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Book part
Publication date: 1 January 2008

Christoph Grimpe and Katrin Hussinger

Purpose – 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…

Abstract

Purpose – 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.

Methodology/approach – On the basis of 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.

Findings – Our results indicate that the importance of technological assets is higher for smaller target firms while the importance of non-technological assets seems to be higher for larger targets. 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.

Research limitations/implications (if applicable) – Our findings suggest that the average firm as a reference for study might not be appropriate to address as the size of the target firm influences the value attribution to the target's assets.

Practical implications (if applicable) – Managers in the acquiring firm should be aware that they might overpay for the technological assets of a small firm. However, the acquisition of larger targets requires a well-developed integration strategy.

Originality/value of paper – For the first time, the broad merger motive of technology acquisition has been further qualified according to the size of the target which exhibits a considerable impact.

Details

New Perspectives in International Business Research
Type: Book
ISBN: 978-1-84855-279-1

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Book part
Publication date: 5 July 2016

Pankaj C. Patel and David R. King

The globalization of knowledge has driven an increased emphasis on cross-border, high-technology acquisitions where a target firm in a technology industry is acquired by a…

Abstract

The globalization of knowledge has driven an increased emphasis on cross-border, high-technology acquisitions where a target firm in a technology industry is acquired by a firm in another nation. However, learning depends on similarity of knowledge, and we find that needed similarity can be provided by either technology or culture. As a result, firms can learn from acquiring targets at increasing cultural distance or at increasing technological distance, but not both. We find an interaction where acquisitions made at longer cultural distances and less technological distance, and acquisitions at shorter cultural distances and greater technological distance improve financial performance. This means technological distance and cultural distance are substitutes or represent a trade-off where improved acquisition performance depends on having commonality (low distance) for one of the variables.

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Book part
Publication date: 14 July 2015

Jochem T. Hummel and Nima Amiryany

This study focuses on intra-industry determinants of acquisition performance. Seven years of printed research on acquisitions from 10 top-tier business journals is…

Abstract

This study focuses on intra-industry determinants of acquisition performance. Seven years of printed research on acquisitions from 10 top-tier business journals is categorized on the basis of R&D intensity – that is, per industry classification: high-, medium-, and low-technology – and determinants of acquisition performance. Instead of broadly generalizing acquisition performance determinants across industries, this study focuses on how the practice of enhancing acquisition performance is different per industry classification and what acquiring firms need to take into account.

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Article
Publication date: 4 January 2021

Annelies Bobelyn, Bart Claryse and Mike Wright

This paper aims to study the effect of two important marketing decisions on the extent of value capturing by the firm owners. First, it addresses the debate whether…

Abstract

Purpose

This paper aims to study the effect of two important marketing decisions on the extent of value capturing by the firm owners. First, it addresses the debate whether acquirers of young technology-based firms value targets that span multiple technology and market categories indicating multiples options for growth or prefer more narrowly defined targets with a clear product and market focus. Second, it investigates to what extent the use of alliances for marketing purposes contributes to value capturing and how they moderate the effect of diversification of technology and marketing.

Design/methodology/approach

To estimate the acquisition price, a linear regression model is used, including a Heckman correction controlling for the likelihood of being acquired. The hypotheses are tested in a sample of British venture capital backed firms.

Findings

Firms that convey focus in their marketing activities (either because they focus on a few market categories or because they rely on downstream alliance to market their inventions) receive higher valuations at acquisition than those that diversify. Further, also the size of the product portfolio is negatively correlated to the acquisition price. Finally, the results reveal that firms with a broad patent portfolio can reduce the negative effects on firm value by engaging in less downstream alliances.

Originality/value

This paper advances existing research on exit strategies for entrepreneurial firms by considering factors explaining acquisition prices, instead of acquisition probabilities. Further, it adds the categorization research by demonstrating how acquirers respond to complex combinations of technology and market categories.

Details

Journal of Research in Marketing and Entrepreneurship, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1471-5201

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Article
Publication date: 20 February 2009

Karen Ruckman

The purpose of this paper is to determine what the effects of acquisition are on R&D patterns.

Abstract

Purpose

The purpose of this paper is to determine what the effects of acquisition are on R&D patterns.

Design/methodology/approach

This paper tests whether the actual post‐acquisition R&D intensity of the combined firm deviated from the predicted R&D intensity, where the predicted amount is an asset‐weighted average of pre‐acquisition values.

Findings

The results indicate that the combination of technology sourcing and technological relatedness have strong predictive powers for determining changes in post‐acquisition R&D intensity. Technology sourcing acquisition of unrelated technologies results in an increase in post‐acquisition R&D intensity, as predicted. Acquirers in this situation may be using their acquisition as a platform for research expansion.

Research limitations/implications

The dataset used in this paper was restricted to public acquirers and targets for completeness of financial information. It would be useful to determine the extent to which a technology sourcing acquirer is predicted to enter into an acquisition and also whether technology sourcing can be used as a predictor for the ultimate target company out of a pool of potential targets.

Practical implications

The results can be used to inform managers on a strategic level when research strategy deviates from what the theory would predict. For example, if a company that did a technology sourcing acquisition of an unrelated product subsequently decreased R&D intensity, then rival pharmaceutical firms can ascertain that the acquired research was ultimately determined to be too risky or unviable.

Originality/value

The value in this paper is the unique measurement for technology sourcing.

