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Does the apple always fall close to the tree? The geographical proximity choice of spin‐outs

Luca Berchicci¹; Andrew A. King²; Christopher L. Tucci³

¹ Erasmus University Rotterdam · ² Dartmouth College · ³ École Polytechnique Fédérale de Lausanne

Previous studies suggest that spin‐outs will locate in close proximity to the firm from which they spawn. As a result of this process, clusters of entrepreneurial activity tend to develop around a few strong parent firms. But do all spin‐outs really stay close to home? We demonstrate that spin‐out firms choose heterogeneous technological and market strategies, and we hypothesize that firms with more aggressive strategies have a greater need to maintain local relationships. We find supporting evidence of our theory by analyzing the location, technology, and market decisions of intraindustry spin‐outs in their first year in the disk drive industry. Copyright © 2011 Strategic Management Society.

DOI

10.1002/sej.110

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