Spinoffs and their endowments: beyond knowledge inheritance theory
| Pages | 570-589 |
| DOI | https://doi.org/10.1108/JIC-02-2016-0023 |
| Date | 11 July 2016 |
| Published date | 11 July 2016 |
| Author | Andrea Furlan,Roberto Grandinetti |
| Subject Matter | Information & knowledge management,Knowledge management |
Spinoffs and their
endowments: beyond knowledge
inheritance theory
Andrea Furlan and Roberto Grandinetti
Department of Economics and Management, University of Padova,
Padova, Italy
Abstract
Purpose –The purpose of this paper is to integrate knowledge inheritance theory with the social
capital perspective to explain the initial endowments of spinoffs.
Design/methodology/approach –The authors maintainthat social capital plays a crucialpart, both
as a mechanismsupporting the generation of intellectualcapital prior to a spinoff’sfoundation, and as an
endowment thatcomplements this capital once the spinoffis founded. Knowledge inheritanceremains a
fundamental mechanism for the formation of a spinoff’s intellectual capital. Its ot her endowment, social
capital, derives from three types of relationship that future entrepreneurs develop within, through and
outside their parentfirm, all three of which are crucial to the formationof a spinoff’s intellect ual capital.
Findings –The first result of the theoretical research is an integrative framework of a spinoff’s
endowments. Moreover, the authors apply this framework to address two key research questions in the
spinoff literature, i.e. whether spinoffs can differ from their parents in terms of intellectual capital; and
why spinoffs tend to co-locate near their parents, in geographical clusters. The integrative approach
helps to tackle these questions.
Originality/value –This conceptual paper offers a more comprehensive explanation of the
emergence of spinoffs in terms of their initial endowments than the knowledge inheritance theory.
Keywords Social capital, Entrepreneurship, Intellectual capital, Geographical clusters,
Knowledge inheritance, Spinoffs
Paper type Conceptual paper
1. Introduction
Among de novo firms, i.e. new ventures that are legally separated from other companies
(Helfat and Lieberman, 2002), spinoffs are consistently more successful in terms of
survival, growth, innovation, and other performance measures (Agarwal et al., 2004;
Klepper and Sleeper, 2005; Chatterji, 2009; Dahl and Sorenson, 2014). To explain their
superior performance, scholars suggest that spinoffs benefit from the industry-specific
knowledge that their founders gained in their previous employment. Based on this
assumption, Klepper and Sleeper (2005) advance a theory of knowledge inheritance
moving from the premise that “spinoffs inherit knowledge from their parents that
shapes their nature at birth”(p. 1291). In other words, the initial endowment explaining
the superiority of spinoffs is the intellectual capital that founders inherit from their
parent firms. For example, founders of spinoffs may have access to innovation
developed by their previous employer, or a better understanding of the routines and
blueprints that work well in a given industry (Dahl and Sorenson, 2014).
While knowledge inheritance theory has received broad support from empirical
research, the majority of studies do not provide specific information on knowledge
transfers between parents and spinoffs. The few exceptions report that spinoffs
outperform other startups even after controlling for their inherited knowledge (Dahl
and Sorenson, 2014). This means that other mechanisms, neglected by the mainstream
literature on knowledge inheritance, must be driving the spinoffs’superiority.
Journal of Intellectual Capital
Vol. 17 No. 3, 2016
pp. 570-589
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2016-0023
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
570
JIC
17,3
As Sorenson and Audia (2000) maintain, potential entrepreneurs with prior industry-
specific experience are more likely to develop social connections that help them, for
instance, to identify and recruit suitable employees for their ventures. This and other
studies suggestthat, in addition to their intellectualcapital, spinoff founders also develop
a social capital before entering the market that might contribute to explaining why they
outperform other start-ups. This impression is supported by an abundance of papers
in the entrepreneurship literature showing how social connections help new founders to
gain business knowledge, access to scarce resources, and develop self-confidence.
As Helfat and Peteraf (2003) argue, new-to-the-world organizations begin with a set of
endowments of which intellectual capital (knowledge, skills, and experience) and social
capital (social ties inside and outside the team) are the main components.
Oddly enough, literature lacks a framework that integrates knowledge inheritance
theory with the social capital perspective to explain the initial endowments of spinoffs.
This paper intends to contribute to the literature on spinoffs by proposing such a
framework. This study maintains that social capital plays a crucial part, both as a
mechanism supporting the generation of intellectual capital before a spinoff is founded,
and as an endowment that complements this intellectual capital at their foundation.
On the one hand, during the pre-entry period potential entrepreneurs develop social
capital (within, through, and outside the parent firm) that help them to develop
additional intellectual capital beyond the intellectual capital they inherit from the
parents. On the other hand, social capital of founders complements their intellectual
capital at the time of foundation.
The integrative framework offers a more comprehensive explanation of the
emergence of spinoffs in terms of their initial endowments than the knowledge
inheritance theory. In particular, knowledge inheritance theory is unable to fully
explain two research questions that have attracted the attention of numerous
spinoff scholars.
The first research question is:
RQ1. Whether spinoffs can differ from their parents in terms of intellectual capital.
As implied by the study of Agarwal et al. (2004), successful spinoffs have to acquire
market or technological knowledge beyond what the founders can inherit from the
parent firm. On the contrary, knowledge inheritance theory tends to over-simplify
reality positing that all spinoffs inherit their intellectual capital only from their parents.
The second research question is:
RQ2. Why spinoffs tend to co-locate near their parents, in geographical clusters.
Knowledge inheritance theory explains this phenomenon drawing on a genetic inertial
factor that lead spinoffs to locate close to their parents. However, to explain the
spinoff’s co-location, “genetics”is not enough as recently argued by Boschma (2015).
The integrative framework helps to tackle these questions more effectively,
providing answers that stem from the interplay between knowledge inheritance and
social capital, both prior to a spinoff’s market entry and at the time of its foundation.
2. Intellectual capital and spinoffs’endowments
As knowledge inheritance theory posits, the main endowment that a spinoff possesses
at the time of its foundation is its intellectual capital, defined as the knowledge and
knowing capability of an organization (Nahapiet and Ghoshal, 1998), which it inherits
from its parent.
571
Spinoffs
and their
endowments
To continue reading
Request your trial