Standing on the Parent’s Shoulder or in its Shadow? Alliance Partner Overlap Between Employee Spinouts and Their Parents

Abstract

Employee spinouts, defined as startups founded by prior employees of an industry firm, play a critical role in firm creation and knowledge transfer. Their superior performance often arises from resources and knowledge accrued during employment in parent firms. An understudied question is whether prior employment in parent firms impacts an employee spinout’s alliance formation, given that alliances are critical to startups’ survival and commercial success. This article examines when employee spinout’s alliance partners overlap with their parent’s partners. Drawing on alliance formation patterns of U.S. medical device spinouts founded between 1990 to 2013, we find that spinouts building on their parents’ technologies tend to have a greater partner overlap with their parents, whereas product market overlap leads to fewer overlapping partners.

Keywords: alliances, entrepreneurship, employee spinouts