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New firm formation in the wake of mergers and acquisitions: An exploration of push and pull factors

Author

Listed:
  • Monia Lougui

    (The Ratio Institute)

  • Anders Broström

    () (KTH Royal Institute of Technology)

Abstract

Abstract This study investigates the relationship between mergers and acquisitions (M&A) and entrepreneurial spawning in labour-intensive service sectors. We discuss two sets of theoretical mechanisms. First, M&As may push employees into entrepreneurship by lowering the average barriers of leaving the current employment (i.e. being associated with general deterioration of working conditions). Second, M&A activities may generate new entrepreneurial opportunities, which are first and foremost accessible by employees directly affected by M&As. Results on entrepreneurial spawning in 3,198 Swedish firms during the time period 2000–2009 confirm that the number of firms spawned from a specific incumbent increases following an M&A. Push-oriented factors are found to contribute to this effect, but a dominating part of the total effect remains in the presence of proxies for push-effects. This suggests that pull-oriented explanations of opportunity creation in the wake of M&As constitute an important avenue for further research on the antecedents of new firm formation.

Suggested Citation

  • Monia Lougui & Anders Broström, 0. "New firm formation in the wake of mergers and acquisitions: An exploration of push and pull factors," Journal of Evolutionary Economics, Springer, vol. 0, pages 1-25.
  • Handle: RePEc:spr:joevec:v::y::i::d:10.1007_s00191-020-00678-4
    DOI: 10.1007/s00191-020-00678-4
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    More about this item

    Keywords

    firm formation; entrepreneurial spawning; mergers; acquisitions; opportunity costs; entrepreneurial opportunity;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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