54057861
Entrepreneurial acquisitions, open innovation and UK high growth SMEs
Abstract This paper examines the dynamics of entrepreneurial acquisitions undertaken by UK high growth small and medium enterprises (SMEs). While entrepreneurial acquisitions are increasingly deployed by SMEs, little is known about their antecedents, motivational drivers and organisational outcomes. Drawing on detailed case study evidence from Scotland, the key factor found to be driving these acquisitions was the desire to augment and exploit technological complementarities between the acquiring and acquired firms. Acquisition can therefore be conceptualised as an advanced stage of the outside-in ‘open innovation’ strategies proactively used within these innovative SMEs. Firms executing this strategy typically have an acute propensity for risk, a desire for close customer engagement, effective business models and strong external orientation. The work suggests that greater attention should be paid within M&A theory to the dynamics of these types of smaller scale entrepreneurial acquisitions.
12067856
Gazelles as job creators: a survey and interpretation of the evidence
It is often claimed that small and young firms account for a disproportionately large share of net employment growth. We conduct a meta-analysis of the empirical evidence regarding whether net employment growth rather is generated by a few rapidly growing firms—so-called Gazelles—that are not necessarily small and young. Gazelles are found to be outstanding job creators. They create all or a large share of new net jobs. On average, Gazelles are younger and smaller than other firms, but it is young age more than small size that is associated with rapid growth. Gazelles exist in all industries. They seem not to be overrepresented in high-technology industries, but there is some evidence that they are overrepresented in services.
154017821
Creating good public policy to support high-growth firms
Writing in Small Business Economics Scott Shane argues that policy-makers should stop subsidising start-ups and instead focus on supporting the small subset of new businesses with high growth potential. However, both Shane and other scholars who have made the same argument only offer broad-brush proposals to achieve this objective. The aim of this article, in contrast, is to engage in a detailed discussion of how to create appropriate policies for high-growth firms (HGFs). Drawing on research in Scotland, we argue that policy-makers are looking for HGFs in the wrong places. The heterogeneous nature of HGFs in terms of sector, age, size and origins makes in impractical to target support on particular sectors, technologies or types of firms (e.g., new or R&D intensive). The article proposes a reorientation of HGFs, both in terms of appropriate targeting and forms of support. Public policy also needs to focus on the retention of HGFs which are acquired by non-local businesses. Finally, policy-makers need to properly reflect upon the specificities of their entrepreneurial environment when devising appropriate policy interventions.
154736003
What holds back high-growth firms? Evidence from UK SMEs
High-growth firms are seen as vital for economic growth. It is important for policy and theory to consider the barriers faced by firms achieving high growth and those with the potential to do so. This article uses data for 4,858 UK SMEs to investigate the obstacles perceived by two sets of firms: (1) firms in periods of high growth and (2) potential high-growth firms, which are observationally similar but are not achieving high growth. The results suggest high-growth firms perceive problems in six areas: recruitment, skill shortages, obtaining finance, cash flow, management skills and finding suitable premises. Potential high-growth firms feel held back by the economy, obtaining finance, cash flow and their management skills, but are less likely to perceive regulation is a problem. The results have implications for theory on high-growth firms and policies focussed at them.
53468323
New Firm Growth: Exploring Processes and Paths
This paper provides an approach to new firm growth that views this as an unfolding developmental process. This approach is based on a Penrosean (1995) model of the firm. We find that new firm growth is non‐linear and prone to interruptions and setbacks to an extent overlooked in the literature. From the model of development used, five propositions are drawn concerning measurable features of new firms' growth paths; these relate to patterns of survival, continuousness of growth, turning points, reversals and cumulative growth. These propositions are examined in the light of data on the growth paths of new firms in three countries, with aggregate comparisons of firms' growth paths effected by graphical representations and sequence analysis.
145216480
Entrepreneurial and Business Growth and the Quest for a “Comprehensive Theory”: Tilting at Windmills?
Even though there has been sustained interest in growth for almost 50 years, relatively little is known about this phenomenon and much confusion and misunderstanding surrounds it. Based on a literature review and the articles in this special issue we make three recommendations that we believe will allow theory to advance and be applicable in practice. First, that discourse between key stakeholders is encouraged in order to achieve greater understanding. Second, that focus is placed on “growth as a process,” rather than as a “change in amount.” Third, that knowledge production requires inclusivity and pluralism in research perspectives and approaches.
154125061
Entrepreneurship and growth
The entrepreneurial growth literature is extensive, but research focusing on questions such as how firms grow, why they grow according to different patterns, how the decisions about growing or not growing are made, and the contextual dimensions within which growth takes place, has been neglected. This annual review article explores such issues: it suggests that there is a greater need to understand the processes that underlie entrepreneurial growth. In particular, we need to know more about how the entrepreneur’s cognitive processes shape growth (i.e. microfoundations of growth), how they access and configure resources to achieve growth (i.e. the resource orchestration underpinning growth), whether these are influenced by a wider variety of contextual dimensions than previously recognised, and how these influence different patterns and types of growth.
154123914
Small firms, R&D, technology and innovation in the UK: a literature review
Abstract The importance of small and medium-sized enterprises (SMEs) in economic growth has made them a central element in much recent policymaking. Of particular interest have been policies designed to promote and facilitate the operation of the innovation process within SMEs, and there has been substantial expansion of this kind of effort. Despite this interest, the knowledge base about how SMEs actually undertake innovative activities remains limited. This paper reports on a literature survey of UK work over the past decade and tries to characterise the state of knowledge about SMEs and innovation. It concludes with a discussion of gaps and weaknesses in the literature and some requirements for future research in this field.
154004788
Small business growth: recent evidence and new directions
Purpose – To review empirical contributions to the small business growth literature since the mid‐1990s.Design/methodology/approach – Narrative review of the literature using the framework adopted in previous reviews: management strategies; characteristics of the entrepreneur; environment/industry factors; and firm characteristics.Findings – The absence of any unifying theory means that the literature continues to feature a wide range of growth measures and model specifications. As a result of this, knowledge development appears fragmented rather than cumulative. New theoretical perspectives are needed if we are to develop our understanding of the growth process in small businesses.Research limitations/implications – Alternative types of research are suggested that focus on small business growth as a process rather than an episode. Future research needs to adopt multiple measures of growth and, more importantly, be based on theory longitudinal in scope but idiosyncratic in its focus. Empirical work should...
