The differential impact of knowledge transfer and knowledge spillovers on both parent and spin-out performance

Focusing on entrepreneurial ventures created by employees leaving a firm, our study examines the differential impact of knowledge transfer and knowledge spillovers on both parent and spin-out performance. While extant research often uses knowledge transfer and spillover interchangeably, our study distinguishes between the two based on the "rivalness" of the relevant knowledge. We theorize that both knowledge transfer (proxied by the exiting employee team size) and knowledge spillovers (proxied by experience of the exiting employee team) will aid spin-out performance. However, knowledge transfer, being more rival, will have a greater adverse impact than knowledge spillovers on parent firm performance. Using U.S. Census Bureau linked employee-employer data from the legal services industry, we find support for our hypotheses. Our study thus contributes to extant literature by highlighting a key dimension of knowledge - rivalness - and the differential competitive dynamics effect of more and less rival resources.