From the Chicago Tribune
At a large, established company, several employees get together and hatch a plan for a new business. Eventually, they make the leap, exiting their old firm and launching a venture that takes off and achieves great heights.
This oft-repeated tale is usually considered a business success story. Spin-offs have the potential to generate great value. New companies create jobs and spawn new products and services. When the process starts happening at a number of firms in the same place at the same time, business clusters form, spreading prosperity across an entire region.
Often overlooked in this rosy scenario, though, is the damage the established firm suffers from the departures of its creative employees. Losing talented people is never a good thing for a company, new or old. When they leave to start new firms, entrepreneurs take their knowledge with them. Because the new venture is usually in the same industry as the established firm, the incumbent tends to be hurt by the new competition.
Read the full post at the Chicago Tribune.
Aleksandra Kacperczyk is the Fred Kayne (1960) Career Development Professor of Entrepreneurship and an Assistant Professor of Technological Innovation, Entrepreneurship, and Strategic Management at the MIT Sloan School of Management.