13895079
Innovation and firm growth in high-tech sectors: A quantile regression approach
We relate innovation to sales growth for incumbent firms in high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to innovative activity. However, given that the returns to innovation are highly skewed and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the ‘average effect for the average firm’. Using a quantile regression approach, we observe that innovation is of crucial importance for a handful of ‘superstar’ fast-growth firms.
14371345
Open innovation in SMEs : trends, motives and management challenges
Open innovation has so far been studied mainly in high-tech, multinational enterprises. This exploratory paper investigates if open innovation practices are also applied by small- and medium-sized enterprises (SMEs). Drawing on a database collected from 605 innovative SMEs in the Netherlands, we explore the incidence of and apparent trend towards open innovation. The survey furthermore focuses on the motives and perceived challenges when SMEs adopt open innovation practices. Within the survey, open innovation is measured with eight innovation practices reflecting technology exploration and exploitation in SMEs. We find that the responding SMEs engage in many open innovation practices and have increasingly adopted such practices during the past 7 years. In addition, we find no major differences between manufacturing and services industries, but medium-sized firms are on average more heavily involved in open innovation than their smaller counterparts. We furthermore find that SMEs pursue open innovation primarily for market-related motives such as meeting customer demands, or keeping up with competitors. Their most important challenges relate to organizational and cultural issues as a consequence of dealing with increased external contacts.
154634705
Types of innovation, sources of information and performance in entrepreneurial SMEs
Purpose – The purpose of this paper is to examine the information sourcing practices of small‐ to medium‐sized enterprises (SMEs) associated with the development of different types of innovation (product/process/market/organizational). The relationship between different types of innovation and firms' performance is also to be examined.Design/methodology/approach – The paper is based on a quantitative study of a sample of SMEs located in the Northern Savo region in Finland. The entrepreneurs completed a questionnaire pertaining to, for example, whether their firms had introduced novel innovations and what were the sources of information behind these innovations.Findings – The introduction of novel product and market innovations appears to be associated with the use of more or less freely accessible information sources. The findings also indicate that the introduction of novel product, process and market innovations is positively associated with firms' growth. None of the types of innovation studied was fou...
145385583
New Venture Growth: A Review and Extension
New venture growth differs from that of established firms and is an important topic for scholarly inquiry. Current literature on new venture growth has focused primarily on why new ventures grow to the exclusion of how and where that growth is occurring. This article reviews the literature on new venture growth and addresses key limitations within this stream of research. It unites the literature on why new ventures grow with that of how (through internal or external means) and where (in domestic or international markets) new ventures grow to advance an important research agenda for future new venture growth studies.
56326484
Mergers and acquisitions : their effect on the innovative performance of companies in high-tech industries
This study examines the post-M&A innovative performance of acquiring firms in four major high-tech sectors. Non-technological M&As appear to have a negative impact on the acquiring firm's post-M&A innovative performance. With respect to technological M&As, a large relative size of the acquired knowledge base reduces the innovative performance of the acquiring firm. The absolute size of the acquired knowledge base only has a positive effect during the first couple of years after which the effect turns around and we see a negative effect on the innovative performance of the acquiring firm. The relatedness between the acquired and acquiring firms’ knowledge bases has a curvilinear impact on the acquiring firm's innovative performance. This indicates that companies should target M&A ‘partners’ that are neither too unrelated nor too similar in terms of their knowledge base.
18485171
R&D Collaboration by SMEs: new opportunities and limitations in the face of globalisation
Globalisation has systemically affected the way all firms undertake innovation. First, there has been a growing use of non-internal technology development, both by outsourcing and strategic alliances. Second, products are increasingly multi-technology. This has led to the growing use of networks by all firms, previously a primary competitive advantage of SMEs. These developments have created both opportunities and threats for the SME. On the one hand, large firms have increasingly sought out SMEs as they have developed their use of external networks. On the other hand, by doing so, larger firms are able to avail themselves of the flexibility long-enjoyed by SMEs. This is particularly so in the electronics hardware-based sector, where we have evaluated the R&D activities of both large and small firms. Although SMEs continue to have the advantages of flexibility and rapid response, the traditional disadvantages due to size limitations may have worsened due to the demand for multiple technological competences and by increased cross-border competition.
154675866
Open innovation in SMEs—An intermediated network model
In spite of increasing interest in open innovation, discussion about the concept and its potential application to the SME sector has been excluded from mainstream literature. However, given that the argument about the effect of firm size on the effectiveness of innovation is still ongoing, it is worth addressing the issue from an SME perspective. That is the focus of this article, which seeks, firstly, to place the concept of open innovation in the context of SMEs; secondly to suggest the input of an intermediary in facilitating innovation; and finally to report accounts of Korean SMEs' success in working with an intermediary. The research results support the potential of open innovation for SMEs, and indicate networking as one effective way to facilitate open innovation among SMEs.
36682294
Meta-analyses of Post-acquisition Performance: Indications of Unidentified Moderators
Empirical research has not consistently identified antecedents for predicting post‐acquisition performance. We employ meta‐analytic techniques to empirically assess the impact of the most commonly researched antecedent variables on post‐acquisition performance. We find robust results indicating that, on average and across the most commonly studied variables, acquiring firms' performance does not positively change as a function of their acquisition activity, and is negatively affected to a modest extent. More importantly, our results indicate that unidentified variables may explain significant variance in post‐acquisition performance, suggesting the need for additional theory development and changes to M&A research methods. Copyright © 2003 John Wiley & Sons, Ltd.
13772209
Market and technology access through firm acquisitions: Beyond one size fits all
Firm acquisitions have been shown to serve as a way to gain access to international markets, technological assets, products or other valuable resources of the target firm. Given this heterogeneity of takeover motivations and the skewness of the distribution of the deal value we show whether and how the importance of different takeover motivations changes along the deal value distribution. Based on a comprehensive dataset of 652 European mergers and acquisitions in the period from 1997 to 2003, we use quantile regressions to decompose the deal value at different points of its distribution. Our results indicate that the importance of technological assets is indeed higher for smaller target firms. The findings support the view on small acquisition targets to complement the acquirer’s technology portfolio while larger acquisition targets tend to be used to gain access to international markets.
