Spin-offs and innovation

This dissertation, entitled "Spin-offs and Innovation", examines the relation between spin-offs and both the intensity and distance of subsequent search (innovation) the parent and spun-off firms undertake. Previous work has found that spin-offs generally increase shareholder wealth. The source of the increased wealth is much debated. We suggest that search after spin-off is one of the important factors. We contend that spin-off parent and child firm's conditions increases or decreases search intensity and search distance. Based on the behavioral theory of the firm and the agency theory, we tested our hypotheses. The results show that variables based on the behavioral theory of the firm tend to explain search input intensity well. Some variables based on the behavioral theory of the firm explained search output intensity, but the direction of coefficient were sometimes opposite. Variables based on the behavioral theory of the firm do not explain the search distance. Variables based on agency theory explained search input intensity well. Hypotheses about agency theory and search output intensity were not supported. We either had non-findings or the direction of coefficient was opposite. Variables based on agency theory explained search distance well. This study implies that the behavioral theory of the firm may be useful to explain the search input intensity. Also, our results suggest that firms with more managerial shareholdings tend to spend more on R&D expenditures compared to their sales. We find that variables based on agency theory explain the search distance better than variables based on the behavioral theory of the firm.