Comparative Advantages of Spin-off Firms: An Evolutionary Perspective

Authors

  • Bilgehan Uzunca IESE Business School

DOI:

https://doi.org/10.4067/S0718-27242011000400007

Keywords:

Spinoffs, evolutionary view, transfer of routines, organizational learning, social capital

Abstract

As predicted by evolutionary economics, historical antecedents matter when it comes to the relationship between survival of entrants and organizational capabilities. Spinoff firms provide an exemplary case of such relationship where the founders’ pre-entry capabilities that are inherited from the parent firm increases their survival chances. Looking closer and deeper to the evolutionary spinoff success mechanisms, I examine three specific genetic features which make spinoff firms more advantageous compared to other entrants; namely 1) Genotype: Transfer of blueprint, 2) Phenotype: Organizational learning, and 3) Memes: Informal relations and social capital. A detailed theoretical analysis of each mechanism prevails how they function and provide sustainable competitive advantage to spinoff firms. Testable hypotheses are provided about each mechanism.

Downloads

Download data is not yet available.

Author Biography

Bilgehan Uzunca, IESE Business School

Bilgehan Uzunca is a PhD candidate in the Strategic Management Department of IESE Business School. He earned a B.Sc. in Industrial Engineering and holds an MBA (Master of Business Administration) degree from Middle East Technical University (METU). His research interests have centered on the strategic management field with a particular focus on the connections between new venture formation, spinoffs, buyer-supplier relationships, interorganizational relationships, and industry evolution.

References

AGARWAL, R., Echambadi, R., Franco, A. M., Sarkar, M. B., 2004, “Knowledge transfer through inheritance: Spinout generation, development and survival”, Academy of Management Journal, 47:4, pp. 501-522.

AGARWAL R, Audretsch D, Sarkar M. 2010. “Knowledge spillovers and strategic entrepreneurship”, Strategic Entrepreneurship Journal 4:4, pp. 271-283.

ALDRICH, H. E., 1999, Organizations Evolving, London: Sage.

ALDRICH, H. E., Baker, T., 2001, “Learning and legitimacy: entrepreneurial responses to constraints on the emergence of new populations and organizations.” in Schoonhoven, C. B., Romanelli, E. (Eds.), The Entrepreneurship Dynamic, Origins of Entrepreneurship and the Evolution of Industries, Stanford, CA: Stanford University Press, pp. 207-235.

BENNER MJ, Tripsas M. 2011. The influence of prior industry affiliation on framing in nascent industries: the evolution of digital cameras. Strategic Management Journal, forthcoming.

BERCHICCI L, King A, Tucci CL. 2011. “Does the apple always fall close to the tree? The geographical proximity choice of spin-outs”, Strategic Entrepreneurship Journal 5:2, pp. 120-136.

BOWER, J. L., Doz, Y., 1979, “Strategy formulation: A social and political process”, in Schendel, D. E., Hofer, C. W. (Eds.), Strategic Management: A New View of Business and Planning, Little, Brown, Boston, MA, pp. 152-166.

BRAUN, E., Macdonald S., 1978, Revolution in Miniature, London: Cambridge University Press.

BRESLIN, D., 2008, “A review of the evolutionary approach to the study of entrepreneurship”, International Journal of Management Reviews, 9:2, pp. 1-25.

BRITTAIN, J. W., Freeman J., 1986, Entrepreneurship in the Semiconductor Industry, unpublished manuscript, University of California, Mimeo.

BUENSTORF, G., 2006, “How useful is generalized Darwinism as a framework to study competition and industrial evolution?”, Journal of Evolutionary Economics, 15:5, pp. 511-527.

BUENSTORF, G., 2007a, “Creation and pursuit of entrepreneurial opportunities: An evolutionary economics perspective”, Small Business Economics, 28, pp. 323–337.

BUENSTORF, G., 2007b, “Evolution on the shoulders of giants: Entrepreneurship and firm survival in the German laser industry”, Review of Industrial Organization, 30:3, pp. 179-202.

BUENSTORF, G., Klepper, S., 2009, “Heritage and agglomeration: The Akron tire cluster revisited”, Economic Journal, 119:537, pp. 705-733.

CAMPBELL BA, Ganco M, Franco AM, Agarwal R. 2011. “Who leaves, where to, and why worry? employee mobility, entrepreneurship and effects on source firm performance”, Strategic Management Journal, forthcoming.

CHATTERJI AK., 2009, “Spawned with a silver spoon? Entrepreneurial performance and innovation in the medical device industry”. Strategic Management Journal

:2, pp. 185-206.

