Spin-offs and the New Firm Formation Process
Tóm tắt
Spin-offs—new firms created by individuals breaking off from existing ones to create competing companies of their own—are common in many high-technology industries and others as well. This articles examines the structural conditions conducive to spin-offs and the environments from which they are most likely to arise.
Từ khóa
Tài liệu tham khảo
There is some haziness to this definition. Markets have seldom been carefully defined, leading analysts to lump together the following phenomena: New companies that compete directly (in same market segment) with the firms their founders have left, new companies that compete indirectly (in same general industry, but different market segments) with the firms their founders have left, and new companies that supply products to the firms their founders have left. A narrow definition of spin-offs would only include firms from the first of these three categories.
Entry by spin-off should not be confused with product development by spin-off, which refers to commercial products that embody technology originally intended for other purposes. See, for example, Welles John G., Waterman Robert H.Jr. “Space Technology: Pay-Off from Spin-Off,” Harvard Business Review (July/August 1964), pp. 106–118.
Cooper Arnold C., 1972, Technical Entrepreneurship: A Symposium
Lanzillotti Robert F., 1961, The Structure of American Industry, 3, 314
Hillebrandt Patricia M., Small Firms in the Construction Industry, Committee of Inquiry on Small Firms, Research Report No. 10 (London: Her Majesty's Stationery Office, 1971), p. 40
and Lange Julian E., Mills Daniel Quinn (eds.), The Construction Industry (Lexington, Massachusetts: D. C. Heath and Company, 1979), pp. 4-7.
“The New Shape of Management Consulting,” Business Week (21 May 1979) p. 100.
Frame Pete, 1980, Rock Family Trees
For another approach to entry behavior, focusing on entry posture (the timing of entry) and marketing mix (the relative emphasis placed on price and quality, breadth of product line, and similar variables), see Biggadike E. Ralph, Corporate Diversification: Entry, Strategy, and Performance (Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1979), pp. 24–34, 133–167.
Maidique Modesto A. “Entrepreneurs, Champions, and Technological Innovation,” Sloan Management Review (Winter 1980), p. 73.
Porter Michael E., Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: The Free Press, 1980), pp. 218–219.
Cooper Arnold C., The Founding of Technologically-Based Firms (Milwaukee: The Center for Venture Management, 1971), pp. 23–25.
Rubenstein Albert H. “Problems of Financing and Managing New Research-Based Enterprises in New England,” research report to the Federal Reserve Bank of Boston (April 1958), p. 50, and Susbauer Jeffrey C. “The Technical Entrepreneurship Process in Austin, Texas,” in Cooper Arnold C., Komives John L. (eds.), op. cit., p. 43.
Cooper, op. cit., p. 25.
Porter, op. cit., p. 218; and Tilton John E., International Diffusion of Technology: The Case of Semiconductors (Washington, D.C.: The Brookings Institution, 1971), p. 80.
Cooper, “Technical Entrepreneurship,” p. 63.
Tilton, op. cit., pp. 73–81; and Webbink Douglas, The Semiconductor Industry: A Survey of Structure, Conduct, and Performance (Washington, D.C.: U.S. Government Printing Office, 1977), p. 102.
Cooper, The Founding of Technologically-Based Firms, p. 38; Cooper Arnold C. “Entrepreneurial Environment,” Industrial Research (September 1970), p. 75; and Mahar James F., Coddington Dean C. “The Scientific Complex—Proceed with Caution,” Harvard Business Review (January/February 1965), p. 146.
Cooper, 1966, “Entrepreneurial Environment,”, 3, 75
Cooper, “Technical Entrepreneurship,” p. 63.
Cooper, 1979, The Founding of Technologically-Based Firms, 28, 26
Shapero Albert, “The Process of Technical Company Formation in a Local Area,” in Cooper, Komives, op. cit., p. 90. According to Shapero, “The output of highly technical companies tends to consist of ‘tailormade,’ short-run, high specification, ever changing products. Furthermore, it is a business in which future outputs and requirements cannot be predicted with any accuracy. Consequently, small technical firms cannot afford to establish and support many vital functions that are operated only intermittently. Thus, the ready availability of outside suppliers of required goods and services can be a critical ingredient in the technical company formation and survival process.” In more technical terms, the existence of multiple sources of supply enables firms to realize “economies of massed reserves,” reducing costs incurred because of unpredictable fluctuations in demand. See also Scherer F. M. The Economics of Multi-Plant Operation (Cambridge, Massachusetts: Harvard University Press, 1975), pp. 274–284, for further discussion.
