Divestiture governance modes and innovation outcomes

Divestitures;Innovation;Spin-offs

Corredor Waldron, Sandra Teresa

关键词: Divestitures;    Innovation;    Spin-offs;   

Others  :  https://www.ideals.illinois.edu/bitstream/handle/2142/99476/CORREDORWALDRON-DISSERTATION-2017.pdf?sequence=1&isAllowed=y

美国|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

This dissertation investigates how discrete variations in the autonomy of divested units from their parents’ governance impact these units’ innovation outcomes. In particular, this dissertation makes a comparative assessment of two divestiture governance modes, corporate spin-offs and equity carve-outs, that provide a suitable context for the comparison of different levels of post-divestiture unit autonomy. The core theoretical insight from comparing these two divestiture governance modes is that the parent company’s decision rights and bureaucratic constraints differentially affect each mode.The first study finds that while divestitures can potentially align market information and unit-managers’ agency incentives to unit-level outcomes for both governance modes, only spin-offs are granted more autonomy from their parents’ constraints to restructure their decision rights and ex-post governance as key ‘mechanisms of governance,’ which then impact innovativeness.The second study further examines the relationship between divestiture governance modes and the application breadth of divested units’ innovations, evaluating the comparative effects of governance modes on the units’ application breadth of innovation. Consistent with the explanation that economic rents from broad resources are more easily appropriated by large diversified firms, and that better technology markets and access to complementary assets allow smaller firms to appropriate technology returns, this chapter finds that parent company diversification, importance of intellectual property rights, and parent company complementary assets, moderate the relationship between the divestiture governance mode and the breadth of application of the innovation of divested units. Thus, (more autonomous) spin-off units experience narrower application breadth of innovation than equity carve-outs, and this narrowing of breadth is greater when the parent company is more diversified.The third study explores the implications of governance consistency (e.g., autonomous divestiture governance mode and autonomous divestiture governance design) on the divested unit’s innovation performance. Taking into account different governance attributes, from the parent-unit divestiture relationship, this dissertation also recognizes that governance choices span beyond the choice of a discrete governance mode. The use of these intermediate divestiture governance mechanisms (i.e., divestiture governance design) is matched with the choice of the focal divestiture governance mode, spin-offs or carve-outs. The findings from this study indicate that non-consistent entities, e.g., high(low) autonomous divestiture governance design and low(high) autonomous divestiture governance mode, may not realize the full benefits of either integration/hierarchy, but they may be suitable arrangements to achieve innovativeness.