THE LESSON LEARNT FROM Parhankangas & Arenius. 2003. From a corporate venture to an independent company: A base for a taxonomy for corporate spin-off

By using the data on 50 technology-related spin-off firms from large Finnish corporations, the authors categorized the corporate spin-offs into 3 types: spin-off developing new technologies, spin-offs serving new markets, and restructuring spin-offs.

They perceived that "the decision to form a spin-off firm is deeply rooted in the nature of interaction between the venture to be spun-off and its parent firm" (p. 464). The study focuses on new business formation based on the business ideas developed within the parent firm being taken into a self-standing firm (p. 464). They utilized two perspectives: resource-based approach and resource-dependent approach. The former is fundamentally concerned with the internal accumulation of assets; while the latter pays close attention to the behavior of organizations and individuals in a resource exchange relationship. In sum, the RBA seeks to explain the outcome of the resource sharing relationship, and the RDA is more concerned with motivations driving the behavior of the parties.

From these perspectives, they proposed that (1) before spin-off, relatedness enhances competence development in a new venture; (2) spin-off decisions are associated with reduced resource fit between the parent firm and the venture; and (3) spin-off ventures with intensive resource sharing linkages with the parent firm are less likely to diversify away from their original competence base than spin-off firms with less intensive resource sharing linkages.

Then, they conducted cluster analysis. In Cluster 1, the new technology group, all the spin-off ventures are engaged in developing leading-edge, new-to-market technologies. The idea fro technology development came from outside the parent firm. There were no resource linkages between parent and venture but rather is collaboration with university or research institutes. The spin-off-triggering factor was mostly the restructuring programs undertaken by the parent firm. In Cluster 2, the new market group, the parent and venture essentially had the same technology base, but the impetus for the ventures within the parent firm was either to support the core businesses of the parent; or to exploit the possibilities of core technologies to the fullest. As the spin-off firm introduced new product applications of the technology, the linkages tended to weaken. In Cluster 3, the restructuring group, the ventures were old established business units of parent firms. The technological competencies being developed were rather mature. At the earlier stages of the venture evolution, these ventures had shared technology, production, marketing- and distribution- related resources with other business units of the parent firm. This will continue until the ventures established its position in the markets.