| Spin-offs: theory and evidence |
| Full Document: |
No document available |
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| Reference Type : |
NCGE Research Reports |
| Authors : |
Luis Cabral; Zhu Wang |
| Year : |
2008 |
| Keywords : |
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| Abstract : |
We develop a “passive learning” model of firm entry by spin-off: firm employees leave their employer and create a new firm when (a) they learn they are good entrepreneurs (type I spin-offs) or (b) they learn their employer\'s prospects are bad (type II spin-offs). Our theory predicts a high correlation between spin-offs and parent exit, especially when the parent is a lowproductivity firm. This correlation may correspond to two types of causality: spin-off causes firm exit (type I spin-offs) and firm exit causes spin-off (type II spin-offs). We test and confirm this and other model predictions on a unique data set of the U.S. automobile industry. Finally, we discuss policy implications regarding “covenant not to compete” laws |
| URL link : |
http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp08-15&r=ent |
| Category : |
Effective Entrepreneurship Education |
| Subcategory : |
Curricula and pedagogy development |
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