154551802
Advancing Firm Growth Research: A Focus on Growth Mode Instead of Growth Rate
The development of firm growth research has been notably slow. In this paper, we argue that a major reason for this lack of development is the impatience of researchers to prematurely address the question of “how much?” before adequately providing answers to the question “how?” On the basis of an extensive review of the literature, we suggest how growth research can advance by changing focus to growth mode (organic, acquisition, hybrid). Toward this end, we provide a research agenda that helps establish the types of questions that growth researchers can ask within this new focus.
154926411
On the Importance of Technological Relatedness: SMEs versus Large Acquisition Targets
This paper empirically investigates a sample of German domestic merger and acquisitions (M&As) in the 1990s to analyze the importance of a related technology portfolio in the decision to acquire a particular firm. The novelty of this analysis lies in the fact that the sample does not contain exclusively large firms, but also a large share of small and medium-sized entrprises (SMEs). The empirical results suggest that firms engage in M&As to strengthen their technological competencies. A related technology portfolio is, in particular, important for the decision to acquire SMEs. This suggests an information advantage of acquirers with related technologies.
153366230
Do mergers and acquisitions among small and medium-sized enterprises affect the performance of acquiring firms?
This article investigates the post-merger performance effects resulting from mergers and acquisitions (M&As), drawing on a representative sample taken from all Swiss M&As occurring between 2006 and 2008, the majority of which took place between small and medium-sized firms (SMEs). Using this data, the study was able to investigate the impact of M&As on differing measures of economic performance, and also on innovation for the post-merger period of 2008–2010. The study found positive statistically significant performance effects arising from M&As for three of five critical performance indicators utilized. Furthermore, the evidence suggests that growth is a principal motive for external mergers, while efficiency is more influential on internal mergers.
144261275
“Business Growth”—Do Practitioners and Scholars Really Talk about the Same Thing?
The current growth literature has stalled over which measures to use in empirical studies, causing a fragmented theory base. This paper claims that there is a third issue that further curbs efforts in developing a better understanding of business growth. Based on a thorough literature review, a quantitative, and a qualitative study, we find that academic scholars and entrepreneurs do not talk about the same thing when they say “business growth.” For practitioners, growth is a more complex phenomenon—with a strong emphasis on internal development—which differs from the simplified conceptualization of growth used in empirical studies.
31554051
The impact of M&A on the R&D process: An empirical analysis of the role of technological- and market-relatedness
While the impact of M&A on R&D and innovation examined at the aggregate level left inconclusive evidence, we find that at the level of the R&D process both the technological and the market relatedness between the target and the acquirer are helpful dimensions to identify effects. Using information on 31 in-depth cases of individual M&A deals we show that technological relatedness between M&A partners directly affects the inputs and organizational structure of the R&D process. M&A partners that operate in the same technological fields tend to reduce their R&D effort and rationalize the R&D process after the M&A compared to firms active in complementary technological fields that merge. These firms will furthermore face less technological competition in the technology market, but risk creating a more bureaucratic R&D process with a less motivated workforce. Market relatedness between partners, while having comparable aggregate effects on the R&D process, operates on different dimensions of the R&D process. Former rivals that engage in a M&A are significantly less likely to expand into new R&D fields or leverage their technological competences across the products and markets of the new entity. Non-rival firms that join forces, in contrast, significantly increase R&D output and productivity through these activities.
6081357
Open innovation: State of the art and future perspectives
Abstract Open innovation has become one of the hottest topics in innovation management. This article intends to explore the limits in our understanding of the open innovation concept. In doing so, I address the questions of what (the content of open innovation), when (the context dependency) and how (the process). Open innovation is a rich concept, that can be implemented in many different ways. The context dependency of open innovation is one of the least understood topics; more research is needed on the internal and external environment characteristics affecting performance. The open innovation process relates to both the transition towards open innovation, and the various open innovation practices. As with any new concept, initial studies focus on successful and early adopters, are based on case studies, and descriptive. However, not all lessons learned from the early adopters may be applicable to following firms. Case study research increases our understanding of how things work and enables us to identify important phenomena. They should be followed by quantitative studies involving large samples to determine the relative importance of factors, to build path models to understand chains of effects, and to formally test for context dependencies. However, the evidence shows that open innovation has been a valuable concept for so many firms and in so many contexts, that it is on its way to find its final place in innovation management.
154230290
Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities
The complex phenomenon that mergers and acquisitions (M&As) represent has attracted substantial interest from a variety of management disciplines over the past 30 years. Three primary streams of enquiry can be identified within the strategic and behavioural literature, which focus on the issues of strategic fit, organizational fit and the acquisition process itself. The recent achievements within each of these research streams are briefly reviewed. However, in parallel to these research advances, the failure rates of mergers and acquisitions have remained consistently high. Possible reasons for this dichotomy are discussed, which in turn highlight the significant opportunities that remain for future M&A research.
167020234
Antecedents of M&A success: The role of strategic complementarity, cultural fit, and degree and speed of integration
In this paper, we develop a comprehensive model of M&A success. We integrate fundamental constructs of different schools and discuss their interdependencies with M&A success. Our theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German-speaking part of Central Europe. The results of our study support the demand for an integrative perspective and theory on M&A. M&A success is a function of strategic complementarity, cultural fit, and the degree of integration. Strategic complementarity also positively influences cultural fit and the degree of integration. Cultural fit positively influences M&A success, but surprisingly has a negative impact on the speed and degree of integration. The degree of integration is positively related to speed of integration
17234554
Caveat Venditor: Trust Asymmetries in Acquisitions of Entrepreneurial Firms
I explore the role of trust in acquisitions of entrepreneurial firms, taking a dyadic view that gives equal attention to buyers and sellers. The two parties have asymmetric views regarding whether ...
152603155
Theory and Evidence on Mergers and Acquisitions by Small and Medium Enterprises
The theory of mergers and acquisitions (MA are more likely to be withdrawn, suggesting that SMEs are more flexible, and more able to avoid deals that turn sour; and, finally, SME M&As are more likely to be financed with equity rather than debt, indicating that the influential financial pecking order theory is of less relevance to SMEs.
