The "Spin-out Entrepreneur" : Employees' Knowledge Flow and Entrepreneurial Opportunities

An employee has the incentive to quit a company and start a new business venture when a discovery allows her to pursue an entrepreneurial opportunity. The discovery is the result of the employee’s knowledge accumulation made within the firm. We call the new venture started autonomously by a former employee a “spin-out.” While most studies analyze the nature of the spin-out at the firm level, we argue that the success of a spin-out can be better understood by analyzing the prior experience—in terms of knowledge accumulation—of the entrepreneur. The analysis of several spin-out companies in the IT and bio-tech industries helps to confirm some hypotheses built on the theory of spin-outs, contradict others, and give more insight on employees’ knowledge mobility.