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New firm formation in the wake of mergers and acquisitions: Are employees pushed or pulled into entrepreneurship?

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  • Lougui, Monia

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Broström, Anders

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

This study investigates the relationship between mergers and acquisitions (M&A) and employee entrepreneurship in human capital-intensive service sectors. We investigate two sets of theoretical mechanisms. First, M&As may push employees 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 employee entrepreneurship in 3 039 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 unexplained. This suggests that pull-oriented explanations of opportunity creation in the wake of M&As constitute an important avenue for further research on employee entrepreneurship.

Suggested Citation

  • Lougui, Monia & Broström, Anders, 2016. "New firm formation in the wake of mergers and acquisitions: Are employees pushed or pulled into entrepreneurship?," Working Paper Series in Economics and Institutions of Innovation 427, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0427
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    More about this item

    Keywords

    employee entrepreneurship; mergers; acquisitions; opportunity costs; entrepreneurial opportunity;
    All these keywords.

    JEL classification:

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

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