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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. 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.
    2. Thomas Hellmann, 2007. "When Do Employees Become Entrepreneurs?," Management Science, INFORMS, vol. 53(6), pages 919-933, June.
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    4. Ashish Arora & Sharon Belenzon & Andrea Patacconi & Jungkyu Suh, 2020. "The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth," Innovation Policy and the Economy, University of Chicago Press, vol. 20(1), pages 39-93.
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    9. 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).
    10. 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.
    11. 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.
    12. Forough Zarea Fazlelahi & J. Henri Burgers & Martin Obschonka & Per Davidsson, 2023. "Spinoffs’ alliance network growth beyond parental ties: performance diminishing, then performance enhancing," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 743-773, June.
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    15. Chesbrough, Henry, 2003. "The governance and performance of Xerox's technology spin-off companies," Research Policy, Elsevier, vol. 32(3), pages 403-421, March.
    16. Ueda, Masako & Frantzeskakis, Kyriakos, 2007. "A Dynamic Equilibrium Model of Firm's Life Cycle and Mergers as Efficient Reallocation," CEPR Discussion Papers 6079, C.E.P.R. Discussion Papers.
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    24. Bruno Cirillo, 2019. "External Learning Strategies and Technological Search Output: Spinout Strategy and Corporate Invention Quality," Organization Science, INFORMS, vol. 30(2), pages 361-382, March.

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