High-Performer Mobility to Entrepreneurship and Parent-Firm Performance

Industry experience is critical for new venture performance, and spinoff entrepreneurs (former employees from the same industry) perform better than other start-ups. However, studies have found that high performers’ mobility to spinoffs harms the performance of their former employers. This paper asks when do spinoffs result in increasing competition and when is spinoff entrepreneurship more harmful compared to other types of high performer mobility? We show that additional detrimental performance effects on former employers depend on employee tenure and the spinoffs’ start-up size. We argue that longer tenure increases competition because it allows the employee to form and strengthen personal relations, for example, to customers, and to accumulate more knowledge on products and processes. Start-up size is important for the recreation and appropriation of this knowledge.