Better the Devil You Know? Examining the Relationship between Spinout Team Assembly and Spinout Survival
Employee Inter- and Intra-Firm Mobility
ISBN: 978-1-78973-550-5, eISBN: 978-1-78973-549-9
Publication date: 15 July 2020
Abstract
This chapter investigates the relationship between the composition of initial spinout teams and spinout survival. We develop a theory suggesting that spinout founders hiring from their prior firm versus hiring from the external labor market to assemble spinout teams will have differential effects on spinout survival. Using confidential employee–employer linked data in the legal services industry provided by the United States Census Bureau, we find evidence that inclusion of spinout team members from the founder's prior firm is positively related to spinout survival, a relationship which increases with included members' prior earnings. In contrast, we find that inclusion of spinout team members from firms outside the founder's prior firm is positively associated with spinout failure, a relationship which becomes statistically insignificant when included team members' prior earnings are high. Taken together, our results point to the potential hazards associated with using external markets to assemble spinout teams, thereby establishing an important boundary condition for extant theory which has focused on the benefits associated with spinout team size, but has often neglected the labor market strategy through which such teams are assembled.
Acknowledgements
Acknowledgments
The research in this chapter was conducted under Special Sworn Status of the US Census Bureau at the Minneapolis and Chicago Census Research Data Centers. Research results and conclusions expressed herein are those of the authors and do not necessarily represent the views of the US Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. This research uses data from the Census Bureau's Longitudinal Employer-Household Dynamics Program, which was partially supported by the following National Science Foundation Grants: SES-9978093, SES-0339191, and ITR-0427889; National Institute on Aging Grant AG018854; and grants from the Alfred P. Sloan Foundation and the Social Science and Humanities Research Council of Canada. We gratefully acknowledge the rich and insightful feedback received from H. Dennis Park and Vera Roche. The manuscript has also benefited from comments received from seminar participants at the University of Minnesota, Purdue University, and the 2016 Academy of Management Annual Meeting. All authors contributed equally and are listed in reverse alphabetical order.
Citation
Raffiee, J., Ganco, M. and Campbell, B.A. (2020), "Better the Devil You Know? Examining the Relationship between Spinout Team Assembly and Spinout Survival", Tzabbar, D. and Cirillo, B. (Ed.) Employee Inter- and Intra-Firm Mobility (Advances in Strategic Management, Vol. 41), Emerald Publishing Limited, Leeds, pp. 389-409. https://doi.org/10.1108/S0742-332220200000041026
Publisher
:Emerald Publishing Limited
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