CHEN P, Williams C, Agarwal R. 2011. “Growing pains: Pre-entry experience and the challenge of transition to incumbency”, Strategic Management Journal, forthcoming.

COHEN, W. M., Levinthal, D. A., 1990, “Absorptive capacity: A new perspective on learning and innovation”, Administrative Science Quarterly, 35:1, pp. 128-152.

CROSSAN, M. M., Lane, H. W., White, R. E., 1999, “An organizational learning framework: From intuition to institution”, Academy of Management Review, 24:3, pp.

-537.

DARWIN, F., 1887, The Life and Letters of Charles Darwin, John Murray, London.

DAWKINS, R., 1976, The Selfish Gene, New York: Oxford University Press.

DAWKINS, R., 1983, “Universal Darwinism.” in Bendall, D. S. (Eds.): Evolution from Molecules to Men, Cambridge University Press, Cambridge, pp. 403– 425.

DOz, Y. L., 1996, “The evolution of cooperation in strategic alliances: Initial conditions or learning processes?”, Strategic Management Journal, 17:7, pp. 55-83.

FERREIRA, M. P., Tavares, A. T., Hesterly W., Armagan S., 2006, “Network and firm antecedents of spin-offs: Motherhooding spin-offs”, Universidade do Porto, Faculdade de Economia do Porto FEP Working Papers Series, Number 201.

FRANCO, A. M., Filson, D., 2000, Knowledge Diffusion Through Employee Mobility, Federal Reserve Bank of Minneapolis, Research Department Staff Report, No. 272.

GARNSEY, E., Lorenzoni, G., Ferriani, S., 2008, “Speciation through entrepreneurial spin-off: The Acorn- ARM story”, Research Policy, 37:2, pp. 210-224.

HELFAT C., Lieberman M., 2002, “The birth of capabilities: Market entry and the importance of pre-history”, Industrial and Corporate Change, 11:4, pp. 725-760.

HITE, J. M., Hesterly, W. S., 2001, “The evolution of firm networks: From emergence to early growth of the firm”, Strategic Management Journal, 22:3, pp. 275-286.

HITE, J. M., 2005, “Evolutionary processes and paths of relationally embedded network ties in emerging entrepreneurial firms”, Entrepreneurship Theory and Practice, 30:1, pp. 113-144.

HODGSON, G. M., 2002, “Darwinism in economics: from analogy to ontology”, Journal of Evolutionary Economics, 12:3, pp. 259-281.

HODGSON, G. M., 2003, “The mystery of the routine: The Darwinian destiny of an evolutionary theory or economic change”, Revue Economique, 54:2, pp. 335-384.

HODGSON, G. M., Knudsen T., 2004, “The firm as an interactor: Firms as vehicles for habits and routines”, Journal of Evolutionary Economics, 14:3, pp. 281-307.

HODGSON, G. M., Knudsen T., 2006a, “The nature and units of social selection”, Journal of Evolutionary Economics, 16:5, pp. 477-489.

HODGSON, G. M., Knudsen T., 2006b, “Why we need a generalized Darwinism, and why generalized Darwinism is not enough”, Journal of Economic Behavior and Organization, 61:1, pp. 1-19.

HUBER, G. P., 1991, “Organizational learning: The contributing processes and the literatures”, Organizational Science, 2:1, pp. 81-115.

JOHANSSON, M., 2007, “Corporate spin-offs and the significance of founders’ informal relations”, Technology Analysis & Strategic Management, 19:6, pp. 789-806.

JONES, C., 2005, “Firm transformation: Advancing a Darwinian perspective”, Management Decision, 43:1, pp.13-25.

KLEPPER, S., 2001. “Employee startups in high tech industries”, Industrial and Corporate Change, 10:3, pp. 639-674.

KLEPPER, S., 2002, “The capabilities of new firms and the evolution of the US automobile industry”, Industrial and Corporate Change, 11:1, pp.645-666.

KLEPPER, S., Sleeper, S., 2005, “Entry by spinoffs”, Management Science, 51:8, pp.1291-1306.

KLEPPER, S., Thompson P., 2005, “Spinoff entry in high- tech industries: Motives and consequences” in Malerba F., Brussoni S., (Eds.), Economic Perspectives on Innovation, Cambridge University Press, 6, pp. 187-218.

KLEPPER S. 2011. Nano-economics, spinoffs, and the wealth of regions. Small Business Economics 37:2, pp. 141-154.

KNUDSEN, T., 2002, “Economic selection theory”, Journal of Evolutionary Economics, 12:4, pp. 443-470.

