IDEAS home Printed from https://ideas.repec.org/a/sae/entthe/v43y2019i6p1166-1193.html
   My bibliography  Save this article

Bringing It All Back Home: Corporate Venturing and Renewal Through Spin-ins

Author

Listed:
  • Richard A. Hunt
  • David M. Townsend
  • Elham Asgari
  • Daniel A. Lerner

Abstract

More often than not, corporate acquisitions are expensive and difficult, especially those transacted for the purpose of advancing the aims of corporate entrepreneurship (CE). Motivated by frequent, high-cost failures, firms are experimenting with novel organizational structures and fresh approaches to acquisition-driven CE. In this study, we examine the effectiveness of corporate spin-ins—acquisitions in which the acquired company is founded by former employees of the acquiring firm—in resolving key challenges of CE-motivated acquisitions Using a matched pairwise dataset of spin-in and non-spin-in acquisitions, we discover that spin-ins generate superior outcomes, positioning them as a high-potential facet of CE portfolios.

Suggested Citation

  • Richard A. Hunt & David M. Townsend & Elham Asgari & Daniel A. Lerner, 2019. "Bringing It All Back Home: Corporate Venturing and Renewal Through Spin-ins," Entrepreneurship Theory and Practice, , vol. 43(6), pages 1166-1193, November.
  • Handle: RePEc:sae:entthe:v:43:y:2019:i:6:p:1166-1193
    DOI: 10.1177/1042258718778547
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1042258718778547
    Download Restriction: no

