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Inherited Advantage and Spinoff Success

Author

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  • Broström, Anders

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

  • Lööf, Hans

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

  • Nabavi, Pardis

    () (Swedish Entrepreneurship Forum & Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology (KTH))

Abstract

This paper investigates how incumbent firm characteristics affect the viability of its spinoffs. The survival patterns of spinoffs with roots in exporting firms and in technologically innovative firms are compared to the survival of other spinoffs. Using comprehensive Swedish employer-employee panel data sets, three possible outcomes are identified: survival,acquisition and complete exit from the market. Experience from an exporting parent is positively associated with spinoff survival. These inheritance benefits do, however, decrease with the tenure of ex-employees. This suggests that inherited advantages in this case is not primarily driven by enhanced opportunities for on-the-job learning. Above-average attractiveness to employees, and associated ability sorting and opportunity costs mechanisms, provides explanations for the superior survival of spin-offs from exporting firms that seem more congruent with data. The study also suggest that technological innovativeness, captured by parent's patenting activity, is negatively associated with spinoff survival when controlling for exports. This result support the view that knowledge inside innovative firms is "sticky" and not easily transferable to new ventures by ex-employees.

Suggested Citation

  • Broström, Anders & Lööf, Hans & Nabavi, Pardis, 2016. "Inherited Advantage and Spinoff Success," Working Paper Series in Economics and Institutions of Innovation 437, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0437
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    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp437.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    entrepreneurship; exports; organizational heritage; innovation; spinoff; entrepreneurial spawning;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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