Technology Partnering to Mergers and Acquisitions

Organization Science, 2002

In today's turbulent business environment innovation is the result of the interplay between two distinct but related factors: endogenous R&D efforts and (quasi) external acquisition of technology and know-how. Given the increasing importance of innovation, it is vital to understand more about the altemative mechanisms-such as alliances and acquisitions-that can be used to enhance the innovative performance of companies. Most of the literature has dealt with these altematives as isolated issues. Companies, however, are constantly challenged to choose between acquisitions and strategic alliances, given the limited resources that can be spent on research and development. This paper contributes to the literature because it focuses on the choice between innovation-related alliances and acquisitions. We focus on the question of how the trade-off between strategic alliances and acquisitions is influenced by previous direct and indirect ties between firms in an industry network of interfirm alliances. We formulate hypotheses pertaining to the number of direct ties between two companies, their proximity in the overall alliance network, and their centrality in that network. In so doing, we distinguish between ties that connect firms from the same and from different industry segments, and those that connect firms from the same or from different world regions. These hypotheses are tested on a sample of strategic alliances and acquisitions in the application-specific integrated circuits (ASIC) industry. The findings show that a series of strategic alliances between two partners increases the probability that one will ultimately acquire the other. Whereas previous direct contacts tend to lead to an acquisition, this is not true of previous indirect contacts, which increase the probability that a link between the companies, once it is forged, takes the form of a strategic alliance. In the case of acquisitions, firms that are more centrally located in the network of interfirm alliances tend to be acquirers, and firms with a less central position tend to become acquired. These findings underscore the importance of taking previously formed interfirm linkages into account when explaining the choice between strategic alliances and acquisitions, as these existing links influence the transaction costs associated with both altematives.

Journal of Small Business and Enterprise Development, 2012

Technology Analysis & Strategic Management, 2002

A large part of the literature from industrial organisation and management expects that, compared with unrelated M&As, related M&As show superior economic performance because of synergetic effects that follow from economies of scale and scope. The current contribution takes the debate on the effect of different M&As somewhat further by studying the effect of M&As on the technological performance of companies. In this study the technological performance of M&As is related to a high-tech sector, i.e. the computer industry. The main result of this research is that the so called strategic and organisational fit between companies involved in M&As seem to play an important role in improving the technological performance of companies (mergers, acquisitions, technological performance) have put this topic on the research agenda.

1999

This paper examines how alliance experience accumulation at the parent firm level and alliance features at the transaction level jointly and interactively shape the termination outcomes of high-tech collaborative agreements. We draw upon the knowledge-based view of the firm and work on governance design to differentiate alliance termination outcomes, investigate where favorable terminations occur, and evaluate factors from multiple levels of analysis affecting alliance dynamics. The evidence suggests that partner-specific experience is beneficial for non-equity alliances affording less control than equity structures as this experience facilitates the development of inter-partner routines. Broad-based collaborative experience and alliance experience in a technological domain do not affect how alliances end, however. The findings also indicate that alliance complexity and how parent firms assign responsibilities among themselves influence alliance termination outcomes.

Rapid technological changes, shortened product life cycle, limited resources, and increasingly intensive competition have forced many companies to source and develop their technology and innovation capability quickly and externally. “Successful organizations are constantly seeking ways to foster innovation and new product or service development” (Kennedy, Payne, & Whitehead, 2002, p.149), especially in technology-intensive industries. Given the high level of uncertainty, time-consuming nature, and inertia of technology exploration/exploitation through internal Research and Development (R&D), the strategic use of mergers and acquisitions (M&A) to obtain new technological knowledge/capabilities has become a common corporate phenomenon. Therefore, this article reflects on the current state of knowledge concerning the technology-based mergers and acquisitions (TBM&As) with regard to the following issues: (1) How do TBM&As perform? (2) What are the contingency factors and how do they impact TBM&A performance? (3) What kind of analytical approaches and theories are adopted in the research? (4) How can the TBM&A phenomenon be studied in the future in order to further develop knowledge concerning TBM&As? These questions are the focus of this article.

International Business Research, 2012

This article examines the various forms and strategical options that are found and employed when merging companies of any size with medium-sized technological companies, with a view to understanding what outcomes are involved. This research paper is based on a sample consisting of 5 738 mergers and acquisitions transactions in the high-tech sector, particularly those involving innovative companies with technological interests. The aim of this research is to show how these strategic manoeuvres operate, using a multi-criteria analysis chart that includes the size of the company, the level of participation, the nature of diversification, the duration of transactions and value ratios. In this way, the research will help to provide better understanding of the characteristics of these technological merger acquisition operations, creating a typology of operations and manoeuvres and correcting some of the beliefs commonly held.

