External Technology Sourcing Through Alliances or Acquisitions: An Analysis of the Application-Specific Integrated Circuits Industry

Abstract

In today's turbulent business environment innovation is the result of the interplay between two distinct but related factors: endogenous R&D efforts and (quasi) external acquisition of technology and know-how. Given the increasing importance of innovation, it is vital to understand more about the altemative mechanisms-such as alliances and acquisitions-that can be used to enhance the innovative performance of companies. Most of the literature has dealt with these altematives as isolated issues. Companies, however, are constantly challenged to choose between acquisitions and strategic alliances, given the limited resources that can be spent on research and development. This paper contributes to the literature because it focuses on the choice between innovation-related alliances and acquisitions. We focus on the question of how the trade-off between strategic alliances and acquisitions is influenced by previous direct and indirect ties between firms in an industry network of interfirm alliances. We formulate hypotheses pertaining to the number of direct ties between two companies, their proximity in the overall alliance network, and their centrality in that network. In so doing, we distinguish between ties that connect firms from the same and from different industry segments, and those that connect firms from the same or from different world regions. These hypotheses are tested on a sample of strategic alliances and acquisitions in the application-specific integrated circuits (ASIC) industry. The findings show that a series of strategic alliances between two partners increases the probability that one will ultimately acquire the other. Whereas previous direct contacts tend to lead to an acquisition, this is not true of previous indirect contacts, which increase the probability that a link between the companies, once it is forged, takes the form of a strategic alliance. In the case of acquisitions, firms that are more centrally located in the network of interfirm alliances tend to be acquirers, and firms with a less central position tend to become acquired. These findings underscore the importance of taking previously formed interfirm linkages into account when explaining the choice between strategic alliances and acquisitions, as these existing links influence the transaction costs associated with both altematives.

How do dynamic capabilities transform external technologies into firms’ renewed technological resources? – A mediation model

“…First, it relies on the patent licensing as the main channel to access external knowledge sources. There are other means through which external knowledge resources can be acquired, e.g., joint ventures, merger and acquisitions, and spillover effects from informal knowledge sharing (Ahuja & Katila, 2001;Vanhaverbeke, Duysters, Noorderhaven, 2002;Nieto & Santamaría, 2007). Future research is encouraged to investigate these alternatives and their impacts on dynamic capabilities and resource reconfiguration.…”

“…While the traditional RBV and the DCV may well explain the internal path of resource development, it remains unclear in the literature how externally acquired resources may become VRIN in combination with organizational capabilities (West & Bogers, 2014). For instance, from an outside-in perspective of open innovation (Enkel et al, 2009), researchers are interested in how firms utilize externally sourced technologies to enhance their technological innovation performance (Chesbrough, 2003;Vanhaverbeke, Duysters, & Noorderhaven, 2002;Tsai, Hsieh, & Hultink, 2011;Tsai & Wang, 2009;Zahra, 1996;Jones & Lanctot, 2001;Stuart, 2000), assuming a direct link between externally sourced technological resources and enhanced performance among technology-acquiring firms (Tsai & Wang, 2007;Li, 2011;Johnson, 2002;Caloghirou, Kastelli, & Tsakanikas, 2004;Lin, 2003;Ahuja & Katila, 2001;Nieto & Santamaría, 2007;Chen, Chen, & Vanhaverbeke, 2011). In these studies, researchers often adopt a static RBV and primarily treat the technology-acquiring firm as a "black box", in which enhanced performance is assumed to be a direct result of acquiring external technological resources.…”

External technology acquisition: a double-edged sword

“…Recent studies on technology acquisition strategy have emphasised the simultaneous use of external sourcing and internal R&D. To generate the important knowledge flow between external sources and internal R&D, it is necessary for firms to pursue both external sourcing and internal R&D simultaneously (Appleyard 1996;Veugelers and Cassiman 1999;Vanhaverbeke, Duysters, and Noorderhavern 2002;Cassiman and Veugelers 2006;Laursen and Salter 2006;Rothaermel and Alexandre 2009).…”

Partner Selection in R&D Collaborations: Effects of Affiliations with Venture Capitalists

“…This familiarity of each other's technological resources and their prospects is expected to diminish the potential impact of VC information intermediation on alliance partner selection. In particular, this familiarity and resulting ability to appreciate each other's technological capabilities can be developed by having previous alliances with each other (e.g., Vanhaverbeke et al, 2002;Higgins and Rodriguez, 2006;Zaheer et al, 2010), building upon each other's knowledge bases during the development of technologies (e.g., Cohen and Levinthal, 1990;Mowery et al, 1998), or possessing similar technological resource endowments (e.g., Stuart, 1998;Rosenkopf and Nerkar, 2001;Gilsing et al, 2008). We therefore identify particular conditions that capture a prospective alliance's information environment and hence shape the implications of common VC backing for partner selection.…”