Imprinting parental signals: a key driver of network status for new spinoff firms

Abstract

Although past research has firmly established the positive effects of network status for resource acquisition and success in entrepreneurial endeavors, we still have a fragmented, limited understanding of the actual drivers of network status emergence. Prior research has mainly focused on the post-founding phase, pointing to the importance of current employment–based and firm-level affiliations in new ventures for their future status formation. In this paper, we extend the attention to the pre-founding phase in a study of spinoffs. Building on imprinting and signaling theories, we theorize that coming from a highly reputable parent firm has a long-term positive impact on a spinoff’s subsequent status by signaling a young spinoff firm’s quality to external parties. We advance previous research by further theorizing that such imprinting is contingent on the level of knowledge relatedness between the parent and spinoff as well as on whether there exists a strategic alliance between them post-founding. In addition, we argue a positive three-way interaction among parent reputation, parent-spinoff knowledge relatedness, and the parent-spinoff strategic alliance. Our analysis of a comprehensive longitudinal sample of 162 Australian mining spinoffs (i.e., firms started by ex-employees of incumbent parent firms) and 3405 strategic alliances from 2001 to 2014 supports majority of our hypotheses.