153562349
A Theory of the Early Growth of the Firm
Economic enterprise consists in the matching of resources and opportunities to create value. Growth processes of the new enterprise are here explored in a systems model inspired by Penrose. A sequence of phases in the early life of the firm reflects growth processes and problems, solutions giving rise to new problems. Firms must access, mobilize and deploy resources before they can generate resources for growth. Subsequent phases--in which growth reinforcement and growth reversal forces content--are not universal, but are set in motion in an important minority of firms, the major job creators. Beyond the early phases, critical problems facing the firm are more diverse. The growth of the firm is related to the building of the competence needed to respond to changing industrial opportunities. Copyright 1998 by Oxford University Press.
118773577
Organic and Acquisitive Growth: Re-Examining, Testing and Extending Penrose's Growth Theory
The Theory of the Growth of The Firm by Edith Penrose, first published in 1959, is a seminal contribution to the field of management. Penrose's intention was to create a theory of firm growth which was logically consistent and empirically tractable (Buckley and Casson, 2007). Much attention, however, has been focused on her unintended contribution to the resource-based view (henceforth RBV) (e.g. Kor and Mahoney, 2004; Lockett and Thompson, 2004) rather than her firm growth theory. We feel that this is unfortunate because despite a rapidly growing body of empirical work, conceptual advancement in growth studies has been limited (Davidsson and Wiklund, 2000; Davidsson et ai., 2006; Delmar, 1997; Storey, 1994). The growth literature frequently references Penrose's work, but little explicit testing of her ideas has been undertaken. This is surprising given that Penrose's work remains the most comprehensive theory of growth to date. One explanation is that she did not formality present her arguments, favouring verbal exposition over formalized models (Lockett, 2005; Lockett and Thompson, 2004). However, the central propositions and conclusions of her theory can be operationalized and empirically tested.
152155249
Toward a Knowledge-Based Theory of the Firm,” Strategic Management Journal (17), pp.
Given assumptions about the characteristics of knowledge and the knowledge requirements of production, the firm is conceptualized as an institution for integrating knowledge. The primary contribution of the paper is in exploring the coordination mechanisms through which firms integrate the specialist knowledge of their members. In contrast to earlier literature, knowledge is viewed as residing within the individual, and the primary role of the organization is knowledge application rather than knowledge creation. The resulting theory has implications for the basis of organizational capability, the principles of organization design (in particular, the analysis of hierarchy and the distribution of decision-making authority), and the determinants of the horizontal and vertical boundaries of the firm. More generally, the knowledge-based approach sheds new light upon current organizational innovations and trends and has far-reaching implications for management practice.
166779693
Achieving superior innovation-based performance outcomes in SMEs through innovation resource–capability complementarity
Firms are increasingly identifying new avenues to enhance their market position. One such effort involves the firms' ability to continuously learn. Learning has the capacity to enable firms to develop and implement more efficient and effective innovation-focused strategies, resulting in the ability to develop and deliver more products in a timelier manner. This study tests the relationship between innovation resource–capability complementarity and innovation-based performance. This study further elaborates that while innovation resource–capability complementarity drives innovation-based performance; their relationship will be enhanced via the firms' possession of superior learning capability. The findings show a significant effect of innovation resource–capability complementarity on innovation-based performance. The results also show that firms that possess superior learning capability are willing to question their operational processes and routines and make adjustments following the feedback obtained from customers and channels; thereby enhancing their abilities to develop more new products and increase their speed in delivering products to the customers.
154449139
Improvising firms: bricolage, account giving and improvisational competencies in the founding process
Improvisation occurs when the design and execution of novel activities converge. Drawing on three samples of young firms, this inductive study investigates the existence, channels and implications of strategic improvisation in knowledge-intensive new businesses. Our study suggests that not only may founding itself be improvisational in some cases, but improvisational processes and issues permeate entrepreneurial activity and have non-obvious implications for emergent firm strategies and competencies. We develop propositions in four domains: (1) the occurrence of strategic improvisation; (2) tactical improvisation rising to the level of strategy; (3) network bricolage; and (4) improvisational competencies. This study contributes to research on organizational improvisation, bricolage and entrepreneurship. Theoretically and in practice, both improvisation and bricolage represent potentially rich additions to the vocabulary of entrepreneurial action.
168626087
Exploring Open Innovation in Small and Medium-Sized Enterprises
Over the past years, research in open innovation has !ourished and the analysis of open innovation has been extended to various topics. However, a large proportion of open innovation research of the last decade concentrates on large and multinational "rms while innovation has become a more level playing "eld. #erefore, one would assume open innovation to be bene"cial for large "rms as well as for small and medium-sized enterprises (SMEs) (Chesbrough, 2006c). Prior work on innovation and SMEs emphasizes the role of inter-organizational relationships and external sources of innovation, and indicates that innovation in SMEs “by nature” has an external focus (Baum et al., 2000; Edwards et al., 2005). Nevertheless, SMEs have been excluded from the mainstream discussion in open innovation research (Lee et al., 2010; Wynarczyk et al., 2013). Only recently, researchers have started to investigate the relevance and the speci"c nature of open innovation in SMEs (Lee et al., 2010; van de Vrande et al., 2009b; Vanhaverbeke, 2012; van der Meer, 2007; Spithoven et al., 2013). #ese studies con"rm that small "rms do engage in di%erent types of open innovation practices and that openness drives innovation performance in SMEs (van de Vrande et al., 2009b; Parida et al., 2012; Brunswicker, 2011). Moreover, recent work provides a clear indication of the speci"c nature of how SMEs can bene"t from opening their business models and using in!ows and out!ows of knowledge (Lee et al., 2010), suggesting that existing "ndings on open innovation in large "rms cannot be directly transferred towards the SME sector. #ese "rst lessons learned provide the argument for studying open innovation in the SME sector in more detail. In addition, the economic relevance of SMEs further emphasizes the importance of research on open innovation strategies in SMEs. In Europe, for example, more than 60% OUP UNCORRECTED PROOF – REVISES, Mon Aug 04 2014, NEWGEN
167507255
Leveraging External Sources of Innovation: A Review of Research on Open Innovation
This article reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside-in” and “coupled” modes of Enkel et al. (2009). From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four-phase model in which a linear process — (1) obtaining, (2) integrating and (3) commercializing external innovations — is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals identified by Linton and Thongpapan (2004), complemented by highly cited work beyond those journals. A review of 291 open innovation-related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front-loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations.Research on obtaining innovations includes searching, enabling, filtering, and acquiring — each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including not-invented-here). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as co-creation, network collaboration and community innovation.This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on inter-organizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The article concludes with recommendations for future research that include examining the end-to-end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.
