Abstract
Parent companies usually undertake corporate spin-offs to cope with higher competitive environments or when, in high technology industries, the differences between R&D investments and intangible assets are larger. Consistent with the recent “positive view“, spin-offs can be considered as a “proactive strategic choice” to foster innovation, develop new activities, being different from past strategic initiatives and, more generally, not being strictly connected to the corporate strategy of the firm. In order to investigate the relation between divestiture decisions and innovation, we conduct an explorative case study in the pharmaceutical industry to show how spin-offs can help firms to explore new opportunities for innovation, search for new funding and push to create the basis for future development.
Highlights
In recent years, divestiture activities have grown substantially worldwide
Alpha Pharma was born with a different business model, mainly focused on research activities as its corporate mission rather than commercial activities [22]. This mission was once conducted by the Research and Development Business Unit, at a research centre located in the north of Italy, and later it was the object of a spin-off operation
The relationship between spin-offs and innovation is of particular interest and relevance
Summary
Divestiture activities have grown substantially worldwide. The volume and value of divestiture transactions increased until the end of 2009, reaching a record of 12,000 transactions, experiencing a global increase of 15% compared to 2005 (Deloitte, 2010). The empirical research suggests that large firms can improve poor innovation through a reconfiguration of their resources, by acquiring, removing or retaining assets [9,10,11,12]. In this area of studies, there is some evidence that large companies take advantage of divestitures, by benefiting from the innovation carried out within small and more “entrepreneurial” divested units. In the last section of the paper, we draw some conclusions and implications
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