    File URL: https://libkey.io/10.1177/1042258718778547?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Phan, Phillip H. & Wright, Mike & Ucbasaran, Deniz & Tan, Wee-Liang, 2009. "Corporate entrepreneurship: Current research and future directions," Journal of Business Venturing, Elsevier, vol. 24(3), pages 197-205, May.
    2. Ulrike Malmendier & Geoffrey Tate, 2005. "CEO Overconfidence and Corporate Investment," Journal of Finance, American Finance Association, vol. 60(6), pages 2661-2700, December.
    3. Henri A. Schildt & Markku V.J. Maula & Thomas Keil, 2005. "Explorative and Exploitative Learning from External Corporate Ventures," Entrepreneurship Theory and Practice, , vol. 29(4), pages 493-515, July.
    4. Ferris, Stephen P. & Jayaraman, Narayanan & Sabherwal, Sanjiv, 2013. "CEO Overconfidence and International Merger and Acquisition Activity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(1), pages 137-164, February.
    5. Margarethe F. Wiersema & Harry P. Bowen, 2009. "The use of limited dependent variable techniques in strategy research: issues and methods," Strategic Management Journal, Wiley Blackwell, vol. 30(6), pages 679-692, June.
    6. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
    7. Jung-Chin Shen & Jeffrey Reuer, 2005. "Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and Public Targets," Small Business Economics, Springer, vol. 24(4), pages 393-407, May.
    8. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    9. Desmond Ng & Randall Westgren & Steven Sonka, 2009. "Competitive blind spots in an institutional field," Strategic Management Journal, Wiley Blackwell, vol. 30(4), pages 349-369, April.
    10. Zacharakis, Andrew L. & Shepherd, Dean A., 2001. "The nature of information and overconfidence on venture capitalists' decision making," Journal of Business Venturing, Elsevier, vol. 16(4), pages 311-332, July.
    11. Theresa Michl & Bernhard Gold & Arnold Picot, 2012. "The spin-along approach: ambidextrous corporate venturing management," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 15(1), pages 39-56.
    12. Reuer, Jeffrey J. & Ragozzino, Roberto, 2008. "Adverse selection and M&A design: The roles of alliances and IPOs," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 195-212, May.
    13. Filippo Carlo Wezel & Gino Cattani & Johannes M. Pennings, 2006. "Competitive Implications of Interfirm Mobility," Organization Science, INFORMS, vol. 17(6), pages 691-709, December.
    14. Steven Klepper & Sally Sleeper, 2005. "Entry by Spinoffs," Management Science, INFORMS, vol. 51(8), pages 1291-1306, August.
    15. David R. King & Dan R. Dalton & Catherine M. Daily & Jeffrey G. Covin, 2004. "Meta‐analyses of post‐acquisition performance: indications of unidentified moderators," Strategic Management Journal, Wiley Blackwell, vol. 25(2), pages 187-200, February.
    16. 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.
    17. Ishii, Joy & Xuan, Yuhai, 2014. "Acquirer-target social ties and merger outcomes," Journal of Financial Economics, Elsevier, vol. 112(3), pages 344-363.
    18. Julian Birkinshaw & Henrik Bresman & Lars Håkanson, 2000. "Managing the Post‐acquisition Integration Process: How the Human Iintegration and Task Integration Processes Interact to Foster Value Creation," Journal of Management Studies, Wiley Blackwell, vol. 37(3), pages 395-425, May.
    19. Donald F. Kuratko & David B. Audretsch, 2009. "Strategic Entrepreneurship: Exploring Different Perspectives of an Emerging Concept," Entrepreneurship Theory and Practice, , vol. 33(1), pages 1-17, January.
    20. Micah S. Officer & Annette B. Poulsen & Mike Stegemoller, 2009. "Target-firm information asymmetry and acquirer returns," Review of Finance, European Finance Association, vol. 13(3), pages 467-493.
    21. Barber, Brad M. & Lyon, John D., 1997. "Detecting long-run abnormal stock returns: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 43(3), pages 341-372, March.
    22. Richard P. Rumelt, 1982. "Diversification strategy and profitability," Strategic Management Journal, Wiley Blackwell, vol. 3(4), pages 359-369, October.
    23. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, The RAND Corporation, vol. 37(4), pages 841-860, December.
    24. Narayanan, V.K. & Yang, Yi & Zahra, Shaker A., 2009. "Corporate venturing and value creation: A review and proposed framework," Research Policy, Elsevier, vol. 38(1), pages 58-76, February.
    25. Eero Vaara, 2003. "Post‐acquisition Integration as Sensemaking: Glimpses of Ambiguity, Confusion, Hypocrisy, and Politicization," Journal of Management Studies, Wiley Blackwell, vol. 40(4), pages 859-894, June.
    26. Cloodt, Myriam & Hagedoorn, John & Van Kranenburg, Hans, 2006. "Mergers and acquisitions: Their effect on the innovative performance of companies in high-tech industries," Research Policy, Elsevier, vol. 35(5), pages 642-654, June.