153693394
Closed or open innovation? Problem solving and the governance choice
Scholars have recently highlighted the promise of open innovation. In this paper, we treat open innovation—in it's different forms and manifestations—as well as internal or closed innovation, as unique governance forms with different benefits and costs. We discuss how each governance form, whether open or closed, is composed of a set of instruments that access (a) different types of communication channels for knowledge sharing, (b) different types of incentives, and (c) different types of property rights for appropriating value from innovation. We focus on the innovation “problem” as the central unit of analysis, arguing for a match between problem types and governance forms, which vary from open to closed and which support alternative forms of solution search. In all, the goal of this paper is to provide a comparative framework for managing innovation, where we delineate and discuss four categories of open innovation governance forms (markets, partnerships, contests and tournaments and user or community innovation) and compare them with each other and with two internal or closed forms of innovation governance (authority and consensus-based hierarchy).
43984708
Open R&D and Open Innovation: Exploring the Phenomenon
There is currently a broad awareness of open innovation and its relevance to corporate R&D. The implications and trends that underpin open innovation are actively discussed in terms of strategic, organizational, behavioral, knowledge, legal and business perspectives, and its economic implications. This special issue aims to advance the R&D, innovation, and technology management perspective by building on past and present studies in the field and providing future directions. Recent research, including the papers in this special issue, demonstrates an increasing range of situations where the concept is regarded as applicable. Most research to date has followed the outside-in process of open innovation, while the inside-out process remains less explored. A third coupled process of open innovation is also attracting significant research attention. These different processes show why it is necessary to have a full understanding of how and where open innovation can add value in knowledge-intensive processes. There may be a need for a creative interpretation and adaptation of the value propositions, or business models, in each situation. In other words, there are important implications for new and emerging methods of R&D management.
54928817
The Future of Open Innovation
Institutional openness is becoming increasingly popular in practice and academia: open innovation, open R&D and open business models. Our special issue builds on the concepts, underlying assumptions and implications discussed in two previous R&D Management special issues (2006, 2009). This overview indicates nine perspectives needed to develop an open innovation theory more fully. It also assesses some of the recent evidence that has come to light about open innovation, in theory and in practice.
15488583
A Knowledge Accessing Theory of Strategic Alliances
The emerging knowledge-based view of the firm offers new insight into the causes and management of interfirm alliances. However, the development of an effective knowledge-based theory of alliance formation has been inhibited by a simplistic view of alliances as vehicles for organizational learning in which strategic alliances have presumed to be motivated by firms' desire to acquire knowledge from one another. We argue that the primary advantage of alliances over both firms and markets is in "accessing" rather than "acquiring" knowledge. Building upon the distinction between the knowledge generation ('exploration') and knowledge application ('exploitation'), we show that alliances contribute to the efficiency in the application of knowledge; first, by improving the efficiency with which knowledge is integrated into the production of complex goods and services, and second, by increasing the efficiency with which knowledge is utilized. These static efficiency advantages of alliances are enhanced where there is uncertainty over future knowledge requirements and where new products offer early-mover advantages. Compared with alternative learning-based approaches to alliance formation, our proposed knowledge-accessing theory of alliances offers the advantages of greater theoretical rigour and consistency with general trends in alliance activity and corporate strategy. Copyright Blackwell Publishing Ltd 2004.
154659265
Learning and knowledge acquisition through international strategic alliances
Executive Overview Global competition is forcing firms to rethink the question of how new organizational knowledge is acquired. New knowledge provides the foundation for new skills, which in turn can lead to competitive success. However, few firms systematically manage the process of knowledge acquisition. This paper explores international strategic alliances and their potential for learning and knowledge acquisition. In bringing together firms with different skills, knowledge bases, and organizational cultures, alliances create unique learning opportunities for the partner firms. Based on the assumption that organizational learning is both a function of access to new knowledge and the capabilities for using and building on such knowledge, the paper focuses on alliance knowledge accessibility and firm learning effectiveness.
167790594
Alliance or acquisition? A dyadic perspective on interfirm resource combinations
For firms seeking to strategically combine their resources with those of other firms, two popular alternative governance structures emerge: alliance or acquisition. In this paper, we propose a dyadic perspective to examine how and why configurations of two firms' resources and capabilities affect the costs and benefits associated with each governance structure. More specifically, we posit that factors such as (1) the resource similarity and complementarity between a pair of firms, (2) the combined relational capabilities of a pair of firms, and (3) the partner‐specific knowledge between a pair of firms will affect the likelihood of observing that pair of firms forming an alliance vs. engaging in an acquisition. We test and find support for our hypotheses using extensive longitudinal data from a sample of the largest firms in the United States from 1991 to 2000. Copyright © 2007 John Wiley & Sons, Ltd.
2481500
Innovation strategies, process and product innovations and growth: Firm-level evidence from Brazil
Using World Bank ICS 2000–2002 data from Brazilian manufacturing firms, this paper identifies innovation strategies of firms – in particular internal development (“technology make”) and external acquisition (“technology buy)” – and their effect on successful process and product innovations. It subsequently explores the importance of process and product innovations for firm growth. Successful process and product innovations occur mostly through “technology buy” (mostly through the purchase of machinery and equipment), either alone or in combination with a “technology make” strategy. The option of only relying on internal development is less successful. The results on firm growth indicate that innovative performance is an important driver for firm growth. It is particularly the combination of product and process innovations that significantly improves firm growth. Both innovation and growth performance are supported by access to finance. Skills of workforce and management matter, but not necessarily tertiary education levels. The impact of international linkages on innovative and growth performance is mixed.
