Corresponding author. All authors contributed equally to the study and the names are listed in random order. We thank the Ewing Marion Kauffman Foundation for grant funding used to support this research. We appreciate comments received from seminar participants at Duke, Illinois, the 2006 SMS and the 2007 AoM meetings. The usual disclaimer applies.

and structural change

Abstract: Based on the case of the biopharmaceutical industry, the aim of this paper is to challenge the core conviction now widespread within the “spatial clustering theory”, which devotes a key (if not exclusive) role to geographical proximity in explaining clustering dynamics of innovation activities within specific territories. Our argument is threefold. First, mere geographical proximity is not enough; in many cases, cognitive, organisational and strategic forms of proximity are often at least as crucial as the topological closeness among innovation actors. Second, our idea is that clusters are fundamentally networking configurations and combinations of actors pursuing common goals, each of these actors having a specific territorial and social embedding that allows him or her (or not) to operate and interact at different spatial scales. Furthermore, contrary to what is suggested in most approaches composing the “spatial clustering theory”, the causality relation between networking and clustering dynamics is likely to operate in an inverted way as clusters appear to be primarily the territorialized outcome of inter-organizational and social networks. Third, sector-driven dynamics — as is in the case of biopharmaceuticals — may structurally frame the way the actors interact and collaborate in R&D projects and innovation processes. In this perspective, clusters and networks appear to be intertwined phenomena, consubstantial one to each other, and co-evolving organisational modes of biopharmaceutical innovation. Key Words:

Entrepreneurs in high-technology industries often have prior experience at incumbent firms, but we know little about how knowledge obtained at the prior employer impacts entrepreneurial performance. Drawing on previous work from strategy, economics, and organizational sociology, I assess the impact of industry experience on entrepreneurial performance and innovation in medical device start-ups. I find that spawns (ventures started by former employees of incumbent firms) perform better than other new entrants. Interestingly, my findings suggest that this superior performance is not driven by technological spillovers from parent to spawn, but rather by nontechnical knowledge related to regulatory strategy and marketing. Copyright © 2008 John Wiley & Sons, Ltd.

the performance of their ventures ∗

Entrepreneurship has been a focal issue of interest in Economics from

Structural Knowledge: How executive experience with structural composition affects intrafirm mobility and unit reconfiguration Contact Author

This paper studies inherited agglomeration effects, how human capital that accrues to managers while working at a parent firm in an industry hub can be subsequently transferred to a spinoff. We test for inherited agglomeration effects in the context of the hedge fund industry and find that hedge fund managers who previously worked in New York and London outperform their peers who worked elsewhere previously by 10-14 basis points per month or about 1.5 % per year. The results are driven by managers who worked in investment management positions previously, and are at least as large as traditional agglomeration effects that arise from being located in an industry hub contemporaneously. The evidence suggests that inherited agglomeration effects are an important, but as yet overlooked, factor influencing the performance of new firms.

Evolutionary theory of business activity studies how firms are selected out of environments that they do not fit, but most existing work under-emphasizes the distinction between acquisition and dissolution as selection processes. We address this gap with a multi-level analysis that investigates how managerial and functional organizational capabilities affect whether struggling firms exit by acquisition or dissolution. We demonstrate that managerial and functional capabilities have heterogeneous effects on selection processes, with managerial capabilities having particularly strong influence on acquisition exits by struggling firms. The work provides a bridge between adaptation and selection views on organizational change; exit by dissolution represents selection of both firms and capabilities, while exit by acquisition represents firm selection but capability adaptation. Key words: Selection, capabilities, acquisition, dissolution, evolutionary theory, business dynamicsOne of the fundamental tensions in strategic management theories of business evolution concerns the distinction between adaptation and selection when firms encounter problems. Early strategic management research typically assumed that business change primarily occurs by adaptation, in which executives of struggling firms actively lead strategic change of their underlying business capabilities (e.g., Cyert and March, 1963; Andrews, 1971). The evolutionary theory revolution of the 1970s and 1980s then