R&amp;D Intensity and Acquisitions in High‐Technology Industries: Evidence from the US Electronic and Electrical Equipment Industries

Taylor, Christopher; Blonigen, Bruce A.

doi:10.1111/1467-6451.00112

Cited by 221 publications

(172 citation statements)

References 16 publications

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“…It may generate negative consequences for the firms' core technological competences and the firms may actually lose their long-term competitive advantage (Sen and Rubenstein 1989;Quinn 1992). This substitutive relationship between external sourcing and internal R&D has been confirmed by a number of previous empirical studies (Blonigen and Taylor 2000;Higgins and Rodriguez 2006;Laursen and Salter 2006;Watkins and Paff 2009). Therefore, external technology acquisition should be considered as a double-edged sword.…”

Section: Introductionsupporting

confidence: 60%

External technology acquisition: a double-edged sword

Kang

2015

Asian Journal of Technology Innovation

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Firms are known to actively utilise external technology acquisition to update and extend their technological knowledge base. Although external technology acquisition has various advantages, it should be considered as a double-edged sword as it also has some inherent negative aspects. This study examines the role of external technology acquisition to investigate whether external technology acquisition is complementary or substitutive to internal R&D activities in creating innovation. The results show that external technology acquisition has an inverted U-shaped relationship with subsequent technology innovation performance, and that is not complementary to internal R&D activities. We thus confirm that external technology acquisition has to be seen as a double-edged sword and that managers need to be aware of the potentially negative effects of strong diversity of the firm's external technology acquisition sources on internal R&D and subsequent innovation performance.

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Section: Introductionsupporting

confidence: 60%

External technology acquisition: a double-edged sword

Kang

2015

Asian Journal of Technology Innovation

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“…In terms of performance, firms in a dynamic environment need to develop new products to secure their competitive advantages (Blonigen & Taylor, 2000). But exploiting these opportunities requires firms to be equipped with strong and patient dynamic capabilities as well as continuous innovation.…”

Section: Theory and Hypotheses Developmentmentioning

confidence: 99%

Dynamic capabilities and organizational performance: The mediating role of innovation

Zhou

Feng

et al. 2017

Journal of Management & Organization

167

105

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How firms' dynamic capabilities lead to their competitive advantage and improved firm performance has been a core issue and full of debates. In this research, we theorize that dynamic capabilities, which could be defined by three distinct dimensions (sensing capability, integration capability, and reconfiguration capability), facilitate different types of innovation that in turn improve firm performance. Based on a sample of 204 Chinese firms, results from partial least squares structural equation modeling analyses generally support our arguments despite some nuanced differences existing among different dimensions of dynamic capabilities. This study contributes to dynamic capabilities literature by reducing the scarcity of empirical research and by uncovering the mechanisms through which dynamic capabilities influence firm performance.

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“…An increased number of possible R&D combinations, for example, may increase the chances that a firm will develop a technological innovation (Henderson and Cockburn 1996, Nelson and Winter 1978, Zahra 1996. Meanwhile, recent research indicates that acquired R&D substitutes for internal R&D (Blonigen andTaylor 2000, Heeley et al 2006)-a position best explained by considering the nature of R&D.…”

Section: Resource Substitutionmentioning

confidence: 99%

“…Thus, there may be significant resource redundancy between target and acquiring firms (Zollo and Singh 2004) or diminishing returns for acquirer R&D. 3 We therefore expect that the acquisition of technology resources will fill specific resource needs of an acquiring firm or that external R&D (at least) serves as a partial substitute for internal development (Barkema and Vermeulen 1998;Blonigen and Taylor 2000;Hitt et al 1990Hitt et al , 1991. In particular, R&D resources are imperfectly immobile, and acquirers not only seek but will retain such resources to keep such specialized knowledge from rival firms (Capron and Pistre 2002).…”

Section: Resource Substitutionmentioning

confidence: 99%

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

King

Slotegraaf

Kesner

2008

Organization Science

217

151

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W e explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified.Key words: merger and acquisition; resource-based view; high technology History: Published online in Articles in Advance January 7, 2008. IntroductionThe value of worldwide merger and acquisition (M&A) activity set a new record in 2006 with $3.79 trillion worth of transactions-a 38% increase over 2005 (Berman 2007a). 1 The dominant rationale used to explain acquisition activity is that acquiring firms seek higher performance (Bergh 1997, Sirower 1997. However, existing M&A research has not consistently identified variables that impact acquisition performance (King et al. 2004). These mixed signals represent an apparent inconsistency or unsolved puzzle (Agrawal and Jaffe 2000), because firms continue to use acquisitions as a strategic tool with no evidence establishing that acquisitions improve firm performance. Consequently, there is a recognized need for research to identify a theoretical framework that helps to explain acquisition performance (Hitt et al. 1998, Hoskisson et al. 1994, Sirower 1997.Research on resource interdependence may offer such a framework (Barney 1988, Capron and Pistre 2002, King et al. 2004). Using resource-based theory (RBT) as a theoretical lens, research in this area suggests that, in general, acquisition performance will be higher when acquiring and target firm resources complement one another (Capron and Pistre 2002;Hitt et al. 1998Hitt et al. , 2001Puranam et al. 2006). Most extant research on resource interconnectedness (Dierickx and Cool 1989) has focused on positive reinforcement (Milgrom and Roberts 1995, Tanriverdi and Venkatraman 2005, Teece 1986) or on complements, where the marginal benefit from higher levels of one resource increases from the level of another resource (Sigglekow 2002). However, firm resource transfers may also serve as substitutes , Miller 2003 or display negative interactions (Sigglekow 2002). We examine resource interactions involving both substitutes and complements between acquiring and target firm resources.Although an acquiring firm's ability to achieve improved performance is likely to depend on interdependence between its resources and those of the target firm, there is limited research that empirically examines target and acquiring firm resource interactions on firm performance (Song et al. 2005). For example, in three different studies, Capron and her colleagues use a methodology largely reliant on survey data, showing that substantial...

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R&D Intensity and Acquisitions in High‐Technology Industries: Evidence from the US Electronic and Electrical Equipment Industries

Cited by 221 publications

References 16 publications

External technology acquisition: a double-edged sword

External technology acquisition: a double-edged sword

Dynamic capabilities and organizational performance: The mediating role of innovation

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

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