A Proposal for a Standard With Innovation Management System

Spin-Off Performance: Entrepreneurial Capabilities and
Social Networks of the Founders in the Creation Period
Thanh Huynh, Daniel Aranda and Luis Molina-Fernández
Management Department, University Of Granada, Granada, Spain
cthuynh77@ugr.es
Abstract: This study examines spin-off performance from the perspectives of resource-based view and social
networks of the founders. This explores the roles of pre-established factors in the financial and operational
performance of a new venture. Such factors comprise entrepreneurial capabilities and social networks of the
entrepreneurs before the spin-offs were established. These capabilities are constituted by technology,
organizational capability, human resource, strategy, and commercial capability. The social networks are analyzed
in structure, governance, and content dimensions. Based on the data from 181 university spin-offs in Spain, the
paper empirically demonstrates that the entrepreneurial capabilities positively influence the performance of the
spin-offs. The social networks of the founders indirectly affect the spin-off performance through enhancing the
entrepreneurial capabilities.
Keywords: university spin-offs, resource-based review, social networks
1. Introduction
Many scholars have studied the success of university spin-offs through the influences of internal and
external factor approaches. Although an entrepreneurship process comprises both foundation and
development phases, most of the scholars have focused on the later stage. Several scholars have
studied the influences of a new firm's capabilities on its performance, but have omitted how social
capital and entrepreneurial capabilities of the entrepreneurial teams contribute to an entrepreneurship
process. Most of the European researches have focused on the environment that influences the spinoffs
(Welter & Lasch, 2008). In environment aspect, social dimensions of entrepreneurship studies
were initially discussed in Europe (Landstrom, 2005). O’Donnell et al. (2001) generally classified
entrepreneurial networks into inter-organizational networks and personal networks. This topic has
increased in empirical studies, but most have emphasized the structural elements of network players
(Larson & Starr, 1993). In resource-based entrepreneurship studies, most of scholars have accented
the influences of entrepreneur's capabilities on several stages of a creation process, such as new
idea creation, opportunity recognition, or opportunity framing. However, social network characteristics
are also studied on content and governance dimensions (Amit & Zott, 2001), and a spin-off
performance must be considered with the contributions of entrepreneurial capability of founders in the
creation process. By examined the influences of entrepreneurial capabilities and social networks of
the founders on a spin-off performance, this study covered the theoretical gap that neglected the
contributions of pre-established factors to the post-established aspects. To delineate the research's
goals, we determined the Spanish university spin-offs as the study's subjects.
2. Definitions, concepts, and hypotheses
A university spin-off refers to a new company that was founded by current students or faculty of
universities to exploit their inventions, and was based on the formal or informal transfers of invented
technologies or knowledge (Smilor, 1990). In the creation period, the entrepreneurs mostly prefer
internal funding, but others explore external funding such as the banking debts and loans. The
universities prefer capitalizing from alternative sources based on university’s reputation or networks
(Roberts, 1991). The potential investors evaluate the professional managements and commercial
experiences of the founding teams in developing and exploiting the technology platforms. The
entrepreneurs cannot disclose all of their inventions, which determine their competitive advances,
lead to the potential investors make their decisions base on the limited information (Shane, 2004).
The information asymmetries push the investors into risky choices lead to pursue an untalented
project of commercial opportunities with potentially restricted values instead of choosing a talented
project (Sahlman, 1990). The uncertainties yield difficulties to investors in opportunity evaluations,
and generate the disagreements between entrepreneurs and investors about the profitability of the
projects (Shane & Stuart, 2002). To surmount the information asymmetries and uncertainties, the
entrepreneurs must demonstrate the spin-off's values and exploit social capital (Shane, 2004).
The theory of organizational effectiveness has developed and concerned on the competing theories,
values, and views about management. The organizational effectiveness cannot be one universal
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