Sourcing technological knowledge through corporate acquisition: Evidence from an international sample of high technology firms

Panos Desyllas, Alan Hughes

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Abstract

We investigate the prevalence of the motive to source technological knowledge externally through corporate acquisition. Drawing on make-or-buy and organizational learning theories, we infer the implications of this explanation for the acquirers' pre-acquisition innovative characteristics. Using an international sample of 6106 high technology acquisitions during 1984-2000, we assess the contribution of innovative characteristics to the acquisition likelihood. For firms acquiring small private firms and former subsidiaries-but not public targets-the evidence is consistent with three propositions: (1) A firm's commitment to internal R&D is negatively affected by the decision to acquire; (2) Low R&D productivity increases the likelihood of acquisition; (3) A large knowledge stock predisposes firms to acquire because they perceive they are capable of selecting and absorbing targets. We conclude that acquisitions of small private firms and former subsidiaries are a viable R&D strategy to explore a range of potential future innovation trajectories for large public firms. © 2008 Elsevier Inc. All rights reserved.
Original languageEnglish
Pages (from-to)157-172
Number of pages15
JournalJournal of High Technology Management Research
Volume18
Issue number2
DOIs
Publication statusPublished - 2007

Keywords

  • Acquisitions
  • Patents
  • R&D

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