Date Added: Aug 2010
Spinoffs firms are an important source of industry dynamics and innovation. While an emerging body of literature identifies strategic disagreements and ideas as determinants of spinoffs, neither of them can completely explain the spinoff process. Mere disagreements or brilliant flashes of ideas do not always lead to spinoffs. This paper brings individual level determinants at the forefront in spinoff formation. Based on insights from the occupational choice theory, the authors argue that spinoff process is a distinctive class of entrepreneurial entrants and entrepreneurial talent is a major determinant in formation of spinoffs. Entrepreneurial talent modulates the impact of strategic disagreements and ideas on the decision to spinoff.