Employee Spinoffs and Other Entrants: Stylized Facts from Brazil

37 Pages Posted: 11 Jan 2010 Last revised: 26 Mar 2023

See all articles by Oana Tocoian

Oana Tocoian

UC San Diego; Claremont McKenna College - Robert Day School of Economics and Finance

Marc-Andreas Muendler

University of California, San Diego (UCSD) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

James E. Rauch

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 2010

Abstract

Using a comprehensive linked employer-employee database from Brazil for the period 1995-2001, we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry. Employee spinoffs are defined either as the director/manager having moved from a parent in the same industry or as one-quarter of the employees having shifted from a common parent. Depending on definition, employee spinoffs account for between one-sixth and one-third of the new firms in Brazil's private sector during this period. Regardless of definition, size at entry is larger for employee spinoffs than for new firms without parents but smaller than for diversification ventures of existing firms. Similarly, exit rates for employee spinoffs are less than for new firms without parents and comparable to those for diversification ventures of existing firms. These results suggest that we can think of some part of a firm's productivity draw in the Jovanovic (1982) model as embodied in the firm's employees and portable by them to a new firm.

Suggested Citation

Tocoian, Oana and Tocoian, Oana and Muendler, Marc-Andreas and Rauch, James E., Employee Spinoffs and Other Entrants: Stylized Facts from Brazil (January 2010). NBER Working Paper No. w15638, Available at SSRN: https://ssrn.com/abstract=1533672

Oana Tocoian (Contact Author)

UC San Diego ( email )

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HOME PAGE: http://www.oanatocoian.com

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

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Marc-Andreas Muendler

University of California, San Diego (UCSD) - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

James E. Rauch

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
619-534-2405 (Phone)
619-534-7040 (Fax)

National Bureau of Economic Research (NBER)

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