Abstract

http://ssrn.com/abstract=1752848
 
 

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Entrepreneurial Spawning and Firm Characteristics


Michel A. Habib


University of Zurich; Swiss Finance Institute

Ulrich Hege


HEC Paris - Finance Department; European Corporate Governance Institute (ECGI)

Pierre Mella-Barral


EDHEC Business School

March 1, 2013

Forthcoming in Management Science
Swiss Finance Institute Research Paper No. 11-01

Abstract:     
We analyze the implications of the decision to spawn or to retain a new product for the nature and evolution of the firm. In our model, a new product is spawned if the fit between the product and its parent firm organization is not adequate. We focus on the impact of the firm's history of spawning decisions on firm characteristics such as size, focus, profitability, and innovativeness, and analyze its role in shaping firm dynamics. In accordance with the empirical literature, our model predicts that older firms innovate less, spawn less, are more diversified and less profitable, and that firms with more valuable general or specialized resources innovate and spawn more. Echoing seemingly contradictory empirical findings, our model predicts that small, focused firms (large, diversified firms) innovate and spawn more, and are more profitable when sample heterogeneity is driven by the importance of organizational fit (the value of general resources).

Number of Pages in PDF File: 34

Keywords: spawning, spinoffs, spinouts, general and specialized resources, firm organization, organizational fit, firm size, focus, profitability, innovativeness, spawning dynamics

JEL Classification: L25, M13, O31, O33

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Date posted: February 1, 2011 ; Last revised: June 3, 2013

Suggested Citation

Habib, Michel A. and Hege, Ulrich and Mella-Barral, Pierre, Entrepreneurial Spawning and Firm Characteristics (March 1, 2013). Forthcoming in Management Science; Swiss Finance Institute Research Paper No. 11-01. Available at SSRN: http://ssrn.com/abstract=1752848 or http://dx.doi.org/10.2139/ssrn.1752848

Contact Information

Michel A. Habib (Contact Author)
University of Zurich ( email )
Plattenstrasse 14
Zurich, 8032
Switzerland
41-44-634-2507 (Phone)
41-44-634-4903 (Fax)
HOME PAGE: http://www.isb.uzh.ch/institut/profs/mhabib.htm
Swiss Finance Institute ( email )
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland

Ulrich Hege
HEC Paris (Groupe HEC) - Finance Department ( email )
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France
+33 1 3967 7299 (Phone)
+33 1 3967 7085 (Fax)

European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http:/www.ecgi.org
Pierre Mella-Barral
EDHEC Business School ( email )
393, promenade des Anglais
NICE, 06202
France
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