Building and Blocking: The Two Faces of Technology Acquisition
Abstract
Gaining access to technological assets and patents, in particular, has long been a major motive and objective for firm acquisitions. On the one hand, patents are used as a building instrument for the acquirer's technology portfolio. On the other hand, patents can be attractive because of their strategic value as a bargaining chip, e.g. in licensing negotiations. This is especially the case if patents have the potential to block competitors. Drawing on transaction cost economics and the resource-based view of the firm, we analyze the importance of these two faces of technology acquisition for the valuation of a target firm. Empirical evidence for European firm acquisitions in the period from 1996 to 2003 indicates that the price paid by an acquirer for a target increases with the building and blocking potential of the target's patents, especially if building and blocking patents are in technology fields related to the acquiring firm's patent portfolio. Our results have implications for the technology strategy of the firm, in that M&A transactions may considerably impact technology markets, increasing the concentration of key technologies. --Download Info
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-042 [rev.].Length:
Date of creation: 2009
Date of revision:
Handle: RePEc:zbw:zewdip:7495
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Keywords: Firm acquisitions; technology; building patents; blocking patents;Other versions of this item:
- Grimpe, Christoph & Hussinger, Katrin, 2008. "Building and Blocking: The Two Faces of Technology Acquisition," ZEW Discussion Papers 08-042, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Grimpe, Christoph & Hussinger, Katrin, 2008. "Building and blocking: The two faces of technology acquisition," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/198273, Katholieke Universiteit Leuven.
- Grimpe, Christoph & Hussinger, Katrin, 2008. "Building and Blocking: The two faces of techology acquisition," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/198164, Katholieke Universiteit Leuven.
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-13 (All new papers)
- NEP-COM-2009-04-13 (Industrial Competition)
- NEP-INO-2009-04-13 (Innovation)
- NEP-IPR-2009-04-13 (Intellectual Property Rights)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Czarnitzki, Dirk & Hussinger, Katrin & Schneider, Cédric, 2009.
"The nexus between science and industry: evidence from faculty inventions,"
ZEW Discussion Papers
09-028, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Dirk Czarnitzki & Katrin Hussinger & Cédric Schneider, 2012. "The nexus between science and industry: evidence from faculty inventions," The Journal of Technology Transfer, Springer, vol. 37(5), pages 755-776, October.
- Czarnitzki, Dirk & Hussinger, Katrin & Schneider, Cédric, 2012. "The nexus between science and industry: Evidence from faculty inventions," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/297252, Katholieke Universiteit Leuven.
- Czarnitzki, Dirk & Hussinger, Katrin & Schneider, Cédric, 2009. "The nexus between science and industry: Evidence from faculty inventions," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/254004, Katholieke Universiteit Leuven.
- Della Malva, Antonio, 2012. "Essays on the economic and strategic implications of science," Open Access publications from Maastricht University urn:nbn:nl:ui:27-28756, Maastricht University.
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