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Book part
Publication date: 30 March 2017

John S. Howe and Scott O’Brien

We examine the use of relative performance evaluation (RPE), asymmetry in pay for skill/luck, and compensation benchmarking for a sample of firms involved in a spinoff

Abstract

We examine the use of relative performance evaluation (RPE), asymmetry in pay for skill/luck, and compensation benchmarking for a sample of firms involved in a spinoff. The spinoff affects firm characteristics that influence the use of the identified compensation practices. We test for differences in the compensation practices for the pre- and post-spinoff firms. We find that RPE is used for post-spinoff CEOs, but not pre-spinoff CEOs. Post-spinoff CEOs are also paid asymmetrically for luck where they are rewarded for good luck but not punished for bad luck. Both pre- and post-spinoff CEOs receive similar levels of compensation benchmarking. The study provides additional evidence on factors that influence compensation practices. Our spinoff sample allows us to examine how compensation practices are affected by changes in firm characteristics while keeping other determinants of compensation constant (i.e., the board and, in many cases, the CEO). Our findings contribute to the understanding of how the identified compensation practices are used.

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Global Corporate Governance
Type: Book
ISBN: 978-1-78635-165-4

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Book part
Publication date: 1 January 2008

Teresa Hogan and Elaine Hutson

Despite their increasing importance in innovation, employment creation and economic growth, there is a dearth of theory-driven research on the financing and capital…

Abstract

Despite their increasing importance in innovation, employment creation and economic growth, there is a dearth of theory-driven research on the financing and capital structure of new technology-based firms (NTBFs).1 Hogan and Hutson (2005a) advance the High-Technology Pecking Order Hypothesis (HTPOH) to explain the role of equity in the financing of NTBFs in the software product sector. The HTPOH posits that NTBFs exhibit a hierarchical pattern of financing that gives precedence to internal sources, but if external financing is required, equity is preferred to debt. This study investigates the extent to which the genesis of the NTBF affects its financing patterns?

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New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-0-0805-5448-8

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Article
Publication date: 16 November 2020

Sandro Battisti and Alexander Brem

Retail networks present new challenges in the business-to-business (B2B) collaboration between technology-based spinoffs and traditional businesses. This study aims to…

Abstract

Purpose

Retail networks present new challenges in the business-to-business (B2B) collaboration between technology-based spinoffs and traditional businesses. This study aims to explore a public–private partnership (PPP) that leverages advanced digital technologies via spinoffs to tackle the key challenge of showrooming that retail shops are facing. Showrooming is the phenomenon in which shoppers go to the physical stores to gather in-depth product information, and later on, decide to buy the product from online retail competitors.

Design/methodology/approach

This research draws on a longitudinal qualitative study of a social context in which digital entrepreneurs are embedded. The empirical setting is a retail network in Italy, Germany and Finland with a particular focus on the process in which a PPP delivers innovation via spinoffs in the context of brick and mortar shops (B&M). The research design enables an understanding of the complexity of the phenomenon from a business and a social perspective.

Findings

New technology to tackle showrooming enables the creation of substantial hybrid value in retail partnerships. Spinoffs are key actors in leveraging digital technologies to create value faster and more tailored compared with large software companies. Spinoff entrepreneurs leverage on specific technologies (e.g. virtual reality and artificial intelligence) available inside organizations’ network (i.e. PPPs). Spinoffs are found to be a fundamental actor in the process of dealing with showrooming because of their time to market. Large software companies usually are not interested in approaching B&M shops because of the high operational costs of product customization for B&M shops.

Practical implications

Managers could use the success factors of the spinoffs in helping their B&M shops to improve both shopper experience and salesperson performance. For managers of B2B retail network, the results are useful towards increasing the involvement of shoppers while they are visiting physical stores, and it also improves salesperson performance. It also leads to the observation that cross-selling is one of the most effective responses to the phenomenon of showrooming. As practical implications for policymakers, the current research supports the view that PPPs should support the creation of spinoffs as a result of longitudinal innovation projects.

Social implications

Retail technologies leveraged from a PPP and commercialized by spinoffs are powerful tools to enable a better quality of salespeople’s life in the working place. At the same time, these new technologies help shop owners increase the retention rates, conversion rates and reduce short-term loss, increasing the likelihood of B&M shops to survive in the condition of extreme competition caused by the showrooming phenomenon.

Originality/value

This research proposes a model of hybrid value creation from networks in digital retail. The model indicates that PPPs create spinoffs to explore showrooming and deliver substantial hybrid value (i.e. business and social) for physical retail shops, mainly because it influences the companies’ growth, employee performance and customer satisfaction. This model expands the field of B2B marketing by identifying factors that enable spinoff creation from retail networks and proposes success factors and research propositions in retail networks.

