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Entrepreneurial Spawning: Public Corporations and the Genesis of New Ventures, 1986 to 1999
Author(s) -
GOMPERS PAUL,
LERNER JOSH,
SCHARFSTEIN DAVID
Publication year - 2005
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2005.00740.x
Subject(s) - spawn (biology) , business , silicon valley , entrepreneurship , bureaucracy , venture capital , new ventures , entrepreneurial spirit , industrial organization , marketing , finance , political science , fishery , politics , law , biology
We examine two views of the creation of venture‐backed start‐ups, or “entrepreneurial spawning.” In one, young firms prepare employees for entrepreneurship, educating them about the process, and exposing them to relevant networks. In the other, individuals become entrepreneurs when large bureaucratic employers do not fund their ideas. Controlling for firm size, patents, and industry, the most prolific spawners are originally venture‐backed companies located in Silicon Valley and Massachusetts. Undiversified firms spawn more firms. Silicon Valley, Massachusetts, and originally venture‐backed firms typically spawn firms only peripherally related to their core businesses. Overall, entrepreneurial learning and networks appear important in creating venture‐backed firms.