Details

Journal of Strategy and Management, vol. 2 no. 1
Type: Research Article
ISSN: 1755-425X

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Article
Publication date: 24 August 2010

Carmen Haro‐Domínguez, Teresa Ortega‐Egea and Ignacio Tamayo‐Torres

The purpose of this paper is to analyse the influence of the manager's strategic orientation concerning technology acquisition and its repercussions for the firm's performance.

Abstract

Purpose

The purpose of this paper is to analyse the influence of the manager's strategic orientation concerning technology acquisition and its repercussions for the firm's performance.

Design/methodology/approach

These relationships are studied using a sample of Spanish engineering consulting firms, most of them small‐ and medium‐sized enterprises.

Findings

The results obtained show that the proactive character adopted by managers will directly influence the decision‐making process concerning technology acquisitions. Managers with a proactive strategic orientation adopt both internal technological development and the external acquisition of technology, but a slight preference is observed for internal development, even though it achieves considerably less satisfactory results than those achieved with external technology acquisition.

Research limitations/implications

The paper is exploratory in character, and its goal is to show whether interrelations exist between the variables. The sample refers only to engineering consultancies. Another limitation is the cross‐sectional character of the analysis performed.

Practical implications

To obtain perfect adaptation of the firm to its environment, it is crucial that the manager be committed on both the tactical and the operating strategic levels. The paper shows the important role of the manager's strategic orientation in his or her decisions on technology acquisition. Success in this kind of decision is of vital importance to the firm. The high costs of internal development prevent immediate profits, and external acquisition brings high risks.

Originality/value

The paper seeks to stimulate new lines of research regarding these two variables (technology acquisition and manager's strategic orientation) and their repercussions for the firm.

Details

Industrial Management & Data Systems, vol. 110 no. 7
Type: Research Article
ISSN: 0263-5577

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Article
Publication date: 1 April 1997

Anthony F. Buono

Presents a case study of an intervention in a technology‐based acquisition. Conceptualizing the technology transfer process as the integrated movement of people…

Abstract

Presents a case study of an intervention in a technology‐based acquisition. Conceptualizing the technology transfer process as the integrated movement of people, capabilities and knowledge, the analysis examines the development and implementation of the acquisition plan. The discussion focuses on the acquiring company’s integration strategy and the ramifications for intervening in such strategic endeavours.

Details

Management Decision, vol. 35 no. 3
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 19 September 2014

George Chondrakis and Tomas Farchi

This article explores the effect of technological similarity in acquisitions on invention quantity and quality. In doing so, we confirm previous findings in the literature…

Abstract

This article explores the effect of technological similarity in acquisitions on invention quantity and quality. In doing so, we confirm previous findings in the literature suggesting that technological similarity exhibits an inverted U-shaped relationship with innovative output and a negative relationship with average invention quality. However, we identify the nature of the technology as an important moderating factor for both relationships. We distinguish between two types of technologies, complex and discrete, and suggest that at high levels of technological similarity, invention quantity and average quality increase more in complex technology industries as compared to discrete technology industries. These effects are attributed to innovation cumulativeness and the interdependencies developed between patent rights in complex technology settings. A study of acquisition and patenting activity in two industries over a sixteen-year period provides empirical support to our claims.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78350-970-6

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Book part
Publication date: 4 January 2012

Dries Faems

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have…

Abstract

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have recently argued that firms can also engage in transitional technology sourcing trajectories where collaboration and acquisition are used as complementary strategies. While these real option scholars have identified factors that influence when partners are likely to shift from collaboration to acquisition, they remain silent on how such a transition can be effectively managed. Based on a multiple case study of four transitional technology sourcing trajectories between one new entrepreneurial and one established firm, this study therefore explores how the pre-acquisition collaboration stage and the post-acquisition integration are related to each other. Findings suggest that entrepreneurial companies may use the pre-acquisition collaboration stage as a period to evaluate the goodwill of the established partner. In addition, we point to the presence of pre-acquisition integration efforts and the extent of strategic convergence during the pre-acquisition collaboration stage as factors that substantially influence the success of the post-acquisition integration process in transitional governance trajectories.

Details

New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-1-78052-118-3

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Article
Publication date: 23 July 2010

Xielin Liu

The purpose of this paper is to examine the effects of international acquisition activities on performance and its role in innovation build‐up in developing countries.

Abstract

Purpose

The purpose of this paper is to examine the effects of international acquisition activities on performance and its role in innovation build‐up in developing countries.

Design/methodology/approach

A case study was used to understand the deep integration process of acquisition process. The theory behind the study is the relationship of innovation management and merger and acquisition activities.

Findings

Acquiring a company with higher technologies has more risks and it requires the acquiring company to master a fast learning capability. The key to a successful international technology acquisition for a developing country is to leverage technology dynamics and build up a high‐level learning capability to absorb tacit knowledge.

Research limitations/implications

An in‐depth case study was adopted. Further quantitative research may be needed to test our research outcome here.

Practical implications

The case study may provide valuable reference for the companies aiming to catch up via international acquisition in the developing countries.

Originality/value

First, this paper is to enrich literature on acquisition research from a technological perspective. Second, fast learning capability, especially the capability to absorb tacit knowledge, is the key to a successful acquisition when a lagging‐behind company in the developing country wants to catch up a leading one.

Details

Journal of Science and Technology Policy in China, vol. 1 no. 2
Type: Research Article
ISSN: 1758-552X

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