Japanese spinoffs: Unexplored survival strategies

This paper analyzes spinoffs of Japanese firms and the use of the spinoff as an instrument to achieve corporate growth objectives. The initial separation of the organizations and its governance mode are analyzed in the context of transaction costs theory. Spinoffs may be created in order to (1) balance costs associated with managing diversified businesses, (2) generate growth based on core competencies of a firm, and (3) pursue an efficient internal labor market. In a changing environment, the spinoff has been a widely used flexible organizational arrangement that is suitable to survival and offers an alternative way of diversification.