Business Publications
Document Type
Article
Publication Date
7-2015
Volume
59
Issue
4
Journal
Academy of Management Journal
URL with Digital Object Identifier
https://doi.org/10.5465/amj.2013.0180
Abstract
A key finding in the literature on industry evolution and strategy is that knowledge “inherited” from the founder’s previous employer can be an important source of a new firm’s capabilities. We analyze the conditions under which knowledge that is useful for carrying out a key value chain activity is inherited, and explore the mechanism through which such an inheritance shapes an entrant’s strategies and, in the process, influences its performance. Evidence from the early U.S. auto industry indicates that employee spinoffs generated from incumbents that had integrated a key value chain activity were also more likely to integrate that activity than other entrants, which, we suggest, reflects the application of knowledge inheritance relative to that activity. Moreover, we find that the integration of this key activity, stimulated by knowledge inheritance, contributed to the establishment of defensible strategic positioning, thereby enhancing the survival duration of inheriting spinoffs. We thus link together the phenomena of knowledge inheritance, vertical integration, and strategic positioning to explain entrant performance. These three phenomena tend to be treated disparately in the literature, rather than in combination.
Notes
This is the author-approved version of an article published in the Academy of Management Journal. The final published version can be found at https://doi.org/10.5465/amj.2013.0180