157997878
Proclivity for open innovation: Construct development and empirical validation
Over the past decade, the concept of open innovation has received substantial attention. Research has ranged from case study representations to large-scale quantitative studies using the Community Innovation Survey data or developing novel approaches to measuring open innovation. In this study, we conceptualise and validate a firm-level measure of proclivity for open innovation, which relates to the firm’s predisposition to perform inbound and outbound open innovation activities. To do so, we focus on smaller firms, assessing their organisational and behavioural perspectives related to open innovation. Building on existing scholarly research and a field study, we begin by conceptualising the theoretical framework of the multidimensional construct. We then develop and validate its measurement scale on two cross-cultural samples. The measure contains the following dimensions: inward IP licensing and external participation, outsourcing R&D and external networking, customer involvement, employee involvement, venturing, and outward IP licensing. Our results indicate that the measure has good reliability and validity. Implications for future research are also discussed.
153676893
Alliances versus acquisitions: choosing the right option
Recently, a wave of corporate acquisitions has swept across Europe, prompted by liberalisation and unification in the European Union. The authors ask the question: Has this made the traditional preference by European firms for alliances and co-operative strategies obsolete? Bearing in mind that, in global terms, alliances are popular, another question is: Should European firms use their experiences in alliances to develop new alliance strategies as an alternative to joining the trend to acquisitions? After a review of the European model of alliances, the authors discuss the pros and cons and rationale for horizontal acquisitions and scale alliances, and argue in favour of more aggressive complementary alliances combined with mergers and acquisitions to expand in Europe as well as globally
167934531
Momentum and serendipity: how acquired leaders create value in the integration of technology firms
Merger and acquisition activity is a critical means by which technology firms obtain the resources needed to compete in global markets. Effective implementation is essential to making these acquisitions successful, yet prior research on the implementation process has yielded paradoxical findings. I argue that a closer examination of the role of the acquired managers helps to resolve the implementation dilemmas found in prior research, which has focused on the role of the acquiring firm. I use grounded theory-building techniques to examine the integration of eight technology acquisitions, and find that acquired managers play a key role in achieving two types of value: expected and serendipitous. In promoting the realization of these two types of value, acquired leaders maintain the advantages of both integration and autonomy. Moreover, these leaders enable their organizations to simultaneously experience two often-conflicting forms of change: exploration and exploitation. Copyright © 2004 John Wiley & Sons, Ltd.
167582462
Cultural differences and capability transfer in cross-border acquisitions: the mediating roles of capability complementarity, absorptive capacity, and social integration
This paper presents an integrative model of the impact of cultural differences on capability transfer in cross-border acquisitions. We propose that cultural differences affect the post-acquisition capability transfer through their impact on social integration, potential absorptive capacity, and capability complementarity. Two dynamic variables – the use of social integration mechanisms, and the degree of operational integration of the acquired unit – are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity. The implications for acquisition research and practice are discussed.
8204421
Complementary Technologies, Knowledge Relatedness, and Invention Outcomes in High Technology Mergers and Acquisitions
Prior research on M&As and invention outcomes has not systematically examined the influence of two types of knowledge differences. Knowledge relatedness has typically been equated with knowledge similarity and the separate influence of knowledge complementarity has been overlooked. Similarly, studies examining innovation outcomes of M&As have typically focused on the role of technological knowledge and overlooked the influence of scientific knowledge. We develop a model of relatedness and invention performance of high-technology M&As that considers science and technology similarity and complementarity as important drivers of invention. We test the model using a sample of M&As from the drug, chemical, and electronics industries and a fine-grained measure of knowledge relatedness that distinguishes between science and technology relatedness. We find that complementary scientific knowledge and complementary technological knowledge both contribute to post-merger invention performance by stimulating higher quality and more novel inventions. This suggests that high-technology firms seeking acquisitions should search for, identify, and acquire businesses that have scientific and technological knowledge that is complementary to their own. Our results also suggest that similarities in knowledge facilitate incremental renewal, while complementarities would make discontinuous strategic transformations more likely, and that absorptive capacity research should be expanded to consider complementarities as well as similarities.
167708091
Acquisitions as Entrepreneurship: Asymmetries, Opportunities and the Internationalization of Multinationals from Emerging Economies
We investigate the rapid internationalization of many multinationals from emerging economies through acquisition in advanced economies. We conceptualize these acquisitions as an act and form of entrepreneurship, aimed to overcome the ‘liability of emergingness’ incurred by these firms and to serve as a mechanism for competitive catch-up through opportunity seeking and capability transformation. Our explanation emphasizes unique asymmetries (and not necessarily advantages) of emerging multinationals due to their historical and institutional differences with advanced economy multinationals, as well as a search for advantage creation when firms possess mainly ordinary resources. The argument shifts the central focus from advantage to asymmetries as the starting point for internationalization.
154027998
Growth Strategies and Merger Patterns among Small and Medium-Sized Enterprises: An Empirical Study
This investigation uses the Analytic Hierarchy Process to examine two main issues: once small and medium enterprises (SMEs) set their development objective as growth, how should they choose the proper means of generating growth? If SMEs choose to meet their strategic objectives by merger and acquisition (MA when a company pursues a contraction strategy, it seeks to eliminate external/internal weaknesses by downsizing, withdrawing funds, cutting budgets, and other means. Both of these strategies can be categorized as passive, rather than active. In strategic planning, a company must address its need to develop, to respond to external opportunities, and to select the most appropriate method and timeline for growth. These issues motivate this investigation. The main two themes addressed here are as follows. After SMEs set their development objective as a growth strategy, how should they choose the appropriate method of achieving this goal of the growth. If SMEs decide to meet their strategic goals by Merger and Acquisition (M&A), what mode of M&A should they employ? Additionally, this investigation examines practical M&A methodology, considering currently popular M&A strategies, and seeks to determine the method of M&A that is most appropriate for a particular industry. The aims of this thesis are summarized as follows. 1. To elucidate whether current policy on loaning to SMEs in Taiwan supports or limits M&A of manufacturing businesses. 2. To elucidate essential metrics for evaluating that SMEs' growth strategies and M&A policies. 3. To apply the Analytic Hierarchy Process (AHP) to analyze the growth strategies and M&A decision processes of SMEs and thus establish a practical model to help decision-making. 4. To determine the most appropriate M&A methodology for various industries and to offer recommendations on SMEs' growth strategies. …
211158017
Success and Failure in Technology Acquisitions: Lessons for Buyers and Sellers
Executive Overview Technology acquisitions can benefit firms by providing valuable resources, increasing market power, and initiating strategic renewal. Yet despite these opportunities, technology acquisitions often present a significant challenge for both buyers and sellers. In this article, we review the research on technology acquisitions and outline what is known and what remains to be studied. First, we examine firms' motivations for engaging in technology acquisitions. Second, we explore the features and challenges that make technology acquisitions unique. Third, we summarize the research on how both buyers and sellers can improve the performance of technology acquisitions. Fourth, we propose a research agenda to address unanswered questions and emerging issues related to technology acquisitions, placing particular emphasis on cross-border deals and the effects of acquisition activity on an industry's competitive dynamics.
