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Do direct or indirect relations between incumbent firms and corporate spin-offs affect the performance of spin-offs?

Author

Listed:
  • Majbritt Rostgaard Evald
  • Ann Hojbjerg Clarke
  • Kent Wickstrom Jensen

Abstract

This article focuses on the performance of corporate spin-offs. The existing literature agrees that corporate spin-offs perform better than independent start-ups. However, systematic evidence on the subject still seems elusive. We therefore review articles that specifically address the performance of corporate spin-offs. Furthermore, we argue there is a need to distinguish between different types of spin-offs when evaluating their performances relative to independent start-ups. In particular, not all spin-offs have the fortune of access to parts of the resource base of their incumbent firm. We therefore suggest a distinction between whether the spin-off has direct or only indirect relations with their incumbent firm. A Danish sample of 325 companies (spinoffs and independent start-ups) shows that spin-offs in general perform better than independent start-ups. In the group of spin-offs, performance differences also exist. Spin-offs with indirect relations to an incumbent firm perform better than spin-offs with direct relations.

Suggested Citation

  • Majbritt Rostgaard Evald & Ann Hojbjerg Clarke & Kent Wickstrom Jensen, 2009. "Do direct or indirect relations between incumbent firms and corporate spin-offs affect the performance of spin-offs?," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 1(2), pages 147-163.
  • Handle: RePEc:ids:ijeven:v:1:y:2009:i:2:p:147-163
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