Technology-Based Mergers and Acquisitions

Technology-Based Mergers and Acquisitions

Daojuan Wang (Aalborg University, Denmark) and Hamid Moini (University of Wisconsin-Whitewater, USA)
Copyright: © 2015 |Pages: 12
DOI: 10.4018/978-1-4666-5888-2.ch006

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A steady increase in corporations utilizing M&As to acquire technological knowledge/capabilities has been well documented in the literature since the 1990s (Bower, 2001; Grimpe, 2007; Valentini, 2012). However, the high-tech or R&D-intensive sectors, such as information technology, electronics, etc., are characterized by high uncertainties, a need to constantly develop new technology and innovation capabilities, reliance on highly specialized skills and expertise, and inefficient markets for know-how and technology, which distinguish them from other types of industries and thus necessitate that they be studied separately.

M&As can come about as a result of many different motivations (Mukherjee, Halil, & Kent, 2004), including the search for new technological resources. Ranft and Lord (2002) stressed that research on acquisitions should be refined by distinguishing the specific motivations for an acquisition and the type of resources being acquired. However, some research put all types of acquisitions together, even though they represent fundamentally different phenomena that need to be studied separately (Bower, 2001). These research studies tend toward overgeneralization and oversimplification when dealing with M&As (Schweizer, 2005). Therefore, this chapter specifically focuses on the TBM&As studies.

Generally, researches on TBM&As can be grouped into two streams: the first stream focuses on the drivers or conditions under which M&As are preferred as the external technology sourcing strategy (Desyllas & Hughes, 2008). The second stream highlights M&A impact to the firm performance, the contingent factors, and effective strategies (Desyllas & Hughes, 2010). This chapter makes contributions to the second stream through a systematic review of articles in top-tier journals from 1990 to 2012, which covered points of view and findings from different TBM&As disciplines.

Key Terms in this Chapter

Mergers and Acquisitions: Used interchangeably. Specifically, mergers point to a combination of two firms, often comparable in size and strength, in which one ceases to exist legally or both are dissolved with the establishment of a new, combined organization. Acquisitions include the purchase of another firm’s assets or stock, in which the acquired firm becomes the part of the other firm and either loses its legal status or continues to exist as a legally owned subsidiary.

Technological Relatedness: Similarity or complementarity between the acquiring and target firms’ main technology field.

Innovation: A process by which the organizations transform ideas or inventions into new/improved products, services, or processes in order to renew, advance, and differentiate themselves in their marketplaces to sustain competitive advantage and achieve commercial success.

Technology-Based Mergers and Acquisitions: The mergers and acquisitions that are performed for leveraging technological knowledge and/or capabilities from the acquiring firm to the target firm or the opposite, or for achieving technology synergies, which usually happen in high-tech industries.

Exploitation and Exploration: Exploitation refers to improving existing technological expertise, while exploration is developing new areas of technological expertise outside the existing knowledge stock of a firm.

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