Where do spinouts come from? The role of technology relatedness and institutional context

Abstract

This paper conceptualizes and empirically examines organizational and institutional antecedents of spinouts (i.e., new businesses created by employees). We deploy multi-level logistic regression modeling methods on a sub-sample of the Global Entrepreneurship Monitor's 2011 survey covering 29 countries. The results reveal that employees who have experience with activities unrelated to the core technology of their organizations are more likely to spin out entrepreneurial ventures, whereas those with experiences related to the core technology are less likely to do so. In support of recent theory, we find that the strength of intellectual property rights and the availability of venture capital have negative and positive effects, respectively, on the likelihood that employees become entrepreneurs. These institutional factors also moderate the effect of technology relatedness such that spinouts by employees with experiences related to core technology are curbed more severely by stronger intellectual property rights protection regimes and lacking of venture capital.