This paper examines the role of knowledge as a driver of an organization’s formation, and as a subsequent source of its competitive advantage. We investigate the parent−progeny knowledge transfer relationship, and the impact of this congenital learning on the evolution and performance of a spin−out (an entrepreneurial venture by an ex−employee). Using data from the disk drive industry, we show that incumbent knowledge capabilities, related to technology and market pioneering, predict spin−out formation. Parent's capabilities at the time of spin−out founding positively affect spin−out knowledge capabilities, and result in spin−outs having higher probabilities of survival relative to other entrants. All authors contributed equally. The names are arranged in alphabetical orde
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