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Market-Based Solutions to Vital Economic Issues
Research
Oct 18, 2021

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

Abstract

Employee spinouts, startups founded by prior employees of existing industry firms, play a critical role in firm creation and knowledge transfer within and across industries. Their superior performance often arises from resources and knowledge accrued during employment in parent firms. An understudied question relates to whether prior employment in parent firms impacts an employee spinout’s alliance formation, given that alliances are critical to the survival and commercial success of startups. 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 extending their parents’ technologies tend to have more alliance partner overlap with their parents, whereas product market overlap leads to fewer overlapping partners.


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