The Peripheral Halo Effect: Do Academic Spinoffs Influence Universities' Research Income?

Extant literature has drawn attention to the ‘halo effect’ of the good reputation of a core organizational activity on the outcome of a peripheral activity. We contribute to the literature on organizational reputation by illustrating a halo effect in the opposite direction – from the periphery to the core. We show that developing a reputation for a peripheral activity (in our context, universities' social impact via spinoffs) may have positive spillovers for core organizational activities (in our context, university research), a phenomenon we term the ‘peripheral halo effect'. We also show that this effect is more prominent for high‐status than for low‐status organizations. Our research also contributes to the academic‐entrepreneurship literature by revealing that spinoff portfolios can generate income for universities not only directly via equity positions but also indirectly via reputational benefits.