry," Working Paper 13-04, Federal Reserve Bank of Richmond.
- Cabral, Luís M B & Wang, Zhu & Xu, Yi (Daniel), 2013. "Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry," CEPR Discussion Papers 9435, C.E.P.R. Discussion Papers.
- Luis Cabral & Zhu Wang & Daniel Yi Xu, 2013. "Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry," Working Papers 13-05, New York University, Leonard N. Stern School of Business, Department of Economics.
- Fryges, Helmut & Müller, Bettina & Niefert, Michaela, 2013. "Job machine, think tank, or both: What makes corporate spinoffs different?," ZEW Discussion Papers 13-093, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Oana Hirakawa & Marc-Andreas Muendler & James E. Rauch, 2010.
"Employee Spinoffs and Other Entrants: Stylized Facts from Brazil,"
NBER Working Papers
15638, National Bureau of Economic Research, Inc.
- Muendler, Marc-Andreas & Rauch, James E. & Tocoian, Oana, 2012. "Employee spinoffs and other entrants: Stylized facts from Brazil," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 447-458.
- Oana Hirakawa & Marc-Andreas Muendler & James E. Rauch, 2010. "Employee spinoffs and other entrants: stylized facts from Brazil," LSE Research Online Documents on Economics 36384, London School of Economics and Political Science, LSE Library.
- Peter Thompson & Jing Chen, 2011.
"Disagreements, employee spinoffs and the choice of technology,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 455-474, July.
- Jing Chen & Peter Thompson, 2010. "Code files for "Disagreements, Employee Spinoffs and the Choice of Technology"," Computer Codes 09-182, Review of Economic Dynamics.
- Fackler, Daniel & Schnabel, Claus, 2013.
"Survival of spinoffs and other startups: First evidence for the private sector in Germany, 1976 - 2008,"
IWQW Discussion Paper Series
06/2013, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
- Fackler, Daniel & Schnabel, Claus, 2013. "Survival of Spinoffs and Other Startups: First Evidence for the Private Sector in Germany, 1976-2008," IZA Discussion Papers 7542, Institute for the Study of Labor (IZA).
- Fackler, Daniel & Schnabel, Claus, 2013. "Survival of spinoffs and other startups: First evidence for the private sector in Germany, 1976-2008," Discussion Papers 84, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
- Christian Cordes & Peter Richerson & Georg Schwesinger, 2014.
"A corporation’s culture as an impetus for spinoffs and a driving force of industry evolution,"
Journal of Evolutionary Economics,
Springer, vol. 24(3), pages 689-712, July.
- Christian Cordes & Peter J. Richerson & Georg Schwesinger, 2011. "A Corporation's Culture as an Impetus for Spinoffs and a Driving Force of Industry Evolution," Papers on Economics and Evolution 2011-11, Philipps University Marburg, Department of Geography.
- Zhu Wang & Daniel Yi Xu & Luis Cabral, 2012. "The Determinants of Geographic Concentration of Industry: A Quantitative Analysis," 2012 Meeting Papers 615, Society for Economic Dynamics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lu Dayrit).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.