A Chip Off the Old Block: Entrepreneurial Legacy in the Geographically Diversified Firm

Our study examines the transfer of entrepreneurial legacy within the parent–subsidiary relationship that exists in the geographically diversified firm. We propose that at the time when foreign subsidiaries evolve into technologically capable units, the time-sensitive transfer of entrepreneurial legacy from the parent company determines their long-term exploration activity. We predict and find that the effect of this legacy imprint operates independently of broader corporate exploration trends and other variables that affect subsidiary exploration. Our findings provide novel insights into the mechanisms through which entrepreneurial legacy is transferred and sustained, highlighting variability on the part of the sender (the parent company) and inertia among the receivers (the subsidiaries). We introduce a novel explanation for persistent differences in levels of exploration among units of the geographically diversified firm, and propose the presence of a unique form of “familiness” that helps maintain a balance between exploration and exploitation that is difficult to achieve for other types of firms. Our findings broaden the perspective on legacy change and its long-term consequences in the wider entrepreneurial legacy literature.