The existence of an inverted U‐shaped effect of the relatedness between acquirer and acquired firm on the innovative performance subsequent to an acquisition is normally regarded as indicative of the existence of a trade‐off between exploration and exploitation in external innovation search. We argue that acquirers endowed with heterogeneous learning capabilities can alter the shape of the trade‐off to their favour. In particular, we focus on a notion of industry relatedness that captures the coherence between the domains of operation of the acquirer and the acquired firm. Using a longitudinal dataset of 1,736 domestic acquisitions in the Netherlands, we show that the heterogeneous learning capabilities of the acquirers alter the shape of the inverted‐U relationship, according to first‐ and second‐order moderating effects. Our results confirm that learning capabilities by internal R&D and by acquisition experience both improve what acquirers can achieve in innovative performance when industry relatedness is at the point of balance between exploration and exploitation. In contrast, they have opposite implications on the potential losses in innovative performance when industry relatedness is outside the point of balance: internal R&D increases the tolerance of the trade‐off, smoothing out potential innovation losses, whereas acquisition experience reduces it.

This paper explores small and medium enterprises (SMEs) proximity preferences when selecting partners for collaborative process innovation. Drawing on a survey of 362 Danish SMEs, we address four partner proximity characteristics: geographic, cognitive, organizational, and social. The results show that SMEs prioritize geographic openness over regional clustering. Furthermore, to simultaneously facilitate collaboration and ensure innovation, firms tend to collaborate with partners that are characterized by cognitive similarity at a technological level and knowledge distance at a market level. Technological proximity is also found to be more relevant than social proximity when it comes to bridging the potential geographic and market distance between the collaborative partners. Finally, the results indicate that the tendency of organizational proximity to facilitate informal interactions with partners enhances process innovation only at two of four process innovation levels. Thus, the results highlight the fact that the value of partner proximity characteristics change with the level of process innovation considered.

We investigate how industry and stage specialization of Private Equity (PE) firms affect the likelihood to exit investments by means of trade sales, Initial Public Offerings (IPOs), or Secondary Buyouts (SBOs). Our empirical analysis relies on competing risks models. Using a sample of 818 Leveraged Buyouts (LBOs) by US and European PE firms over the period 2000-2015, we find that both industry and stage specializations of PEs increase the likelihood of exiting via IPO, whereas only industry specialization positively affects the likelihood of divesting through a trade sale. Finally, SBOs are more likely for non-specialized investors.

We investigate the long-run stock return performance of European cross-border merger and acquisition (M&A) bidders for the period 2002-2012. Our analysis shows that, though acquirers underperform their matched control firms over the thirty-six months following deal completion, this underperformance is not ascribed to the acquisition event, but rather explained by differences between acquirers and control firms in seven firm characteristics. Results are obtained by applying the augmented buy-and-hold abnormal return (BHAR) method. We enhance the robustness of our results by introducing the propensity score methodology to the analysis in addition to matching based on size and book-to-market equity.

Purpose The mechanisms of knowledge acquisition and their impact on innovation are particularly relevant in the context of rapidly growing emerging markets. The purpose of this paper is to investigate the relationship between firm acquisition characteristics and post-acquisition knowledge exploration and exploitation in the Chinese domestic acquisition market. Design/methodology/approach By using patent and company data of 188 domestic Chinese deals completed between 2002 and 2013, the paper replicates the measurements and analytical methods of the US-based study by Phene, Tallman and Almeida (2012) to address the acquirer’s opportunity to explore and/or exploit external knowledge, its ability to absorb and effectively assimilate such knowledge and thus establish innovations in new technologies. Findings The paper finds support for a positive effect of knowledge uniqueness of the target on the bidder’s post-acquisition exploration. The findings also support that the post-acquisition exploitation is facilitated by the commonality of technological knowledge between the bidder and the target, a result that, although expected, was not be supported in the US-based study. Originality/value This paper qualifies the generalizability of US-based findings about post-acquisition exploration and exploitation in the context of China. It also responds to the call for China-focused knowledge management research by capturing innovation capability building by Chinese firms through domestic acquisitions. Finally, it contributes to the nascent literature on replication in management studies.