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Graceful Exits and Missed Opportunities: Xerox's Management of its Technology Spin-off Organizations

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  • Chesbrough, Henry

Abstract

The Xerox Corporation has devised several strategies for managing the numerous spin-off firms that independently commercialized many of its technologies. From 1979 to 1998, thirty-five technology-based organizations emerged from Xerox's research centers. Contradicting the common perception that Xerox “fumbled the future” by letting its technology walk out the door, in fact the company set in motion a series of deliberate initiatives to manage its spin-off organizations. After initially adopting a laissez-faire approach, the company soon turned to ad hoc methods, which evolved into a formal internal venture capital structure and culminated in a triage process, with the result that only companies perceived by Xerox as fitting into its overall corporate strategy were retained. By using spin-offs to withdraw gracefully from areas it considered to be marginal, Xerox for feited the potential to realize value from their research. Some, but not all, of the spin-offs obtained venture capital financing from outside sources and thus prospered independently. Their success demonstrated the opportunity that Xerox missed in managing its spin-offs.

Suggested Citation

  • Chesbrough, Henry, 2002. "Graceful Exits and Missed Opportunities: Xerox's Management of its Technology Spin-off Organizations," Business History Review, Cambridge University Press, vol. 76(4), pages 803-837, January.
    • Handle: RePEc:cup:buhirw:v:76:y:2002:i:04:p:803-837_07
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    1. Adams, Stephen B., 2011. "Growing where you are planted: Exogenous firms and the seeding of Silicon Valley," Research Policy, Elsevier, vol. 40(3), pages 368-379, April.
    2. Heike Mayer, 2013. "Spinoff regions: entrepreneurial emergence and regional development in second-tier high-technology regions – observations from the Oregon and Idaho electronics sectors," Chapters, in: Frank Giarratani & Geoffrey J.D. Hewings & Philip McCann (ed.), Handbook of Industry Studies and Economic Geography, chapter 8, pages 207-229, Edward Elgar Publishing.
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    10. Bruno Cassiman & Masako Ueda, 2006. "Optimal Project Rejection and New Firm Start-ups," Management Science, INFORMS, vol. 52(2), pages 262-275, February.
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    12. Czakon, Wojciech & Klimas, Patrycja & Kawa, Arkadiusz & Kraus, Sascha, 2023. "How myopic are managers? Development and validation of a multidimensional strategic myopia scale," Journal of Business Research, Elsevier, vol. 157(C).
    13. Heracleous, Loizos & Papachroni, Angeliki & Andriopoulos, Constantine & Gotsi, Manto, 2017. "Structural ambidexterity and competency traps: Insights from Xerox PARC," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 327-338.
    14. Katja Maria Hydle & Kjersti Vikse Meland, 2016. "Spinning Them Off: Entrepreneuring Practices in Corporate Spin-Offs," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 12(1), pages 57-73.
    15. Shankar, Raj K. & Shepherd, Dean A., 2019. "Accelerating strategic fit or venture emergence: Different paths adopted by corporate accelerators," Journal of Business Venturing, Elsevier, vol. 34(5), pages 1-1.
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