    27. Royston Greenwood & C. R. Hinings & John Brown, 1994. "Merging Professional Service Firms," Organization Science, INFORMS, vol. 5(2), pages 239-257, May.
    28. John A. Doukas & Dimitris Petmezas, 2007. "Acquisitions, Overconfident Managers and Self‐attribution Bias," European Financial Management, European Financial Management Association, vol. 13(3), pages 531-577, June.
    29. Jeffrey G. Covin & Morgan P. Miles, 1999. "Corporate Entrepreneurship and the Pursuit of Competitive Advantage," Entrepreneurship Theory and Practice, , vol. 23(3), pages 47-63, April.
    30. Deepak K. Datta, 1991. "Organizational fit and acquisition performance: Effects of post‐acquisition integration," Strategic Management Journal, Wiley Blackwell, vol. 12(4), pages 281-297, May.
    31. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    32. Glenn Hoetker, 2007. "The use of logit and probit models in strategic management research: Critical issues," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 331-343, April.
    33. Josh Lerner, 1996. "The Government as Venture Capitalist: The Long-Run Effects of the SBIR Program," NBER Working Papers 5753, National Bureau of Economic Research, Inc.
    34. Martin, Kenneth J, 1996. "The Method of Payment in Corporate Acquisitions, Investment Opportunities, and Management Ownership," Journal of Finance, American Finance Association, vol. 51(4), pages 1227-1246, September.
    35. Lihua Wang & Edward J. Zajac, 2007. "Alliance or acquisition? a dyadic perspective on interfirm resource combinations," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1291-1317, December.
    36. Will Drover & Matthew S. Wood & G. Tyge Payne, 2014. "The Effects of Perceived Control on Venture Capitalist Investment Decisions: A Configurational Perspective," Entrepreneurship Theory and Practice, , vol. 38(4), pages 833-861, July.
    37. Rikard Larsson & Sydney Finkelstein, 1999. "Integrating Strategic, Organizational, and Human Resource Perspectives on Mergers and Acquisitions: A Case Survey of Synergy Realization," Organization Science, INFORMS, vol. 10(1), pages 1-26, February.
    38. Kevin B. Hendricks & Vinod R. Singhal, 2001. "The Long-Run Stock Price Performance of Firms with Effective TQM Programs," Management Science, INFORMS, vol. 47(3), pages 359-368, March.
    39. Pierre Dussauge & Laurence Capron & Will Mitchell, 1998. "Resource redeployment following horizontal acquisitions in Europe and North America, 1988-1992," Post-Print hal-00464384, HAL.
    40. Harbir Singh & Maurizio Zollo, 1998. "The Impact of Knowledge Codification, Experience Trajectories and Integration Strategies on the Performance of Corporate Acquisitions," Center for Financial Institutions Working Papers 98-24, Wharton School Center for Financial Institutions, University of Pennsylvania.
    41. Davidson, Russell & MacKinnon, James G, 1992. "A New Form of the Information Matrix Test," Econometrica, Econometric Society, vol. 60(1), pages 145-157, January.
    42. Klepper, Steven & Thompson, Peter, 2010. "Disagreements and intra-industry spinoffs," International Journal of Industrial Organization, Elsevier, vol. 28(5), pages 526-538, September.
    43. repec:bla:jomstd:v:37:y:2000:i::p:395-425 is not listed on IDEAS
    44. Tim Loughran & Jay Ritter, 2004. "Why Has IPO Underpricing Changed Over Time?," Financial Management, Financial Management Association, vol. 33(3), Fall.
    45. Shaker A. Zahra & Anders P. Nielsen & William C. Bogner, 1999. "Corporate Entrepreneurship, Knowledge, and Competence Development," Entrepreneurship Theory and Practice, , vol. 23(3), pages 169-189, April.
    46. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts and the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 39-84.
    47. Barth, ME & Clinch, G, 1998. "Revalued financial, tangible, and intangible assets: Associations with share prices and non-market-based value estimates," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 199-233.
    48. repec:bla:jfinan:v:53:y:1998:i:2:p:773-784 is not listed on IDEAS
    49. Francis, J & Hanna, JD & Vincent, L, 1996. "Causes and effects of discretionary asset write-offs," Journal of Accounting Research, Wiley Blackwell, vol. 34, pages 117-134.
    50. Eero Vaara, 2003. "Post-acquisition integration as sensemaking : Glimpses of ambiguity, confusion, hypocrisy, and politicization," Post-Print hal-02311680, HAL.
    51. Raghavendra Rau, P. & Vermaelen, Theo, 1998. "Glamour, value and the post-acquisition performance of acquiring firms," Journal of Financial Economics, Elsevier, vol. 49(2), pages 223-253, August.
    52. Melissa E. Graebner, 2004. "Momentum and serendipity: how acquired leaders create value in the integration of technology firms," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 751-777, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hunt, Richard A. & Townsend, David M. & Manocha, Parul & Simpson, Joseph J., 2023. "Knowledge problem diagnosis and the fate of corporate entrepreneurship initiatives," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
