Abstract
Various theories have been advanced for why employees leave incumbent firms to
found firms in the same industry, which we call spinoffs. We review the
accumulating evidence about spinoffs in various high-tech industries,
highlighting the central role often played by disagreements. Because existing
theories have ignored them, we develop the foundations of a model of spinoff
formation driven by disagreements. Doing so proves to be rather challenging,
because disagreements are not possible among rational actors that talk to each
other. We introduce a minimal degree of non-rationality, based on the concept of
solipsism, and ask whether such a concept is capable of generating predictions
consistent with the empirical literature.