SSRN Electronic Journal, 2000

This paper focuses specifically on interfirm strategic collaboration as a vehicle for knowledge management across firm boundaries. Drawing on the widely accepted exploitation/exploration dichotomy, this article contributes to research concerning alliance dynamics by combining elements related to alliance formation, negotiation and outcomes. By integrating the exploitation/exploration arguments into a set of knowledge-related strategic motives for alliance formation, the main arguments focus on the influence of governance mechanisms on the relationship between strategic fit and outcome in terms of knowledge. This paper integrates the emergent knowledge-based theories of alliance formation (and outcome) with existing theories related to governance and coordination in an attempt to explain how the knowledge outcome of collaborative relationships may be determined by the strategic fit of partner motives, influenced by the mix of contractual and procedural governance. A series of testable propositions are derived in order to answer the following question: Do combinations of contractual and procedural coordination, given specific strategic fit, explain performance differentials?

Academy of Management Review, 2008

Mergers and acquisitions (M&As) and alliances are potential alternative choices for managers. We propose that three dimensions of industry conditions are likely to be influential in such choices: (1) industry demands on firms to make significant commitment, (2) the environmental pressures for flexibility, and (3) the limitations on firm choices stemming from industry concentration and institutional conditions. We develop propositions about how differences across these three dimensions influence the choices that firms make between M&As and alliances.

This paper examines governance structures influenced by relational and performance risk in interfirm alliances. Risk perspectives and transaction cost economics (TCE) generate conflicting hypotheses about predicting alliance governance structures. In a highly risky situation, TCE suggests protective governance mechanisms such as equity joint ventures, whereas risk perspectives suggest more flexible mechanisms such as contract-based alliances. Hypotheses are formulated based on risk perspectives; next, they are empirically tested using 3,228 alliance data records generated during the past 5 years for high-tech industries. The results suggest that risk perspectives provide a better rationale than TCE for choosing an alliance governance structure in a high-tech industry. In the conclusion, we discuss critical issues in current debates about predicting alliance governance structures.

papers.ssrn.com

The management of technology acquisitions-acquisitions of small technology based firms by large established firms-poses an organizational paradox. Acquirers must integrate acquired firms in order to exploit their technologies in a coordinated manner; at the same time, they must preserve organizational autonomy for acquired firms in order to avoid disrupting their capacity for continued exploration. In this study, we suggest that the coordination-autonomy dilemma can be better managed by recognizing that the effect of a structural form on innovation outcomes is contingent on the stage of development of the innovation trajectory of the acquired firm. Specifically, we show that structural integration lowers the hazard of new product introductions for acquired firms that have not launched any products prior to acquisition and for all acquired firms in the immediate aftermath of the acquisition, but these adverse effects disappear as the innovation trajectory evolves beyond these stages. We discuss implications for our understanding of post merger integration, and the organizational challenges of balancing exploration and exploitation in high velocity environments.

2000

A large part of the literature from industrial organisation and management expects that, compared with unrelated M&As, related M&As show superior economic performance because of synergetic effects that follow from economies of scale and scope. The current contribution takes the debate on the effect of different M&As somewhat further by studying the effect of M&As on the technological performance of companies. In this study the technological performance of M&As is related to a high-tech sector, i.e. the computer industry. The main result of this research is that the so called strategic and organisational fit between companies involved in M&As seem to play an important role in improving the technological performance of companies (mergers, acquisitions, technological performance) 1INTRODUCTION The central topic of this paper concerns the possible effect that mergers and acquisitions (M&As) have on the technological performance of companies. This subject of the technological effect of M...

2015

Our study explores the effect of technological overlap on the success or failure of merger and acquisition deals taking into consideration the change management procedures applied by the company management, and bearing in mind the market penetration strategy used by the new entity in planning its entrance to the market.

2017

Coopetition characterizes situations in which firms simultaneously cooperate and compete. The idea of coopetition has been talked about among management scholars for a while, but further theoretical and empirical explorations are still scarce. In the existing literature, coopetition is generally looked at through case studies on the co-development of a technology by a small number of players, while the same firms compete in the context of the commercialization of products based on this technology. The aim of this study is to advance a related but different concept: broad coopetition, that is, coopetition that takes place not only between a dyad of players, but rather in a widespread way among most market players. In this paper, we explore this idea in the context of M&As. We suggest that some M&As among direct competitors are likely to raise market expectations that encourage broad coopetition for all parties on the market, i.e., merging competitors and their rivals. Empirically, we...

2008

Baro et al.

Business Horizons, 2009