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

Research output: Contribution to journalJournal articlepeer-review

Published
<mark>Journal publication date</mark>2008
<mark>Journal</mark>Journal of High Technology Management Research
Issue number2
Volume18
Number of pages16
Pages (from-to)157-172
Publication StatusPublished
<mark>Original language</mark>English

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.