    2. Kaveh Bastani & Elham Asgari & Hamed Namavari, 2018. "Wide and Deep Learning for Peer-to-Peer Lending," Papers 1810.03466, arXiv.org, revised Oct 2018.
    3. Hunt, Richard A., 2021. "Entrepreneurial orientation and the fate of corporate acquisitions," Journal of Business Research, Elsevier, vol. 122(C), pages 241-255.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hunt, Richard A., 2021. "Entrepreneurial orientation and the fate of corporate acquisitions," Journal of Business Research, Elsevier, vol. 122(C), pages 241-255.
    2. Wang, Daojuan & Hain, Daniel S. & Larimo, Jorma & Dao, Li T., 2020. "Cultural differences and synergy realization in cross-border acquisitions," International Business Review, Elsevier, vol. 29(3).
    3. Chondrakis, George, 2016. "Unique synergies in technology acquisitions," Research Policy, Elsevier, vol. 45(9), pages 1873-1889.
    4. Bauer, Florian & King, David & Matzler, Kurt, 2016. "Speed of acquisition integration: Separating the role of human and task integration," Scandinavian Journal of Management, Elsevier, vol. 32(3), pages 150-165.
    5. Satu Teerikangas & Olivier Irrmann, 2016. "Cultural Change Following International Acquisitions: Cohabiting the Tension Between Espoused and Practiced Cultures," Management International Review, Springer, vol. 56(2), pages 195-226, April.
    6. Colman, Helene Loe, 2020. "Facilitating integration and maintaining autonomy: The role of managerial action and interaction in post-acquisition cabability transfer," Journal of Business Research, Elsevier, vol. 109(C), pages 148-160.
    7. Strobl, Andreas & Bauer, Florian & Matzler, Kurt, 2020. "The impact of industry-wide and target market environmental hostility on entrepreneurial leadership in mergers and acquisitions," Journal of World Business, Elsevier, vol. 55(2).
    8. Meglio, Olimpia & Risberg, Annette, 2011. "The (mis)measurement of M&A performance—A systematic narrative literature review," Scandinavian Journal of Management, Elsevier, vol. 27(4), pages 418-433.
    9. Alfonso Gambardella & Martin Ganco & Florence Honoré, 2015. "Using What You Know: Patented Knowledge in Incumbent Firms and Employee Entrepreneurship," Organization Science, INFORMS, vol. 26(2), pages 456-474, April.
    10. Teerikangas, Satu & Colman, Helene Loe, 2020. "Theorizing in the qualitative study of mergers & acquisitions," Scandinavian Journal of Management, Elsevier, vol. 36(1).
    11. Kanungo, Rama Prasad, 2021. "Uncertainty of M&As under asymmetric estimation," Journal of Business Research, Elsevier, vol. 122(C), pages 774-793.
    12. Johan Wiklund & Dean A. Shepherd, 2009. "The Effectiveness of Alliances and Acquisitions: The Role of Resource Combination Activities," Entrepreneurship Theory and Practice, , vol. 33(1), pages 193-212, January.
    13. Albert Banal‐Estañol & Jo Seldeslachts, 2011. "Merger Failures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 589-624, June.
    14. Hussinger, Katrin & Grimpe, Christoph, 2007. "Firm Acquisitions and Technology Strategy: Corporate versus Private Equity Investors," ZEW Discussion Papers 07-066, ZEW - Leibniz Centre for European Economic Research.
    15. Martynova, M., 2006. "The market for corporate control and corporate governance regulation in Europe," Other publications TiSEM 8651e281-4914-41f2-ac14-1, Tilburg University, School of Economics and Management.
    16. Ioannis Ioannou, 2014. "When Do Spinouts Enhance Parent Firm Performance? Evidence from the U.S. Automobile Industry, 1890–1986," Organization Science, INFORMS, vol. 25(2), pages 529-551, April.
    17. Jan Lampe & Priscilla Sarai Kraft & Andreas Bausch, 2020. "Mapping the Field of Research on Entrepreneurial Organizations (1937–2016): A Bibliometric Analysis and Research Agenda," Entrepreneurship Theory and Practice, , vol. 44(4), pages 784-816, July.
    18. Andrey Golubov & Dimitris Petmezas & Nickolaos G. Travlos, 2013. "Empirical mergers and acquisitions research: a review of methods, evidence and managerial implications," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 12, pages 287-313, Edward Elgar Publishing.
    19. Suin Lee & Christos Pantzalis & Jung Chul Park, 2024. "Interstate migration‐based social networks and M&A decisions," The Financial Review, Eastern Finance Association, vol. 59(1), pages 113-153, February.
    20. Pamela Adams & Roberto Fontana & Franco Malerba, 2022. "Knowledge resources and the acquisition of spinouts," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 277-313, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:entthe:v:43:y:2019:i:6:p:1166-1193. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.