IDEAS home Printed from https://ideas.repec.org/a/inm/ororsc/v19y2008i2p327-340.html
   My bibliography  Save this article

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

Author

Listed:
  • David R. King

    (U.S. Air Force, Wright-Patterson AFB, Ohio 45433)

  • Rebecca J. Slotegraaf

    (Kelley School of Business, Indiana University, Bloomington, Indiana 47405)

  • Idalene Kesner

    (Kelley School of Business, Indiana University, Bloomington, Indiana 47405)

Abstract

We explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified.

Suggested Citation

  • David R. King & Rebecca J. Slotegraaf & Idalene Kesner, 2008. "Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms," Organization Science, INFORMS, vol. 19(2), pages 327-340, April.
    • Handle: RePEc:inm:ororsc:v:19:y:2008:i:2:p:327-340
    DOI: 10.1287/orsc.1070.0313
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/orsc.1070.0313
    Download Restriction: no
    File URL: https://libkey.io/10.1287/orsc.1070.0313?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
    2. Christensen, Clayton M. & Rosenbloom, Richard S., 1995. "Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network," Research Policy, Elsevier, vol. 24(2), pages 233-257, March.
    3. Maurizio Zollo & Harbir Singh, 2004. "Deliberate learning in corporate acquisitions: post‐acquisition strategies and integration capability in U.S. bank mergers," Strategic Management Journal, Wiley Blackwell, vol. 25(13), pages 1233-1256, December.
    4. Michael C. Jensen, 1968. "The Performance Of Mutual Funds In The Period 1945–1964," Journal of Finance, American Finance Association, vol. 23(2), pages 389-416, May.
    5. Claudio Loderer & Kenneth Martin, 1992. "Postacquisition Performance of Acquiring Firms," Financial Management, Financial Management Association, vol. 21(3), Fall.
    6. Kahle, Kathleen M. & Walkling, Ralph A., 1996. "The Impact of Industry Classifications on Financial Research," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(3), pages 309-335, September.
    7. Zvi Griliches, 1998. "Productivity and R&D at the Firm Level," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 100-133, National Bureau of Economic Research, Inc.
    8. Kathleen M. Kahle & Ralph A. Walkling, "undated". "The Impact of Industry Classifications on Financial Research," Research in Financial Economics 9607, Ohio State University.
    9. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    10. Donald D. Bergh, 1997. "Predicting divestiture of unrelated acquisitions: an integrative model of ex ante conditions," Strategic Management Journal, Wiley Blackwell, vol. 18(9), pages 715-731, October.
    11. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1, March.
    12. Annette L. Ranft & Michael D. Lord, 2002. "Acquiring New Technologies and Capabilities: A Grounded Model of Acquisition Implementation," Organization Science, INFORMS, vol. 13(4), pages 420-441, August.
    13. Richard N. Langlois, 2003. "The vanishing hand: the changing dynamics of industrial capitalism," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(2), pages 351-385, April.
    14. David J. Teece, 2008. "Technology Transfer By Multinational Firms: The Resource Cost Of Transferring Technological Know-How," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 1, pages 1-22, World Scientific Publishing Co. Pte. Ltd..
    15. Rikard Larsson & Sydney Finkelstein, 1999. "Integrating Strategic, Organizational, and Human Resource Perspectives on Mergers and Acquisitions: A Case Survey of Synergy Realization," Organization Science, INFORMS, vol. 10(1), pages 1-26, February.
    16. Michael Song & Cornelia Droge & Sangphet Hanvanich & Roger Calantone, 2005. "Marketing and technology resource complementarity: an analysis of their interaction effect in two environmental contexts," Strategic Management Journal, Wiley Blackwell, vol. 26(3), pages 259-276, March.
    17. Stewart, John F & Harris, Robert S & Carleton, Willard T, 1984. "The Role of Market Structure in Merger Behavior," Journal of Industrial Economics, Wiley Blackwell, vol. 32(3), pages 293-312, March.
    18. Shantanu Dutta & Om Narasimhan & Surendra Rajiv, 2005. "Conceptualizing and measuring capabilities: methodology and empirical application," Strategic Management Journal, Wiley Blackwell, vol. 26(3), pages 277-285, March.
    19. Michael Lubatkin & William S. Schulze & Avinash Mainkar & Ronald W. Cotterill, 2001. "Ecological investigation of firm effects in horizontal mergers," Strategic Management Journal, Wiley Blackwell, vol. 22(4), pages 335-357, April.
    20. Sendil K. Ethiraj & Prashant Kale & M. S. Krishnan & Jitendra V. Singh, 2005. "Where do capabilities come from and how do they matter? A study in the software services industry," Strategic Management Journal, Wiley Blackwell, vol. 26(1), pages 25-45, January.
