Managing the Spin-Off Process: A Case Study from the United Arab Emirates

IntroductionWith the aim to diversify market shares in different sectors, companies in emerging marketplaces often consider spin-offs as a practical business solution to achieve their economic goals (Yoon & Ariff, 2007). Spin-offs thus play an increasingly important role in the development and growth of different industries (Clarysse & Van de Velde, 2006). Generally, the notion of a spin-off is an economic and strategic term with objectives to help companies to improve efficiency, gain more market opportunities and meet the needs of market growth (Kim, 2011; Chu, Teng, Lee, & Chiu, 2009). Spin-offs are usually founded by well-educated and experienced employees and often produce different types of products or services which are similar but not directly related to those of the parent company (Klepper & Sleeper, 2005). As such, "spin-off" is defined as an organization's new separated unit (Pyo, 2007) that works in a cross industry not related to the parent company (Abardanell, Bushee & Raedy, 2003).From an economic standpoint, many companies find it profitable to break up specialized sections in order to perform better and expand from the parent organization's core business. Researchers have even suggested that a spin-off survives longer than a normal start-up because it is a simpler way to transfer assets (tangible and intangible) to new firms that use or mobilize them more effectively (Siddiqi & Warganegara, 2003). However, as most companies seek to measure the financial growth of the spin-off units (Garvin, 1983; Woo, Willard & Daellenbach, 1992) and evaluate the spin-off process or maximize their share values (Block, 2009; Rosenfeld, 1984; Yoon A Elfring & Foss, 1997; Yoon & Ariff, 2007), which in turn could avoid risks and potential losses from those nonstrategic units (Tubke, 2005). Some researchers tried to define and identify the liabilities that arise by spin-off creation and how to resolve them (Larson, 1992). Other studies suggest governmental regulation as a motivator for spin-off decision (Bekkers, Gilsing & Van der Steen, 2006), while the importance of individual characteristics and other factors that help or lead to spin-off establishment are also highlighted (Ismail, Mason, Cooper, Wan Omar, & Abdul Majid, 2010). Evidently, little attention is paid to the parent company's support and spin-off teams' skills and knowledge, two factors that are embedded within spin-off units (Landry, Amara & Saihi, 2007) and essential for the spin-off units' future survival and success (Tubke, 2005; Chu et al., 2009).Therefore, the aim of this paper is to close this knowledge gap by providing insights into the relationships between spin-off teams' skills and knowledge, the parent company's support and the spin-off process. The creation and management of spin-off units require different skills and capabilities from the typical process of creating a regular company (Ismail, Wan Omar, & Abd Aziz, 2012). With little empirical knowledge in this research area, it will thus be useful and relevant to examine these two aspects (i.e. the parent company's support and the teams' skills and knowledge) in the context of spin-off businesses, where such research is lacking and more studies are needed.The UAE provides an interesting landscape for this research purpose because it is one of the most developed and modernized countries in the Middle East, with high market expansion in relation to economic, cultural and social environment over the years (Dobransky, 2011). Its strong market infrastructure and societal development has made the UAE one of the fastest-growing countries in the world (Dobransky, 2011). …