External Learning Strategies and Technological Search Output: Spinout Strategy and Corporate Invention Quality

The strategic management of knowledge spillovers to employee ventures may provide firms with knowledge spill-ins, or the potential to learn from the ventures they have spun out. However, the mechanisms underlying knowledge spill-ins and their importance for external learning in uncertain technology environments have not been examined in detail. This article compares corporate venturing (CV) spinouts that are supported by parent firms with independent, employee spin-outs, as well as with other strategies for external learning, such as investments and alliances. An analysis of the patenting activities of leading corporations operating in the information and communication technology industry reveals that, ceteris paribus, when firms recombine unfamiliar knowledge components developed by their CV spinouts, their inventions are associated with higher quality than comparable firms’ inventions that recombine knowledge from the firm’s corporate venture capital portfolio ventures, allies, or employee spinouts. This effect is especially pronounced when CV spinout inventors hold parent-specific technological expertise. The results are robust across several econometric specifications that account for selection and intrinsic differences in external learning strategies. Furthermore, the results indicate that CV spinouts benefit their parent firms by reducing uncertainty, relative to other strategic formats for external learning in unfamiliar technological areas. The detailed theoretical and practical implications derived from this research reflect perspectives on technology strategy and corporate renewal.