The Influence of a Firm’s Capability and Dyadic Relationship of the Knowledge Base on Ambidextrous Innovation in Biopharmaceutical M&As

Abstract

In recent years, technological mergers and acquisitions (M&As) have become important strategic tools for enterprises to access and utilize new external knowledge. In particular, in the biopharmaceutical industry, M&A activities are actively being progressed due to an increase in new drug development costs, a decrease in R&D productivity, and the patent expiration of blockbuster drugs. However, there is a lack of research on the integrated view of (1) the acquirer’s capability and (2) the dyadic relationship of the knowledge base between the acquirer and target on the innovation performance of the acquirer. Furthermore, there are few empirical studies on the impact of these factors on ambidextrous innovation; that is, exploitative and explorative innovation. Therefore, with this integrated view in mind, this study analyzed the effect of each factor on the exploitative and exploratory innovation performance of the acquirer. A negative binomial regression was conducted using patent data to measure the innovation outcome of the acquirer after M&A. The findings suggest that (1) the acquisition experience of the acquirer and (2) the technological commonness between the acquirer and the target both had a significant impact on the exploitation and exploration innovation performance.

SETTING THE “RIGHT” GOAL: POST M&A INNOVATION PERFORMANCE AND GOAL ORIENTATION

“…Furthermore, the effectiveness and efficiency of capturing, absorbing, and integration of knowledge during the M&A integration phase is facilitated through a learning mechanism which is generated through conducting many acquisition in the past (Hayward, 2002). In other words, prior experience can affect the flow of technological knowledge from the target to the acquiring firm (Jo et al, 2016;Lee et al, 2019).…”

Can User Innovation Grow a Firm? The Case of the Korean Smart Media Industry

“…This research studied the influence of exploitation and exploration strategies on business performance to analyze firm strategy and the effect of the user role on business performance. To appropriately measure the effect, other variables, including firm strategy, age of the firm, R&D concentration, and market structure were considered [39][40][41][42]. Figure 1 shows the research framework.…”

“…In order to investigate the effect of exploitation strategy on performance, we examined the factors of the strategy. First, the elements of exploitation strategy as examined in the literature are license sales, improved products or services, and marketing agreements [15,42,43]. The use of resources was analyzed in [44], including licensing and marketing agreements used to engage contracts and increase efficiency.…”

“…The present research measured the value of expenses and sales in 3 years. If the R&D concentration ratio is high, the possibility of obtaining technology and innovation resources increases, which has a positive effect on business performance [42,51].…”

Factors Affecting the Outbound Open Innovation Strategies in Pharmaceutical Industry: Focus on Out-Licensing Deal

“…Conventionally, in the context of inbound innovation, studies mainly focused on the concept of the absorptive capacity, as suggested by [7]. However, as firms began to have increasing interest in selling their technologies as a way of outbound innovation, the research on open innovation has moved from mainly considering the inbound process to investigating the outbound process and stressing the need for empirical studies on knowledge capacities [8,9].…”