Edited by Guido Buenstorf
Chapter 10: Spin-off Growth and Job Creation: Evidence on Denmark
10. Spin-off growth and job creation: evidence on Denmark Pernille Gjerløv-Juel and Michael S. Dahl* 1 INTRODUCTION It is well established that entrepreneurial spin-offs are distinct performers in several industries. Firms founded by former employees from incumbent firms in the same industry tend to outperform other new entrants and sometimes even incumbent firms as well (see Klepper, 2001a, 2009 for reviews of this literature). This fact has sparked considerable interest among politicians and civil servants, since future industrial and entrepreneurial policy might gain by looking more closely at this. Most of the existing studies focus on the life cycle of single industries and on survival as a key performance indicator. Spin-offs have been found to be key entrants at specific stages of the life cycle, but are spin-offs universally the best entrants? To answer this question, we need to add studies of firms from a variety of industries, across different stages of the life cycle and with other performance measures as well. Dahl and Reichstein (2007a) and Dahl et al. (2009) have established that spin-offs are relatively more successful entrants across industries in terms of survival. The question is more open when it comes to other performance measures. This chapter adds to this discussion by studying in greater detail the performance differences between spin-offs and other entrants in terms of employment growth and job creation. We use a comprehensive dataset covering all entrants in the Danish economy from 1995 to 2004. We find that spin-offs are not only surviving...
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