The Double-Edged Sword of Knowledge Inheritance; Knowledge Relatedness and Spin-Outs’ Performance 

Aliasghar Bahoo Torodi - University of Bologna, Department of Management

This study explores the impact of knowledge relatedness with parent organizations on the performance of start-ups founded by former employees of these incumbent firms. Building on the entrepreneurship literature on spin-outs, I argue that the degree to which spin-outs’ technological and market knowledge bases overlap with their parent organizations has a nonlinear impact on their performance - innovativeness and survival. knowledge relatedness is beneficial to spin-outs because it reduces the uncertainty surrounding the early steps of a new venture. However, excessive overlap with the parent’s technological and market capabilities may hamper the search for new combinations in areas distant from the core knowledge of the parent organization. Moreover, substantial market overlap may spark the parent’s hostile reaction, giving rise to disruptive competition. These two effects in turn reduce the spinout’s likelihood of survival. Also, I argue that the overlap-performance relationship is moderated by the founders’ hierarchical position in the parent firms. The analysis of 131 biotech spin-outs spawned by 116 industry incumbents supported my hypotheses. The results contribute to the literature on the genealogical perspective on firm formation, knowledge inheritance, and spin-outs performance.

Same, but Different? Birth Order, Family Size, and Sibling Sex Composition Effects in Entrepreneurship 

Theodor Vladasel - Universitat Pompeu Fabra

How does family background affect entrepreneurship? Beyond exposing siblings to common features such as human capital and financial resources, the family context also generates sibling differences. In this paper, I assess the differential effects of birth order, family size, and sibling sex composition on unincorporated and incorporated entrepreneurship in a set of causal exercises using Swedish register data. First, while later born men are more likely to become unincorporated entrepreneurs, this effect is explained by their lower education and poorer labor market prospects, pointing towards the subsistence nature of this type of entrepreneurship. Second, I find limited evidence of causal family size effects in linear and non-linear instrumental variable approaches. Third, while I find no pure sibling sex composition effect, there is a small negative effect of having a brother on the father-daughter association in unincorporated entrepreneurship. Fourth, neither source of within-family heterogeneity exhibits a clear relationship with incorporation, although children with more than four siblings are less likely to become incorporated business owners. Finally, accounting for within-family differences increases previously estimated sibling correlations by little. The results confirm the role of families in generating sibling similarities, rather than differences in entrepreneurship.


What's There to Gain? Outbound Openness and Markets for Technology 

Araksya Ayvazyan - Universidad Carlos III de Madrid, Business Administration

Said Matr - Universidad Carlos III de Madrid, Department of Business Administration

Previous literature on outbound open innovation examining the reasons for opening up mostly assumes that openness encourages other players in the market to build upon the newly available knowledge. This paper investigates how the focal firms internalize on their decision to adopt an outbound open innovation approach for no direct financial benefits. We argue that firms can benefit from strategic openness by enabling their involvement in markets for technology and facilitating transactions for intellectual property rights (IPRs), through buying and selling actions. Besides, the firm can internally develop on the subsequent knowledge created by others. We use the variation in IBM’s IP strategy toward more openness, coming from the decision of IBM to pledge 500 of its patents to the public in 2005, which allows us to implement a difference-in-differences approach between 1999 and 2010. Our results imply that IBM utilizes the created knowledge that used the liberated knowledge via the in-house R&D or through acquisitions in the markets for technology. Further, IBM sells more technologies proportionally with its level of openness.