16385565
Consumers as Co-developers: Learning and Innovation Outside the Firm
Abstract This study describes a process in which a firm relies on an external consumer community for innovation. While it has been recognized that users may sometimes innovate, little is known about what commercial firms can do to motivate and capture such innovations and their related benifits. We contribute to strategy literature by suggesting that learning and innovation efforts from which a firm may benifit need not necessarily be located within the organization, but may well reside in the consumer environment. We also contribute to the existing theory on ‘user-driven innovation’ by showing what firms purposively can do to generate consumer innovation efforts. An explorative case study shows that consumer innovation can be structured, motivated, and partly organized by a commercial firm that organizes the infrastructure for consumers’ interactive learning in a public online domain.
155450405
Management and Business Research
Chapter 1: Getting Started and Writing the Research Proposal Chapter 2: Reviewing the Literature Chapter 3: The Philosophy of Management and Business Research Chapter 5: Politics, Access and Ethics Chapter 4: Designing Management and Business Research Chapter 6: Crafting Qualitative Data through Language and Text Chapter 7: Crafting Qualitative Data through Observation and Interaction Chapter 8: Framing and Interpreting Qualitative Data Chapter 9: Crafting Quantitative Data Chapter 10: Summarizing and Making Inferences from Quantitative Data Chapter 11: Multivariate Analysis Chapter 12: Writing Management and Business Research
153599564
The Seller's Side of the Story: Acquisition as Courtship and Governance as Syndicate in Entrepreneurial Firms
In contrast to the prior acquisitions literature, which has emphasized the buyer's perspective, we examine the seller's perspective. This has important implications for understanding both the acquisition process and, more broadly, corporate governance in successful firms. Using a multiple-case, inductive study of 12 technology-based ventures, we find that acquisition occurs when sellers are pushed toward acquisition by difficult, albeit natural strategic hurdles, such as a chief executive search or funding round, and by strong personal motivations for sale, such as past failures and investments by friends. Sellers are also more likely to be pulled toward acquisition by attractive buyers that offer synergistic combination potential and organizational rapport, factors usually associated with the long-term interests of buyers. We reframe acquisition as courtship and corporate governance as a syndicate, indicating joint decision making with some common goals, and explore the generalizability of these views for private versus public firms and other contingencies. Together, courtship and syndicate suggest a behaviorally informed account of organization that belies the rhetoric of price and self-interest.
55396735
Building theories from case study research
Building Theories From Case Study Research - This paper describes the process of inducting theory using case studies from specifying the research questions to reaching closure. Some features of the process, such as problem definition and construct validation, are similar to hypothesis-testing research. Others, such as within-case analysis and replication logic, are unique to the inductive, case-oriented process. Overall, the process described here is highly iterative and tightly linked to data. This research approach is especially appropriate in new topic areas. The resultant theory is often novel, testable, and empirically valid. Finally, framebreaking insights, the tests of good theory (e.g., parsimony, logical coherence), and convincing grounding in the evidence are the key criteria for evaluating this type of research.
53452137
DYNAMIC CAPABILITIES, WHAT ARE THEY?
Seeks to present a better understanding of dynamic capabilities and the resource-based view of the firm. Dynamic capabilities are considered to be the "organizational and strategic routines by which firms achieve new resource configurations." Dynamic capabilities are identifiable and specific routines that can serve different purposes, including integrating resources, reconfiguring resources within firms, and guiding the gain and release of resources. Various examples such as the product development process and alliancing, are discussed. Commonalities related to effective dynamic capabilities can be seen across firms though this does not mean that these capabilities are exactly alike. The dynamism of the market can impact the sustainability of the dynamic capabilities and the causal ambiguity of these capabilities. Moderately dynamic markets see robust, grooved routine, while high velocity markets experience simple rules and real-knowledge creation. The evolution of these dynamic capabilities within a firm are unique but the firm's individual path is shaped by well-known learning mechanisms. Competitive advantage does not lie in the dynamic capabilities themselves but rather in the resource configurations that managers build using these dynamic capabilities. (SRD)
154082240
Case-Study Method in Small Business and Entrepreneurial Research
The case-study method has a long and respected history in the mainstream management literature. The philosophy and implications of the case-study method have received considerable attention and there are a number of standard texts on the approach. The method is also gaining acceptance, along with other qualitative methods, within the small business and entrepreneurial research community. Yet there has been little discussion of the distinctive philosophical consequences of applying the case-study approach in this area. This article will address this gap by mapping the paradigms adopted by small business and entrepreneurial case-study researchers. This will provide a platform upon which to explore the consequences of the paradigmatic position that researchers adopt.
12711240
Grounded theory research: Procedures, canons, and evaluative criteria
Using grounded theory as an example, this paper examines three methodological questions that are generally applicable to all qualitative methods. How should the usual scientific canons be reinterpreted for qualitative research? How should researchers report the procedures and canons used in their research? What evaluative criteria should be used in judging the research products? We propose that the criteria should be adapted to fit the procedures of the method. We demonstrate how this can be done for grounded theory and suggest criteria for evaluating studies following this approach. We argue that other qualitative researchers might be similarly specific about their procedures and evaluative criteria.
