Corporate Affiliations – A Guarantee of Success or the First Step into Dependency?

In a new study [1],  we examine whether corporate affiliations truly help young founders or whether they instead become a ‘business spouse’—one that, in hindsight, might have been best avoided. Together with my colleagues Christian Hopp and Gernot Pruschak, we investigated the role of experience and professional background in shaping entrepreneurial strategy and success

Corporate Affiliation: Carrot or Stick?

When starting a business, most startups face a key decision: spread their wings and launch independently or seek the security of a “nest” with a large company. The latter option is tempting—after all, it means you don’t have to navigate everything alone. It’s a bit like moving into a “business shared apartment” where your roommate already has a full bank account and a well-stocked refrigerator. But what’s the reality? Do these Corporate Affiliated Entrepreneurial Strategies (CAES) actually help, or do you eventually end up as the eternal “coffee maker” in the company?

In our study, we examined the advantages and disadvantages of this corporate-affiliated strategy and looked at how well it really works. And – don’t worry – we have a robust dataset that allows us to draw some compelling conclusions.

Human Capital: Don’t Worry, We’re Not Talking About Capital Crimes Here

“Human capital” – sounds serious, doesn’t it? Don’t worry, it’s just about how much experience a founder brings to the table.[2] We looked at different types of experience:

• General professional experience – in other words, “have I done more than just summer jobs?”
• Industry experience – does one know their way around their own industry?
• Management and leadership experience – in short: Can one pull off being the boss?
• Founding experience – has one already walked the rocky path of founding a business?

Our analysis shows: A CAES can indeed be helpful—but not always. Founders with industry experience often gain little from such an affiliation, as they already know their field well. Managers and former founders, on the other hand, are more likely to seek the security of a corporate partnership—fully aware that sometimes, it’s nice to have someone else pull the cart out of the mud.

Corporate Affiliation – Recipe for Success or False Advertising?

Our results show: Those who utilize a “corporate network” often indeed have better chances of becoming profitable more quickly. The support and resources of a parent company accelerate the path to success, especially for those who rely not on deep industry knowledge but on active support.[3]

However, be careful—there’s no such thing as a “one-size-fits-all” solution. Some affiliations, like franchises, work well for founders who appreciate having a structured “guidebook.” Spin-offs and corporate sponsorships, on the other hand, are best suited for experienced founders who are already familiar with the company’s environment.

As with any good relationship, the success of an affiliation depends on personal preferences—or, as we like to say: “There’s a lid for every pot—but not every lid fits every pot!”

Table: The Ingredients for a Successful Affiliation

 Starting Up: With or Without “Big Brother”?

Our results make it clear that choosing a CAES is a strategic decision for many founders, where it’s less about “right or wrong” and more about “does it fit or not.” A CAES can be very helpful, but it’s not a cure-all. And, as we discovered, the decision isn’t always entirely voluntary – sometimes, it seems, one’s own portfolio sets the tone.

As a colleague nicely put it: “Some need a sparring partner, others prefer to fight their battles alone.” Our results show that an affiliation is particularly helpful when one can benefit from the structures and networks that larger companies offer – access to quick success through networks and capital often more than compensates for lacking experience in specific industries.

Conclusion and Final Thoughts: When Does CAES Make Sense?

In summary, one could say: Choosing between independence and corporate affiliation is like taking the first plunge into cold water. Those who can swim well may prefer to dive in alone, while those who still appreciate water wings will gladly rely on an established partner. Corporate affiliation offers many advantages—but only when the initial conditions are right.

Our study shows: Don’t be afraid to take the leap. What matters most is knowing your own strengths and understanding the kind of support you truly need. After all, entrepreneurship is always a bold decision—one that requires courage, confidence, and sometimes, a dash of irony.

Sources

1 https://link.springer.com/article/10.1007/s11365-024-00998-y

2 Quelle: Hopp, C., & Sonderegger, R. (2015). Understanding the dynamics of nascent entrepreneurship—prestart‐up experience, intentions, and entrepreneurial success. Journal of Small Business Management, 53(4), 1076-1096.

3 Quelle: Semrau, T., & Hopp, C. (2016). Complementary or compensatory? A contingency perspective on how entrepreneurs’ human and social capital interact in shaping start-up progress. Small Business Economics, 46, 407-423.