“Opportunistic” spin-offs in the aftermath of an adverse corporate event

Abstract

Purpose -The purpose of this paper is to explore the inter-organisational dynamics, in terms of the triggers to spin-off formation and the genealogical inheritance of spin-offs, between a parent characterised by an adverse event and the spin-offs that emerge. The study focusses on the nature of the triggering event, exploring the heterogeneous nature of the processes by which some spin-offs are formed to exploit new opportunities created unexpectedly by an adverse event, and on the genealogical inheritance that forms the pre-entry experience of the founder. Design/methodology/approach -A case study based on interview data with founders of spin-offs, supplemented with interviews with managers and industry experts, and with secondary data sources. The case study is of the spin-offs from a successful firm, Élan Corporation, reported to be the world's 20th largest drug firm in 2002, that experienced an adverse event in 2002. The Élan case offers the opportunity to focus exclusively on what Buenstorf (2009) refers to as necessity spin-offs. Prior to collecting data it was necessary to identify the population of spin-offs from Élan. Findings -This study extends existing research by identifying "opportunistic spin-offs": spin-offs that occur in the wake of an adverse event where the entrepreneur exploits an unexpected opportunity to engage in entrepreneurship but does not feel compelled to establish the spin-off. These spin-offs are characterised by "unexpected opportunities", "opportunistic acquisition of assets" and, perhaps reflecting the seniority and experience of those involved, "alternative employment opportunities". Originality/value -Understanding the process of spin-off formation is important because it provides insight into how and why individuals initiate new ventures. Spin-offs are an important source of new firms and an important mechanism in the process of industry evolution. The study contributes to the literature on spin-offs by providing evidence of the heterogeneous nature of spin-offs that occur in the aftermath of an adverse event, leading to the classification of some spin-offs as "opportunistic spin-offs". The study contributes to the entrepreneurship literature by demonstrating that an important trigger for venture creation is unexpected changes in an individual's employment circumstances.

Triggering events in the decision to be an entrepreneur: an analysis of their influence on higher education graduates

“…These events or triggers can be understood as significant, positive or negative events that cause a change in the inertia of an individual's behavior (Shapero, 1975). Therefore, the study of such events is essential to understand the triggers that make an entrepreneur finally decide to or not to start a business project (Curran et al , 2016).…”

Sustainability Perspectives of Market-Pulled and Crisis-Pushed Corporate Spin-Offs

“…Positive CSOs theories have been developed beyond motivations to include a multitude of market dimensions or pre-conditions to CSOs. Most notably, recent studies like Prezas and Simonyan (2015), Rocha et al (2015), Curran et al (2016) and Penela et al (2019) have built up the momentum of CSOs literature to consider external factors that affect CSOs decisions directly, motivate CSOs indirectly, or determining CSO outcome expectation. Prezas and Simonyan (2015) explores how the market valuation, performance, and degree of investor optimism or pessimism about the market at the time of divestitures affect the choice of managers between CSO and selloff decisions.…”

“…They found that Pulled CSO does not outperform Pushed CSOs and Pushed CSOs recorded a higher survival rate comparatively. Curran et al (2016) explored new typologies of CSOs that are "opportunistic spin-offs," where they focused on studying Pushed CSOs' performance outcome, which was a reaction to an adverse event. We trail the arguments to the role of market optimism and circumstances of CSOs from these studies and focusing it on the outcome of the decision to achieve our goal of reporting market condition and performance tailorto-fit CSOs analysis.…”

New venture creation: a systematic review of associated literature

“…Academic spin-off topics included social capital (Borges & Fillion, 2013); causality and effectuation (Schleinkofer & Schmude, 2013); relational credibility (Bower, 2003) and growth (Doutriaux, 1987). Whereas, public funded spin-offs were analysed predominantly in light of the technology transfer process (Upstill & Symington, 2002), and corporate ventures via the influence of adverse conditions and inspiration (Curran et al, 2016;Thorén & Brown, 2010).…”