The combined effect of technological relatedness and knowledge utilization on explorative and exploitative invention performance post-M & A

Abstract

Purpose – The purpose of this paper is to investigate the combined effect of Mergers and Acquisitions (M & A) partners’ technological relatedness and the acquirer’s effective utilization of the target’s knowledge on explorative and exploitative invention performance post-M & A. Design/methodology/approach – Based on the knowledge perspective of an M & A, this study measures how much of the target’s knowledge acquired in an M & A has been effectively transformed into new knowledge. A negative binomial regression on a cross-sectional data set of 152 bio-pharmaceutical firms (59 European firms and 93 North American firms) completing at least one M & A in the period between 2001 and 2005 is conducted. The effect of knowledge utilization is assessed by comparing performance six years before the M & A and six years after. Findings – The effective assimilation and utilization of acquired knowledge positively affects both acquirers’ explorative and exploitative performance post-M & As. The combined effect with technological relatedness, measured as similarity and complementarity, further enhances the acquirer’s technological performance. However, while the utilization of similar knowledge significantly affects only exploitative invention performance, the utilization of complementary knowledge influences both, although explorative more than exploitative performance. Originality/value – The acquirer’s ability to effectively use the target’s knowledge is crucial in order to support the transformation of the inventive potential, such as is embodied in the interaction between an internal and an external base of knowledge, into new explorative and exploitative performance.

O Processo de Gestão do Conhecimento: uma pesquisa teórico-conceitual

“…Knowledge must be used as the basis for the development of new knowledge through integration, innovation, creation, and extension of the existing knowledge basis, and should still be used as a basis for decision making. Thus, the use has an exploitative character of knowledge when through it decision or improvements are made, using, therefore, the same knowledge basis; or an explorative character, when the knowledge basis is used as a primary knowledge to create new knowledge in an innovative proposal (Cohen & Levinthal, 1990;Ganzaroli et al, 2016;Nooteboom et al, 2007).…”

“…At this stage, interest is focused on forms of location and access to knowledge created and stored. It is through the use of retained knowledge that the organization closes the cycle of knowledge transformation, since knowledge was created under certain conditions, stored and distributed among individuals and, at this point, used for another purpose, promoting its transformation and the creation of new knowledge (Ganzaroli et al, 2016). The first topic addressed in publications refers to the form of use, i.e., if the organization exploited acquired knowledge in a reactive manner, usually related to solving problems presented by processes; or considers an exploitative view of knowledge in which the organization innovates from the consolidated knowledge basis (Cohen & Levinthal, 1990).…”

“…The dynamic capability, related to the organizational capacity to rebuild its skills, is the second important issue dealt with in the use of publications. In this context, the interest is related to the ability of the firm to use the knowledge in order to be internally modified and respond to new market demands (Ganzaroli et al, 2016). And finally, retrieval and transformation of knowledge is the third aspect studied in the literature.…”

Inovação por exploração e explotação do conhecimento: um estudo empírico do setor automobilístico

“…In other words, companies that exploit new knowledge generate great variation in performance, while the use of exploitation leads to a more stable performance. Levinthal & March (1993) and Ganzaroli et al (2016) argue that it is important for companies to maintain an appropriate balance between exploration and exploitation to increase competitiveness. Holmqvist (2004) found that exploration and exploitation require significantly different structures, processes, strategies, capacity, and culture.…”

“…According to Levinthal & March (1993), Ganzaroli et al (2016) and Gupta et al (2006), organizations must balance their exploration and exploitation strategies. The authors argue that an excessive focus on exploitation results in organizational "short-sightedness," hindering innovation and leading to a process of obsolescence.…”