Entrepreneurial Spawning and Firm Characteristics

Abstract

We analyze the implications of entrepreneurial spawning for a variety of firm characteristics such as size, focus, profitability, and innovativeness. We examine the dynamics of spawning over time. Our model accounts for much of the empirical evidence relating to the relation between spawning and firm characteristics. Firms that have higher patent quality spawn more, as do firms that have higher knowhow. Older firms spawn less, they are more diversified and less profitable. Spawning frequency, focus, and profitability are positively related where spawning is driven by the value of organizational fit; they are negatively related with firm size.JEL classification: L25, M13, O31, O33.

Learning Through Crowdfunding

“…Our empirically testable implications also suggest ways to test our model against these alternative theories. 11 Our paper also contributes to the literature that points out that investing in entrepreneurial projects enables …rms to experiment new technologies (Hellmann 2002, Gromb and Scharfstein 2005, Bettignies and Chemla 2008 Rhodes-Kropf 2014). We show that crowdfunding is an e¢ cient mechanism to learn about demand without experimentation costs.…”

“…The campaign itself may either provide actual funding or alleviate the root causes of …nancial constraints. For example, if …nancial constraints are driven by asymmetric information about demand, then the crowdfunding campaign that generates public information about demand 11 For example, large, …nancially unconstrained corporations such as Sony have crowdfunded projects. These projects can then lead to the development of new products that can be either spawned or retained (Habib, Hege, and Mella-Barral 2013).…”

Experimentation and appropriability inearly‐stageventures: Evidence from theUSsoftware industry

“…R S ð Þ is the fraction of the value that the venture can capture. I assume Habib, Hege, and Mella-Barral (2013), willingness-to-pay W a, z, S ð Þis negatively related to the distance between market peak z and product location a. When the product is further away from the peak, the venture creates less value.…”

Staged entrepreneurship: the formation of hybrid and spawning entrepreneurial intentions

“…Most entrepreneurial careers start at established organizations (Sørensen and Fassiotto 2011). The "process whereby an existing firm gives birth to a new firm set up by one or more employees departed from the existing firm" is considered to be entrepreneurial spawning (Habib et al 2013(Habib et al , p. 2790. Spawning entrepreneurs often rely on expertise gained and/or the technology developed in the course of previous employment (Campbell et al 2012).…”

“…Reviewing the firm characteristics that favor entrepreneurial spawning, Elfenbein et al (2010) suggest that spawning is more likely to occur in small firms due to, inter alia, the opportunities they have to specifically develop human capital relevant to entrepreneurial activities. Furthermore, the more entrepreneurial opportunities, such as potential innovations, there are in an established organization, the more likely the employees are to leave that organization and become self-employed (Habib et al 2013). This is especially true when such entrepreneurial opportunities remain unexploited within the established organization itself, which can encourage employees to exploit them beyond its confines (Andersson et al 2012).…”