Entrepreneurial acquisitions, open innovation and UK high growth SMEs

Abstract

This paper examines the dynamics of entrepreneurial acquisitions undertaken by UK high growth small and medium enterprises (SMEs). While entrepreneurial acquisitions are increasingly deployed by SMEs, little is known about their antecedents, motivational drivers and organisational outcomes. Drawing on detailed case study evidence from Scotland, the key factor found to be driving these acquisitions was the desire to augment and exploit technological complementarities between the acquiring and acquired firms. Acquisition can therefore be conceptualised as an advanced stage of the outside-in 'open innovation' strategies proactively used within these innovative SMEs. Firms executing this strategy typically have an acute propensity for risk, a desire for close customer engagement, effective business models and strong external orientation. The work suggests that greater attention should be paid within M&A theory to the dynamics of these types of smaller scale entrepreneurial acquisitions.

Myth-busting and entrepreneurship policy: the case of high growth firms

“…Indeed, to our knowledge no bespoke policy initiatives exist to promote entrepreneurial entry (or business growth in general) via acquisitions despite their fundamental importance for many HGFs (Mawson and Brown 2016). While there may be important displacement issues in terms of supporting firms wishing to undertake acquisitions, particularly domestically, there needs to be greater recognition amongst policy circles that entrepreneurial entry and firm growth is not solely an organic phenomenon.…”

“…According to observers, "at the macro level, growth by acquisition may simply 'transplant' jobs from a smaller firm into a larger acquiring firm, thus leading to net zero employment gain" (McKelvie and Wiklund 2010, 282). Although some exceptions exist (Deschryvere 2008), quantitative studies have been largely unable to distinguish between firms that grow organically and those that grow through acquisition, although there is increasing recognition in the literature that some HGFs choose to actively pursue growth via acquisition (Mawson and Brown, 2016).…”

“…For the vast majority of HGFs, universities are rarely used as a key 'source' of innovation (Deiaco et al 2012). A number of studies show that more important drivers of 'open' innovation for these firms are suppliers, customers and end-users (Wennberg 2013) or even acquired companies (Mawson and Brown 2016). These findings have led some to claim that the significance placed on universities in technology transfer and commercialization policies to generate USOs, or new-starts more generally, has been greatly exaggerated (Harrison and Leitch 2010), especially in peripheral regional economies (Brown 2016).…”

A Research Agenda on Open Innovation and Entrepreneurship: A Co-Word Analysis

“…The fourth block contains several terms related to resources and capabilities: ABSORPTIVE CAPACITY, DYNAMIC CAPABILITIES, and RESOURCE-BASED VIEW (e.g., Patton 2014; Venturini and Verbano 2017). Last, the fifth block includes other general terms, such as ACQUISITION, BIOTECHNOLOGY INDUSTRY, and COMPETITIVE ADVANTAGE (e.g., Mawson and Brown 2016;Patterson and Ambrosini 2015).…”

Small and medium enterprises led-growth in two Adriatic countries: Granger causality approach

“…Modern enterprises, including SMEs, face at least two important challenges: (a) how to satisfy customer requirements and (b) how to make their business requisitely innovative to maximise customer satisfaction with their organisation, products and services more than their competitors (Lafley & Johnson, 2010;Mawson & Brown, 2017). Consequently, SMEs should create and implement a holistic development similar to, or greater than, the bigger enterprises.…”