Phased Acquisitions for Disruptive Innovation: Toward a Micro-Level Governance Perspective

Abstract

Whereas incumbents often struggle to respond to disruptive innovations, start-up companies frequently face difficulties in establishing them within existing ecosystems. Phased acquisitions, that is, trajectories where an incumbent initially takes an equity stake in a start-up and subsequently acquires it, have been suggested as viable strategy to address these challenges. Whereas prior research has focused on the macro-level governance of such phased acquisitions, the authors explore the micro-level governance, examining how the existence of and changes in particular coordination and control mechanisms can shape the phased acquisition and its performance implications. Based on a longitudinal process study of a phased acquisition in which one start-up and one incumbent jointly developed and commercialized a disruptive technology, the authors develop a process model that (1) illuminates the existence of micro-level governance shifts and their impact on the decision to transition from equity alliance to acquisition, (2) identifies specific triggers of micro-level governance shifts, and (3) emphasizes the existence of counterintuitive micro-level governance spillovers across alliance and acquisition.

Citation

Faems, D. and Madhok, A. (2019), "Phased Acquisitions for Disruptive Innovation: Toward a Micro-Level Governance Perspective", Sydow, J. and Berends, H. (Ed.) Managing Inter-organizational Collaborations: Process Views (Research in the Sociology of Organizations, Vol. 64), Emerald Publishing Limited, Leeds, pp. 139-162. https://doi.org/10.1108/S0733-558X20190000064010