Long-term operational performance following spin-offs: Evidence from the medical technology industry
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Examensarbete för masterexamen
Master's Thesis
Master's Thesis
Modellbyggare
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Sammanfattning
Spin-offs function as a strategic tool for firms aiming to adjust their portfolios in
response to strategic changes and evolving business environments. From an op-
erational perspective, a common motivation for spin-offs is tied to expectations of
performance improvements where the mechanisms behind this stem from abilities to
increase focus on core businesses as the parent and the spun-out entity can achieve
greater organizational freedom, ability to change strategy, and focus the strategy
more narrowly. There has been a high activity of spin-offs in the medical tech-
nology industry and an underpinning reason for this is that firms aim to mitigate
industry-wide challenges through spin-offs with the motivation of achieving increased
operational focus to capture long-term growth opportunities. Hence, the purpose
of this study was to analyze spin-offs in the medical technology industry. To fulfill
this purpose, a mixed-method approach was employed to investigate the operational
performance of spin-offs in the medical technology industry through a combination
of quantitative and qualitative analyses. The findings indicate that post-spin-off im-
provements in operating performance, as measured by ROA, are mainly associated
with the parent firms rather than the spun-off entities. In the studied sample, the
parents benefited from increased focus as it facilitated strategy execution, capital
allocation, and access to capital. In addition, evidence suggests that the parent firms
spun out underperforming firms and that the spun-out entities prioritized growth
over profitability to a greater extent.
Beskrivning
Ämne/nyckelord
Spin-off, Operational performance, Long-term performance, Medical- technology industry, Return on assets, Divestiture, Corporate restructuring