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Are external technology sourcing strategies substitutes or complements? The case of embodied versus disembodied technology acquisition

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Author Info

  • Cassiman, Bruno

    ()
    (IESE Business School)

  • Veugelers, Reinhilde

    (Katholieke Universiteit Leuven)

Abstract

This paper analyzes the choice between different external technology sourcing activities of a firm. On the one hand, the firm can acquire new technology which is embodied in personnel. On the other hand, the firm can obtain new technology disembodied through a licensing agreement or by outsourcing the technology development from an R&D contractor. Building on Cassiman and Veugelers (2006), we test whether embodied and disembodied technology acquisitions are complementary activities or rather behave as substitute technology acquisition alternatives. We find that while internal and external technology acquisition are complementary innovation activities, the actual choice of external technology sourcing between embodied or disembodied modes is substitutive for smaller firms. The evidence for larger firms suggests that different external technology sourcing activities are complementary, but in this case the results are suggestive although not strongly significant.

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Bibliographic Info

Paper provided by IESE Business School in its series IESE Research Papers with number D/672.

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Length: 22 pages
Date of creation: 23 Jan 2007
Date of revision:
Handle: RePEc:ebg:iesewp:d-0672

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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Related research

Keywords: Embodied & disembodied technology acquisition; complementarity; substitutability;

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References

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  1. Belderbos,René & Carree,Martin & Lokshin,Boris, 2004. "Cooperative R&D and Firm Performance," Research Memorandum 022, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  6. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers.
  7. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-79, June.
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  12. Susan Athey & Scott Stern, 1998. "An Empirical Framework for Testing Theories About Complimentarity in Organizational Design," NBER Working Papers 6600, National Bureau of Economic Research, Inc.
  13. 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 569-96, September.
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  15. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January.
  16. De Bondt, Raymond, 1997. "Spillovers and innovative activities," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 1-28, February.
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Citations

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Cited by:
  1. Elena Cefis, 2008. "The Impact of M&A on Technology Sourcing Strategies," LEM Papers Series 2008/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  2. Cédric Schneider, 2009. "External knowledge sourcing: science, market and the value of patented inventions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 551-560.

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