LINDHOLM, A., 1994, The economics of technology- related ownership change? Unpublished doctoral dissertation, Chalmers University of Technology, Department of Industrial Management and Economics, Gothenburg, Sweden.

LINDHOLM–Dahlstrand, Å., 1997, “Growth and inventiveness in technology-based spin-off firms”, Research Policy, 26:3, pp. 331-344.

LINDHOLM–DAHLSTRAND, Å., 2000, “Entrepreneurial origin and spin-off performance”, Paper presented at the 20th Annual Entrepreneurship Research Conference, Babson College, USA, 8–10 June.

LUMSDEN, C. J., Wilson, E. O., 1981, Genes, Mind, and Culture, Cambridge: Harvard University Press.

MARCH, J. G., 1981, “Footnotes to organizational change”, Administrative Science Quarterly, 26 pp. 563-567.

MCIVOR, R., 2007, “Outsourcing and the spin-off arrangement: Lessons from a utility company”, Journal of General Management, 33:1, pp. 51-70.

MINER, A. S., 1994, “Seeking adaptive advantage: Evolutionary theory and managerial action”, in Baum, J., Singh, J. (Eds.), Evolutionary Dynamics of Organisations, New York: Oxford University Press, pp. 76 –89.

MOORE, G., Davis, K., 2004, “Learning the Silicon Valley way”, in Bresnahan T., Gambardella A., (Eds.), Building High-Tech Clusters: Silicon Valley and Beyond, Cambridge University Press, Cambridge UK, pp. 7-39.

MURMANN, J. P., 2003, Knowledge and Competitive Advantage: The Coevolution of Firms, Technology and National Institutions, Cambridge University Press, Cambridge.

NAHAPIET, J., Ghoshal, S., 1998, “Social capital, intellectual capital, and the organizational advantage”, Academy of Management Review, 23:2, pp. 242-266.

NELSON R. R., 1995, “Recent evolutionary theorizing about economic change”, Journal of Economic Literature, 33:1, pp. 48–90.

NELSON R. R., 2008, “Bounded rationality, cognitive maps, and trial and error learning”, Journal of Economic Behavior and Organization, 67:1, pp. 78-89.

NELSON, R. R., Winter S. G., 1982, An Evolutionary Theory of Economic Change, Cambridge, MA, London: Belknap Press of Harvard University Press.

PARHANKANGAS, A., Arenius P., 2003, “From a corporate venture to an independent company: A base for a taxonomy for corporate spin-off firms”, Research Policy, 32:3, pp. 463-481.

PENROSE, E., 1959, The Theory of the Growth of the Firm, Wiley, New York, NY.

PHILLIPS, D. J., 2002, “A genealogical approach to organizational life chances: The parent-progeny transfer among Silicon Valley law firms, 1946-1996”, Administrative Science Quarterly, 47:3, pp. 474-507.

ROBERTS, E., 1991, “The technological base of the new enterprise”, Research Policy, 20:4, pp. 283-297.

SAHAYM, A., 2005, “Spin-out formation and performance from the lens of dynamic capabilities and social capital theory”, Academy of Management Proceedings, Honolulu- Hawaii, 5-10 August 2005, pp. 1-6.

SANCHEz, R., 1997, “Managing articulated knowledge in competence-based competition”, in Sanchez R., Heene A., (Eds.), Strategic Learning and Knowledge Management, John Wiley & Sons, pp. 163-187.

SAPIENzA, H. J., Parhankangas, A., Autio, E., 2004, “Knowledge relatedness and post-spin-off growth”, Journal of Business Venturing, 19:6, pp. 809-829.

SHANE, S., 2000, “Prior knowledge and the discovery of entrepreneurial activities”, Organization Science, 11:4, pp. 448-69.

SHANE, S., Stuart, T. 2002. “Organizational endowments and the performance of university start-ups”, Management Science, 48:1, pp. 154-170.

VANBERG, V. J., 2006, “Human intentionality and design in cultural evolution”, in Schubert C., Wangenheim G., (Eds.), Evolution and design of institutions, Routledge, London, pp. 197-212.

WITT, U., 2004, “On the proper interpretation of ‘evolution’ in economics and its implications for production theory”, Journal of Economic Methodology, 11:2, pp. 125-146.

Downloads

Published

2011-11-24

How to Cite

Uzunca, B. (2011). Comparative Advantages of Spin-off Firms: An Evolutionary Perspective. Journal of Technology Management & Innovation, 6(4), 80–92. https://doi.org/10.4067/S0718-27242011000400007

Issue

Section

Research Articles