Organisational synergies, dissonance and spinoffs.

Abstract

Spinoff firms are a distinct class of new entrants across industries. The causes for their emergence have been widely investigated in the literature. However, the role of team environments has received little attention. On the one hand, talented individuals may find it necessary to team up with others to utilise complementary knowledge and generate synergies. On the other hand, some types of team production environments may exhibit dissonance and motivate individuals to leave them. This study introduces environments of synergy and dissonance utilising team production functions and utilises them to analyse how team environments vary in their propensity to generate spinoffs. We show that the teams exhibiting synergy are not likely to spawn spinoffs but a new idea from a team member gets implemented only if it is of exceptional quality. The concepts of synergy and dissonance can also be utilised to analyse other phenomena such as mergers and alliances.