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Journal of Business & Industrial Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 3 May 2016

Andrea Furlan

Studies on spinoffs neglect firms founded by single individuals (i.e. proprietorships) thus overlooking a large portion of new ventures. Moreover, scholars usually do not…

Abstract

Purpose

Studies on spinoffs neglect firms founded by single individuals (i.e. proprietorships) thus overlooking a large portion of new ventures. Moreover, scholars usually do not consider the effect of the rank, and the amount, of founder’s working experience on spinoff’s survival. The purpose of this paper is to analyze a sample of 3,456 Italian manufacturing proprietorships.

Design/methodology/approach

Out of an initial population of some 6,000 firms, the authors obtained a sample of 3,456 usable records with complete information about new ventures and founders’ background. The authors relied on the class of methods known as “proportional hazard models” to perform survival analyses.

Findings

Analyses show that spinoffs from surviving parents outlive other startups. Surprisingly, spinoffs from high-ranked positions have comparable hazard rates than other startups while spinoffs from low-ranked positions have lower hazard rates than other startups. Finally, industry-specific working experience has a curvilinear inverted U-shape effect on spinoffs’ survival.

Originality/value

The present study contributes to the debate on spinoffs’ survival and bears important ramifications into the relationship between knowledge inheritance and entrepreneurial dynamic capabilities. It is also helpful in informing public policies aimed at encouraging entrepreneurial activities in the form of new proprietorships.

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International Journal of Entrepreneurial Behavior & Research, vol. 22 no. 3
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 11 July 2016

Andrea Furlan and Roberto Grandinetti

– The purpose of this paper is to integrate knowledge inheritance theory with the social capital perspective to explain the initial endowments of spinoffs.

Abstract

Purpose

The purpose of this paper is to integrate knowledge inheritance theory with the social capital perspective to explain the initial endowments of spinoffs.

Design/methodology/approach

The authors maintain that social capital plays a crucial part, both as a mechanism supporting the generation of intellectual capital prior to a spinoff’s foundation, and as an endowment that complements this capital once the spinoff is founded. Knowledge inheritance remains a fundamental mechanism for the formation of a spinoff’s intellectual capital. Its other endowment, social capital, derives from three types of relationship that future entrepreneurs develop within, through and outside their parent firm, all three of which are crucial to the formation of a spinoff’s intellectual capital.

Findings

The first result of the theoretical research is an integrative framework of a spinoff’s endowments. Moreover, the authors apply this framework to address two key research questions in the spinoff literature, i.e. whether spinoffs can differ from their parents in terms of intellectual capital; and why spinoffs tend to co-locate near their parents, in geographical clusters. The integrative approach helps to tackle these questions.

Originality/value

This conceptual paper offers a more comprehensive explanation of the emergence of spinoffs in terms of their initial endowments than the knowledge inheritance theory.

Details

Journal of Intellectual Capital, vol. 17 no. 3
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 4 September 2018

Ye Jin Park and Young Won Park

The purpose of this study is to explore the role of spinoff entrepreneurs in the post-bubble Japan and ultimately to facilitate policy reforms that benefit entrepreneurs…

Abstract

Purpose

The purpose of this study is to explore the role of spinoff entrepreneurs in the post-bubble Japan and ultimately to facilitate policy reforms that benefit entrepreneurs most in need of support.

Design/methodology/approach

This study adopts a survey of Japanese entrepreneurs from 2003 to 2013. Exploiting the survey questions, the authors separate spinoff startups from the non-spinoff startups. Using this data set, this study first performs a logistic regression, followed by a chi-squared independence test between spinoff startups and firm performance.

Findings

This study finds that while both human and social capital predict the probability of a firm’s positive performance, industry experience was the strongest predictor for the probability of performance.

Originality/value

As Garvin (1983) stated, most research on spinoffs are limited to both industry type and location. The theoretical contribution of this study is to broaden the applicability of current entrepreneurship theories by considering industries beyond technological startups. The practical value of this study is to begin evaluating policies and their interaction effect with cultural context.

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Asia Pacific Journal of Innovation and Entrepreneurship, vol. 12 no. 2
Type: Research Article
ISSN: 2398-7812

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Article
Publication date: 28 June 2018

Yuan Wen

This paper aims to examine the prevalence of informed trading around corporate spinoffs and the relation between firm opacity and informed trading using option market data.

Abstract

Purpose

This paper aims to examine the prevalence of informed trading around corporate spinoffs and the relation between firm opacity and informed trading using option market data.

