Is Success Hereditary? Evidence on the Performance of Spawned Ventures

A common phenomenon in entrepreneurship
is that employees turn away from employment to
found their own businesses. Prior literature discusses
the former employers’ characteristics that influence
the creation of entrepreneurial ventures. An investigation
of whether these characteristics also affect the
success of the spawned ventures is missing so far. This
paper contributes to the literature by showing that
entrepreneurial ventures spawned by well performing
firms are financially more successful than ventures
stemming from poorly performing firms. This suggests
that spawned entrepreneurs are able to exploit valuable
knowledge from their previous employers which
impacts their ventures’ performance positively. The
analysis is based on a linked employee–employer data
set for the Netherlands for the period 1999–2004.