A Stakeholder Perspective on Employee Spinouts and Parent Firms

Instrumental stakeholder theory (IST) has emerged as a perspective that explains and predicts incumbent firm performance. Extending this perspective to the undertheorized employee spinouts literature, we argue that parent firms have more to gain from treating their spinouts in ways that are consistent with IST. We elaborate a theory of spinout and parent firm behaviors stemming from an IST approach and compare it to the predominant agency theory approach. Using a 2 x 2 matrix that juxtaposes spinout and parent firm behaviors according to the IST and agency theory lenses, we explore the implications of alignment and misalignment between parent and spinout approaches to stakeholder management.