Startup acquisitions, relocation, and employee entrepreneurship

J. Daniel Kim

43 citations0/0 files storedStrategic Management Journal

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Entrepreneurship Studies and Influences Corporate Finance and Governance Private Equity and Venture Capital

Abstract

Abstract Research Summary This study examines the impact of startup acquisition on the acquired employees' propensity for entrepreneurship. As a new owner, the acquirer may not prioritize acquired employees' ideas to be commercialized internally, thereby increasing the odds that they are pursued externally. Leveraging employee‐employer matched data from U.S. Census on high‐tech startup acquisitions and their workforce in 1990–2011, I find that startup acquisitions substantially increase the rate of employee entrepreneurship both within and outside the target firm's industry. Post‐acquisition entrepreneurship is disproportionally concentrated among individuals with high human capital. Moreover, this effect is amplified when the target startup is relocated to the acquirer's location, and largely muted when left in its original location. Overall, this study highlights startup acquisitions as an important organizational precursor to employee entrepreneurship. Managerial Summary The past few decades have shown a significant increase in established firms acquiring startups. Although startup acquisitions can be a new source of technological innovation, talent, and market power, their long‐term outcomes likely depend on the ability to retain the acquired personnel. Using comprehensive data in the United States in 1990–2011, this study shows that startup acquisitions push many acquired employees to leave and launch their own ventures, some of which can be new competitors. This effect is disproportionately driven by the departures of founders and other top earners, who are generally the most valuable individuals to retain after the acquisition. Acquirers can mitigate these effects by allowing the acquired startup to remain in its original location rather than relocating it inside their existing establishments.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 43 citations exist upstream.

References

1990Absorptive Capacity: A New Perspective on Learning and Innovation 1996Toward a knowledge‐based theory of the firm 1992Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology 1983An Evolutionary Theory of Economic Change 1962Economic Welfare and the Allocation of Resources for Invention 1986Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy 1978Vertical Integration, Appropriable Rents, and the Competitive Contracting Process 2003Enjoying the Quiet Life? Corporate Governance and Managerial Preferences

Cited by

2023Startup Acquisitions as a Hiring Strategy: Turnover Differences Between Acquired and Regular Hires 2024The effects of firm-specific incentives (stock options) on mobility and employee entrepreneurship 2022Hiring by professional affiliation: The benefits and challenges of leveraging prospective hires’ prior employment ties to improve matching and access to resources 2023Founder Turnover and Organizational Change 2023Will there always be a return on investment? The effects of investment in employee development on employee entrepreneurship

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.