Applying the dynamic capability perspective, this article takes two different views on spin-offs. Firstly, they are considered as developmental strategies not only to realign the assets but also to create, develop and rejuvenate assets through recombination. Secondly, we consider them in the context of SME where resources and managerial limitations limits slack for growth.

With such constraints, spin-offs are often viewed as risky processes leading to the loss of specific assets and skills. However, we argue that they can enable SMEs to create, extend and outreach assets and competencies outside their traditional scope but related to their core competencies.

Building on Teece’s dynamic capabilities framework, we intend to contribute to the literature gap on small firm growth by conceptualizing how spin-offs can be a hybrid developmental mode rather than a divestment mode in the context of SME.