Corporate Spin-Offs: Exploring the Knowledge Inherited From the Entrepreneurial Orientation of the Parent Company.

Abstract

This study explores the presence of entrepreneurial orientation behaviors of the spin-off company inherited from the parent company's strategic profile. As projects or business units of diversified firms, spin-offs were previously under the influence of their corporate parents. Once a spin-off becomes completely independent from the parent company, the spin-off has the ability to reconfigure its asset base, and adjust the strategic profile and processes in order to capitalize on opportunities and environmental demands. Previous research suggests that divested units gain knowledge from their inter-organizational relationships with the parent company. It is expected that during the post spin-off event, the spin-off firm will inherit knowledge of entrepreneurial orientation behaviors of proactiveness, risk- taking activities, and product innovation from the parent company and use the knowledge to reconfigure the organizational strategy and firm resources of the spin-off. This process of inheriting may increase the opportunity of gaining a competitive advantage within the industry as well as improved performance and post spin-off growth. [ABSTRACT FROM AUTHOR]