Inter-organizational Relationships and Acquisition Likelihood: Evidence from High Technology Firms

We explore the influence of inter-organizational relationships of firms, namely, corporate venture capital investments and strategic alliances, on the likelihood of being acquired. A longitudinal investigation of 2,302 acquired and non-acquired firms in the high technology sector of the U.K., during the period 2008 – 2016, reveals a significantly positive relationship between the two types of inter-organizational relationships examined and the acquisition likelihood. Further, as predicted, this relationship is stronger for start-up firms. However, contrary to our expectations, affiliation with high reputation partners weaken the effect of inter-organizational relationships on the acquisition likelihood. Taken together, these findings are consistent with the view that inter-organizational relationships serve as “endorsements” which are taken by acquirers as signals of firm quality when seeking acquisition targets – particularly when their information disadvantage is greater.