Imprinting parental signals: a key driver of network status for new spinoff firms.
Saved in:
| Authors: | Zarea, Forough1 (AUTHOR) f.zarea@qut.edu.au, Burgers, J. Henri2 (AUTHOR), Obschonka, Martin3 (AUTHOR), Davidsson, Per1,4 (AUTHOR) |
|---|---|
| Source: | Small Business Economics. Dec2024, Vol. 63 Issue 4, p1555-1583. 29p. |
| Subject Terms: | *New business enterprises, Signal theory, Reputation, Dilemma, Incumbency (Public officers) |
| Abstract: | Although past research has firmly established the positive effects of network status for resource acquisition and success in entrepreneurial endeavors, we still have a fragmented, limited understanding of the actual drivers of network status emergence. Prior research has mainly focused on the post-founding phase, pointing to the importance of current employment–based and firm-level affiliations in new ventures for their future status formation. In this paper, we extend the attention to the pre-founding phase in a study of spinoffs. Building on imprinting and signaling theories, we theorize that coming from a highly reputable parent firm has a long-term positive impact on a spinoff's subsequent status by signaling a young spinoff firm's quality to external parties. We advance previous research by further theorizing that such imprinting is contingent on the level of knowledge relatedness between the parent and spinoff as well as on whether there exists a strategic alliance between them post-founding. In addition, we argue a positive three-way interaction among parent reputation, parent-spinoff knowledge relatedness, and the parent-spinoff strategic alliance. Our analysis of a comprehensive longitudinal sample of 162 Australian mining spinoffs (i.e., firms started by ex-employees of incumbent parent firms) and 3405 strategic alliances from 2001 to 2014 supports majority of our hypotheses. Plain English Summary: Newly founded firms often face the challenge of establishing connections with resource-rich counterparts to acquire the resources that they lack. Existing research underscores the significance of founders' affiliations, either based on their current employment or at the firm level, in facilitating such connections. Paradoxically, for new firms to forge ties with more resource-rich entities, they must possess a higher status, implying pre-existing connections to firms already linked with other resource-rich entities in the industry. This presents a dilemma as new firms lack a proven track record, resulting in an information gap between their founders and external firms attempting to assess their potential for partnerships. In light of imprinting and signaling theories, we extend the focus to the pre-founding phase, emphasizing the enduring importance of a highly reputable employment-based affiliation of founders for a nascent firm to signal its quality to external parties. Our research reveals that, in the absence of an established track record, the benefits derived from originating in a highly reputable firm are contingent on maintaining a post-founding relationship with it and operating in similar markets. We delve into two-way and three-way interactions to comprehensively examine these dynamics. Beyond the theoretical implications, our study offers practical strategies for new firms that can enable them to establish connections with high-status entities within the industry. [ABSTRACT FROM AUTHOR] |
| Database: | Entrepreneurial Studies Source |
|
Full text is not displayed to guests.
Login for full access.
|
|
| Abstract: | Although past research has firmly established the positive effects of network status for resource acquisition and success in entrepreneurial endeavors, we still have a fragmented, limited understanding of the actual drivers of network status emergence. Prior research has mainly focused on the post-founding phase, pointing to the importance of current employment–based and firm-level affiliations in new ventures for their future status formation. In this paper, we extend the attention to the pre-founding phase in a study of spinoffs. Building on imprinting and signaling theories, we theorize that coming from a highly reputable parent firm has a long-term positive impact on a spinoff's subsequent status by signaling a young spinoff firm's quality to external parties. We advance previous research by further theorizing that such imprinting is contingent on the level of knowledge relatedness between the parent and spinoff as well as on whether there exists a strategic alliance between them post-founding. In addition, we argue a positive three-way interaction among parent reputation, parent-spinoff knowledge relatedness, and the parent-spinoff strategic alliance. Our analysis of a comprehensive longitudinal sample of 162 Australian mining spinoffs (i.e., firms started by ex-employees of incumbent parent firms) and 3405 strategic alliances from 2001 to 2014 supports majority of our hypotheses. Plain English Summary: Newly founded firms often face the challenge of establishing connections with resource-rich counterparts to acquire the resources that they lack. Existing research underscores the significance of founders' affiliations, either based on their current employment or at the firm level, in facilitating such connections. Paradoxically, for new firms to forge ties with more resource-rich entities, they must possess a higher status, implying pre-existing connections to firms already linked with other resource-rich entities in the industry. This presents a dilemma as new firms lack a proven track record, resulting in an information gap between their founders and external firms attempting to assess their potential for partnerships. In light of imprinting and signaling theories, we extend the focus to the pre-founding phase, emphasizing the enduring importance of a highly reputable employment-based affiliation of founders for a nascent firm to signal its quality to external parties. Our research reveals that, in the absence of an established track record, the benefits derived from originating in a highly reputable firm are contingent on maintaining a post-founding relationship with it and operating in similar markets. We delve into two-way and three-way interactions to comprehensively examine these dynamics. Beyond the theoretical implications, our study offers practical strategies for new firms that can enable them to establish connections with high-status entities within the industry. [ABSTRACT FROM AUTHOR] |
|---|---|
| ISSN: | 0921898X |
| DOI: | 10.1007/s11187-024-00871-w |