Mahar, Coddington, “The Scientific Complex—Proceed with Caution,” pp. 146–147, and Deutermann, op. cit., pp. 10–12.
Shapero Albert, The Role of the University in Defense R & D (Menlo Park, California: Stanford Research Institute, 1966), pp. 93–108. The authors observe that there are areas with strong universities and few spin-offs as well as regions without a university that have a high rate of new firm formation.
Vernon Raymond, 1966, Quarterly Journal of Economics, 80, 190
1978, Sierra Log Homes, Inc. (A), Harvard Business School
The concept of the “dominant design,” which marks the acceptance of a basic product type and initiates a shift in emphasis from product innovation (performance) to process innovation (cost), is due to William Abernathy. See Abernathy William J., The Productivity Dilemma (Baltimore: The Johns Hopkins University Press, 1978), p. 75.
Tilton, op. cit., pp. 78, 80.
Coughlan Anne J., Flaherty M. Therese, “Preliminary Study of the Semiconductor Industry” (Economics Department, Stanford University, mimeographed, April 1978), pp. 58, 60.
Some evidence on the importance of transferability is provided by Roberts E. B., Wainer H. A. “New Enterprises on Route 128,” Science Journal (December 1968), pp. 78–83. In studying the spin-offs from various research laboratories at M.I.T., Roberts and Wainer note that the most successful companies were those characterized by a “high transfer of technology from the source laboratory to the new enterprise.”
Porter, op. cit., pp. 218–219. The importance of labor mobility requires further emphasis, for it suggests another possible explanation for the low incidence of spin-offs in Western Europe and Japan. Employees there are often bound by (implicit) long-term employment contracts. These contracts, and the firm loyalty that often accompanies them, may be one reason why so few scientists and managers in those countries have broken away to form companies of their own.
Seltzer Lawrence, A Financial History of the U.S. Auto Industry (New York: Houghton Mifflin, 1928), p. 19.
One indication of the importance of know-how in the early years of the automobile industry is the fact that the industry's first technical manual was not issued until about 1910, several years after the industry's founding. See Epstein, op. cit., pp. 184–185.
May George, R. E. Olds (Grand Rapids, Michigan: W. B. Eerdmans Publishing Company, 1977), pp. 157–159.
For a further discussion of the “technology” of service firms, see Leavitt Theodore, “The Industrialization of Service,” Harvard Business Review (September/October 1976), pp. 63–74.
Abernathy William J., 1980, Government, Technology, and the Future of the Automobile, 38
The risks of entrepreneurship in knowledge-intensive industries are often exaggerated. The founders of new firms are generally skilled and creative people, well respected by other firms in their industries. Should their new companies suffer financial problems, the presence of such valuable personnel often makes them attractive acquisition candidates. In the semiconductor industry, Tilton has observed that “a company employing a few competent people is often acquired by an established firm for that asset alone.” Tilton, op. cit., p. 80. Also see Rubenstein, op. cit., pp. 76–77.
Coughlan, Flaherty, op. cit., pp. 12–13; citations omitted.
Abernathy William has noted that in chemical products, as in other industries employing continuous flow processes, “advanced, elaborate, and large scale process equipment is used to make a new product virtually from the initial product introduction.” See Abernathy William J., The Productivity Dilemma, p. 84.
Brock Gerald, 1975, The U.S. Computer Industry, 1954–1973: A Study of Market Power
Porter, op. cit., p. 234 (emphasis in original). In more technical terms, the issue is one of externalities. In the early stages of an industry, reputation has certain “public good” characteristics. All firms benefit from the entry of competitors that enhance the industry's reputation, solidifying its position relative to longer established products by providing evidence of stability and quality.
Roberts Edward has termed this strategy “venture spin-off.” See Roberts Edward B. “New Ventures for Corporate Growth,” Harvard Business Review (July/August 1980), pp. 134–142.
“Citibank: A Rising Giant in Computer Services,” Business Week (4 August 1980), p. 56.
3M has followed a similar strategy of promoting internal entrepreneurship, although voluntary divestiture has seldom been involved. See Roberts, op. cit., pp. 139–141.