    21. Pierre Dussauge & Laurence Capron & Will Mitchell, 1998. "Resource redeployment following horizontal acquisitions in Europe and North America, 1988-1992," Post-Print hal-00464384, HAL.
    22. Szulanski, Gabriel, 2000. "The Process of Knowledge Transfer: A Diachronic Analysis of Stickiness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 82(1), pages 9-27, May.
    23. Zahra, Shaker A., 1996. "Technology strategy and financial performance: Examining the moderating role of the firm's competitive environment," Journal of Business Venturing, Elsevier, vol. 11(3), pages 189-219, May.
    24. Cohen, Wesley M & Klepper, Steven, 1992. "The Anatomy of Industry R&D Intensity Distributions," American Economic Review, American Economic Association, vol. 82(4), pages 773-799, September.
    25. Sayan Chatterjee & Birger Wernerfelt, 1991. "The link between resources and type of diversification: Theory and evidence," Strategic Management Journal, Wiley Blackwell, vol. 12(1), pages 33-48, January.
    26. David J Teece, 2008. "Capturing Value from Technological Innovation: Integration, Strategic Partnering, and Licensing Decisions," World Scientific Book Chapters, in: Technological Know-How, Organizational Capabilities, And Strategic Management Business Strategy and Enterprise Development in Competitive Environments, chapter 12, pages 237-252, World Scientific Publishing Co. Pte. Ltd..
    27. Bruce A. Blonigen & Christopher T. Taylor, 2000. "R&D Intensity and Acquisitions in High‐Technology Industries: Evidence from the US Electronic and Electrical Equipment Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 47-70, March.
    28. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    29. Henry Grabowski & John Vernon, 1990. "A New Look at the Returns and Risks to Pharmaceutical R&D," Management Science, INFORMS, vol. 36(7), pages 804-821, July.
    30. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    31. Hüseyin Tanriverdi & N. Venkatraman, 2005. "Knowledge relatedness and the performance of multibusiness firms," Strategic Management Journal, Wiley Blackwell, vol. 26(2), pages 97-119, February.
    32. Gautam Ahuja & Curba Morris Lampert, 2001. "Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 521-543, June.
    33. Jeffrey J. Reuer, 2001. "From hybrids to hierarchies: shareholder wealth effects of joint venture partner buyouts," Strategic Management Journal, Wiley Blackwell, vol. 22(1), pages 27-44, January.
    34. Gautam Ahuja & Riitta Katila, 2001. "Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study," Strategic Management Journal, Wiley Blackwell, vol. 22(3), pages 197-220, March.
    35. Veugelers, Reinhilde, 1997. "Internal R & D expenditures and external technology sourcing," Research Policy, Elsevier, vol. 26(3), pages 303-315, October.
    36. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    37. Hilary Ingham & Ingvild Kran & Andre Lovestam, 1992. "Mergers And Profitability: A Managerial Success Story?," Journal of Management Studies, Wiley Blackwell, vol. 29(2), pages 195-208, March.
    38. Jay B. Barney, 1988. "Returns to bidding firms in mergers and acquisitions: Reconsidering the relatedness hypothesis," Strategic Management Journal, Wiley Blackwell, vol. 9(S1), pages 71-78, June.
    39. Abbie Griffin & John R. Hauser, 1992. "Patterns of Communication Among Marketing, Engineering and Manufacturing---A Comparison Between Two New Product Teams," Management Science, INFORMS, vol. 38(3), pages 360-373, March.
    40. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    41. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn.
    42. Henrik Bresman & Julian Birkinshaw & Robert Nobel, 1999. "Knowledge Transfer in International Acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(3), pages 439-462, September.
    43. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
    44. John B. Kusewitt, 1985. "An exploratory study of strategic acquisition factors relating to performance," Strategic Management Journal, Wiley Blackwell, vol. 6(2), pages 151-169, April.
    45. Bruce Kogut & Udo Zander, 1996. "What Firms Do? Coordination, Identity, and Learning," Organization Science, INFORMS, vol. 7(5), pages 502-518, October.
    46. Vasudevan Ramanujam & P. Varadarajan, 1989. "Research on corporate diversification: A synthesis," Strategic Management Journal, Wiley Blackwell, vol. 10(6), pages 523-551, November.
    47. Higgins, Matthew J. & Rodriguez, Daniel, 2006. "The outsourcing of R&D through acquisitions in the pharmaceutical industry," Journal of Financial Economics, Elsevier, vol. 80(2), pages 351-383, May.
    48. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and the Sustainability of Competitive Advantage: Reply," Management Science, INFORMS, vol. 35(12), pages 1514-1514, December.
    49. Michael Lubatkin, 1987. "Merger strategies and stockholder value," Strategic Management Journal, Wiley Blackwell, vol. 8(1), pages 39-53, January.