Design/methodology/approach

The author investigates the prevalence of informed trading by examining the relationship between abnormal stock returns associated with spinoffs and the volatility spread/volatility skewness of options prior to the spinoffs. Furthermore, the author examines how opacity and organizational complexity prior to the spinoffs affect informed trading.

Findings

The study shows that option volatility spread and volatility skewness for the five days prior to the spinoffs can predict the abnormal stock returns on the spinoff announcement days, suggesting that there is informed trading in the options market prior to spinoffs. The study shows that informed trading is more prevalent for firms that are more opaque prior to the spinoff. Furthermore, informed trading decreases after spinoffs.

Originality/value

To the best of knowledge, this is the first empirical research that examines the prevalence of informed trading around spinoffs by using options volatility spread/skewness and the relation between firm opacity and informed options trading.

Details

The Journal of Risk Finance, vol. 19 no. 3
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 16 October 2009

Terence Tai‐Leung Chong, Daniel Wai‐Hong Wong and Venus Khim‐Sen Liew

There is a broad consensus in the literature that spinoffs tend to create value for shareholders and exhibit positive long‐run excess returns. However, most of the prior…

Abstract

There is a broad consensus in the literature that spinoffs tend to create value for shareholders and exhibit positive long‐run excess returns. However, most of the prior studies are confined to the US and the European cases. The spinoff problems in Hong Kong are surprisingly under‐studied despite its important role as a global center of capital formation. In this paper, we find that there is a short‐run value creation for the Hong Kong spinoffs. However, the financial health of the spinoff companies, measured by various financial ratios, tends to deteriorate in the long‐run. In general, Hong Kong spinoffs generate negative returns to investors.

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Journal of Asia Business Studies, vol. 4 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 23 September 2020

Göran Svensson and Carmen Padin

The purpose of this study is to examine the role of spinoffs and tradeoffs in business-driven sustainable development in the marketplace based on environmental, economic…

Abstract

Purpose

The purpose of this study is to examine the role of spinoffs and tradeoffs in business-driven sustainable development in the marketplace based on environmental, economic and social constituents. It is based on the insights gathered from a company’s business-driven sustainable development. It can therefore be used as a teaching case.

Design/methodology/approach

An inductive approach based on case study methodology is applied to describe a company’s spinoffs and tradeoffs of business-driven sustainable development in the marketplace.

Findings

The study reports how raw material residuals can be recycled and reused in spinoff processes, and tradeoffs done, to optimize the outcome of business-driven sustainable development in the marketplace.

Research limitations/implications

The study reveals that spinoffs and tradeoffs between constituents and related sub-constituents enable to improve the ultimate outcome of business-driven sustainable development in the marketplace. The study also illustrates how environmental, social and economic constituents and related sub-constituents connect and reconnect to each other as a whole through spinoffs and tradeoffs, to optimize business-driven sustainable development in marketplace.

Practical implications

Business-driven sustainable development requires corporate considerations to connect and reconnect the economic, social and environmental constituents and related sub-constituents. It illustrates the pioneering actions of combining existing solutions of business sustainability in conjunction and gaining synergy effects to optimize business-driven sustainable development.

Originality/value

Contribution is based on the actions of combining existing solutions of business sustainability in conjunction and gaining synergy effects to optimize business-driven sustainable development. This study also makes a contribution illustrating a framework based on a company’s business-driven sustainable development fostering CO2 neutrality and fossil-free fuel in the food and agricultural industries. In addition, it makes a contribution illustrating how raw material residuals are recycled and reused in spinoff processes, so as to optimize the business-driven sustainable development. Furthermore, it makes a contribution illustrating that business-driven sustainable development in the marketplace is neither simplistic nor straightforward, but requires that tradeoffs between constituents and related sub-constituents be made to optimize the ultimate outcome.

Details

Journal of Business & Industrial Marketing, vol. 36 no. 3
Type: Research Article
ISSN: 0885-8624

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Book part
Publication date: 14 December 2004

Steven Klepper

Case studies of four important automobile firms are used to understand how the performance of both diversifying and new entrants into the automobile industry was…

Abstract

Case studies of four important automobile firms are used to understand how the performance of both diversifying and new entrants into the automobile industry was conditioned by their pre-entry experience. Various conjectures based on the four firms are then tested using a unique data source on the pre-entry backgrounds of all entrants into the automobile industry from the commercial inception of the industry in 1895 through 1966. In addition to analyzing the types of pre-entry experiences that affected the longevity of entrants, the analysis also focuses on the conduits by which pre-entry experience influenced the performance of entrants and the extent to which pre-entry experience had enduring effects.

Details

Business Strategy over the Industry Lifecycle
Type: Book
ISBN: 978-0-76231-135-4

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