153984854
Born Global or Born to Run? The Long-Term Growth of Born Global Firms
Born global firms have stimulated substantial academic attention as regards their start up but research has neglected their subsequent, ongoing internationalisation. This contribution extends analysis from the inception and childhood to the growth and maturity of such firms. We investigate whether born global are also “born to run” companies; we also try to reconcile the analysis of international new ventures in international entrepreneurship studies with the approaches based on fast growing firms and gazelles. We initially present the latest advances in the modelling of accelerated internationalisation over time; we then discuss and develop a conceptual framework and a model that captures the variables that affect born global firms’ evolution in an holistic perspective; finally, we match case study analysis with the framework and discuss our findings. The results show two groups of firms that differ significantly in long-term internationalisation paths and growth cycles. We highlight turning points in these paths and discuss the drivers which lead to sustained high growth. The characteristics of the entrepreneurial/management teams, strategic partnerships and the entry in complex markets are the main differentiators in growth patterns, irrespectively of the industry. The “openness” of the founders and the early preparation for growth determine both the extent of organizational learning and the speed at which it is developed and used. We see said learning and its speed in development and use as the underlying, necessary mechanism of sustained high growth.
9284642
Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance
This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright  2007 John Wiley & Sons, Ltd.
16214813
The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments
On the basis of empirical research, a model of the internationalization process of the firm is developed. The model focuses on the gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign markets. In particular, attention is concentrated on the increasing involvement in the individual foreign country.
154696563
Dynamic Capabilities and Managing Human Capital
We apply the dynamic capabilities framework to explore the management of human capital, with particular emphasis on the process of “acqui-hiring.” Acqui-hiring is the acquisition of small companies primarily to gain access to their employees and has been proliferating according to publicly available data. While this trend has received considerable attention from practitioners, scholars have not systematically explored these acquisitions or explained how they fit into the corporate strategy of the acquirers, mostly Silicon Valley–based technology companies. We use a hand-collected dataset to document recent trends in acqui-hiring and present two case studies to provide insights into how acqui-hiring works in practice. We then draw on prior work in strategic management on dynamic capabilities to explain how acqui-hiring relates to the broader set of strategies firms employ to sustain competitive advantage. Specifically, we present acqui-hiring as one example of asset orchestration—an important dynamic capab...
155019448
The role of alliances in the early development of high-growth firms
Rapid growth is sought after but may overstretch a firm's resources. Can alliances supply compensating support for rapidly growing firms? Longitudinal data on firms in a technology cluster are used to investigate rapid growth in relation to alliances and other factors known to be associated with firm growth. Rapid firm growth appears beneficial in terms of higher survival rates and earlier attainment of mid-size, but is rarely sustained. Alliances are predictors of rapid growth, as are international operations. Venture capital is not directly associated with firm growth in the findings, but there is a high incidence of alliances among venture capital-backed firms. Copyright 2014 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.
143543588
Can a Previous Alliance Between an Acquirer and a Target Affect Acquisition Performance?
Throughout the 1990s, organizations have been combining resources through acquisitions and alliances in record numbers. An acquirer’s previous alliance with a target may give an acquirer target-specific information and experience that may be an advantage-producing resource in selection, valuation and integration of the target. This study investigates whether a previous alliance between an acquirer and a target affects post-acquisition performance and finds that a previous alliance between an acquirer and a target correlates positively with acquisition performance. Acquirers’ previous R&D, technology transfer, manufacturing and marketing alliances with targets benefit acquisition performance more than their previous licensing alliances with targets. Furthermore, target-specific learning effects are strongest and most beneficial to acquisition performance in acquirers’ previous technology transfer and manufacturing alliances with targets.
154356799
The effect of prior alliance experience on acquisition performance
Information asymmetry usually results in acquiring a target where post-acquisition performance is often disappointing. In this study, we examine whether previous bidder–target alliances mitigate the negative effect of information asymmetry. Further, in cases when the target firms in an acquisition are from the high technology or service industries or privately held firms, whereby the firms are composed of unique knowledge, intangible assets and less disclosed information, respectively, we test whether there are significantly more acquisitions when prior bidder–target alliances exist, as it is assumed that these alliances reduce the level of information asymmetry. We find on average the post acquisition stock performance is better when the purchasing firm acquires a prior alliance partner. Furthermore, when acquiring privately held target firms, the target firms are more likely to be previous alliance partners. Finally, when the target firms are ‘more informed’ (i.e. high technology, service or privately held firms), the post acquisition performance is disappointing. However, bidder–target alliances reduce the amount of value destroyed.
31423124
Prior Alliances with Targets and Acquisition Performance in Knowledge-Intensive Industries
An important focus of the research on mergers and acquisitions is the conditions under which acquisitions create value for the acquiring firm's shareholders. Given that the acquisition process is plagued by serious issues of information asymmetry, which are exacerbated in the context of knowledge acquisitions, we examine whether prior alliances with potential targets reduce the information asymmetry enough to create “partner-specific absorptive capacity” and yield superior stock returns on acquisition, compared with acquisitions not preceded by alliances. We test our hypotheses on a sample of high-technology acquisitions by U.S. firms during 1990--1998 using an event study methodology to assess abnormal stock returns. We find, unexpectedly, that no significant general effect emerges for acquisitions with prior alliances. However, international acquisitions following alliances show significantly better returns relative to both acquisitions without prior alliances and domestic acquisitions. Additionally, stronger forms of prior alliances lead to better acquisition performance than weaker forms of alliances. Together, the results broadly support our thesis that partner-specific absorptive capacity may be at work and suggest that under certain prior alliance conditions, acquisitions can indeed create value for acquirers.
4118353
The geography of job creation in high growth firms: the implications of ‘growing abroad’
In recent years, there has been an upsurge of interest by policy makers in high growth firms. Interest in these dynamic firms has primarily been driven by their prodigious ability to create new employment. Despite this, very little is known about the complex corporate geographies of these firms and their internationalisation processes. Using quantitative and qualitative data, this paper explores this issue by examining Scottish high growth firms. High growth firms were found to adopt more aggressive forms of international expansion, such as overseas acquisitions, than their non-high growth firm counterparts. As a result of these complex growth processes, a large proportion of high growth firm employment growth is generated outside Scotland. The paper concludes that the regional development impact of high growth firms for small peripheral economies in the UK is more limited than originally envisaged. The implications of the study for further research and public policy are examined.
73630426
External Technology Sourcing Through Alliances or Acquisitions: An Analysis of the Application-Specific Integrated Circuits Industry
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 alternative 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 alternatives 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 alternatives.