    50. Richard R. Nelson & Sidney G. Winter, 1978. "Forces Generating and Limiting Concentration under Schumpeterian Competition," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 524-548, Autumn.
    51. Capron, Laurence & Mitchell, Will, 1998. "Bilateral Resource Redeployment and Capabilities Improvement Following Horizontal Acquisitions," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 7(3), pages 453-484, September.
    52. Shantanu Dutta & Om Narasimhan & Surendra Rajiv, 1999. "Success in High-Technology Markets: Is Marketing Capability Critical?," Marketing Science, INFORMS, vol. 18(4), pages 547-568.
    53. Balaji S. Chakravarthy, 1986. "Measuring strategic performance," Strategic Management Journal, Wiley Blackwell, vol. 7(5), pages 437-458, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schön, Benjamin & Pyka, Andreas, 2013. "The success factors of technology-sourcing through mergers & acquisitions: An intuitive meta-analysis," FZID Discussion Papers 78-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    2. Adrian Lüthge, 2020. "The concept of relatedness in diversification research: review and synthesis," Review of Managerial Science, Springer, vol. 14(1), pages 1-35, February.
    3. Desyllas, Panos & Hughes, Alan, 2010. "Do high technology acquirers become more innovative?," Research Policy, Elsevier, vol. 39(8), pages 1105-1121, October.
    4. Feiqiong Chen & Yao Chen & Fangfang Zhong, 2017. "Integration decision-making in technology-sourcing cross-border M&As: a mathematical model," Computational and Mathematical Organization Theory, Springer, vol. 23(4), pages 524-545, December.
    5. Hagedoorn, John & Wang, Ning, 2012. "Is there complementarity or substitutability between internal and external R&D strategies?," Research Policy, Elsevier, vol. 41(6), pages 1072-1083.
    6. Sears, Joshua B., 2018. "Post-acquisition integrative versus independent innovation: A story of dueling success factors," Research Policy, Elsevier, vol. 47(9), pages 1688-1699.
    7. Vanhaverbeke, W. & Beerkens, B. & Duysters, G., 2001. "Technological capability building through networking strategies within high-tech industries," Working Papers 01.15, Eindhoven Center for Innovation Studies.
    8. Maria Chiara Di Guardo & Kathryn Rudie Harrigan & Elona Marku, 2019. "M&A and diversification strategies: what effect on quality of inventive activity?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 669-692, September.
    9. Barbara Fidanza, 2017. "Quali driver nella selezione delle target in operazioni di M&A? Una verifica empirica nel mercato italiano," Working Papers 52-2017, Macerata University, Department of Studies on Economic Development (DiSSE), revised Jan 2018.
    10. Bruce Rasmussen, 2010. "Innovation and Commercialisation in the Biopharmaceutical Industry," Books, Edward Elgar Publishing, number 13680.
    11. Srikanth Paruchuri & Atul Nerkar & Donald C. Hambrick, 2006. "Acquisition Integration and Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies," Organization Science, INFORMS, vol. 17(5), pages 545-562, October.
    12. Chondrakis, George, 2016. "Unique synergies in technology acquisitions," Research Policy, Elsevier, vol. 45(9), pages 1873-1889.
    13. Neda Barqawi & Lars Mathiassen & Kamran Syed & Saloni Firasta Vastani, 2016. "Balancing Coordination And Autonomy During Post-Acquisition Within A High-Tech Firm," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-32, April.
    14. Tsai, Kuen-Hung & Wang, Jiann-Chyuan, 2008. "External technology acquisition and firm performance: A longitudinal study," Journal of Business Venturing, Elsevier, vol. 23(1), pages 91-112, January.
    15. Khansa, Lara, 2015. "M&As and market value creation in the information security industry," Journal of Economics and Business, Elsevier, vol. 82(C), pages 113-134.
    16. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    17. Laurence Capron & Will Mitchell, 2009. "Selection Capability: How Capability Gaps and Internal Social Frictions Affect Internal and External Strategic Renewal," Organization Science, INFORMS, vol. 20(2), pages 294-312, April.
    18. Phanish Puranam & Harbir Singh & Saikat Chaudhuri, 2009. "Integrating Acquired Capabilities: When Structural Integration Is (Un)necessary," Organization Science, INFORMS, vol. 20(2), pages 313-328, April.
    19. David Benson & Rosemarie H. Ziedonis, 2009. "Corporate Venture Capital as a Window on New Technologies: Implications for the Performance of Corporate Investors When Acquiring Startups," Organization Science, INFORMS, vol. 20(2), pages 329-351, April.
    20. Feiqiong Chen & Yin Wang, 2014. "Integration risk in cross-border M&A based on internal and external resource: empirical evidence from China," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 281-295, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ororsc:v:19:y:2008:i:2:p:327-340. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.