Entrepreneurship Post Displacement:Exploring Knowledge Spillovers and Idea Generationas a Result of Business Closure

Abstract: Empirical findings on knowledge transfers associated with business closures are limited (Hoetkerand Agarwal, 2007), and very few studies examine the search process of individuals and theirsearch for new solutions and ideas (Maggitti et al., 2013). The purpose of this paper is to fill theknowledge gap of knowledge spillovers and idea generation taking place while displacedemployees transition to entrepreneurship after business closure. This paper will examineAstraZeneca’s displaced employees that started their own businesses after AstraZeneca’sresearch and development facilities closed down in Lund (2010) and Södertälje (2012) inSweden. The research questions investigated were: What are the different factors and ideaprocesses that made the displaced employees start their own businesses? To what extent are theentrepreneurs utilizing their knowledge and experience gained at AstraZeneca in their currentbusinesses, and are they using contacts gained while working for AstraZeneca? To answer thesequestions both qualitative and quantitative research method were used in the form of surveys andinterviews. The results of this study showed that a knowledge spillover took place between thenew firms and the closing firm, while previous experience and expertise gained fromAstraZeneca greatly influenced the idea generation that took place amongst the displacedemployees while transitioning into entrepreneurship. Moreover, about 20% of theentrepreneurship was necessity based, whereas 70% were opportunity based. In regards to thetiming of the idea generation process, half of the participants came up with the business ideaafter learning about the closure, while the rest disagreed. Therefore, the idea generation processamongst the participants did not necessary start after the announcement of the displacement.