Entering the Digital Era – The Impact of Digital Technology-related M&As on Business Model Innovations of Automobile OEMs

Digital technologies have reached the sphere of industrial-age, primarily physical industries, thus forcing incumbent firms to digitally innovate their business models. Employing a longitudinal dataset of the world’s largest automobile manufacturers from 2000 to 2013, we found empirical evidence of a positive effect of digital technology–related mergers and acquisitions (M&As) on digital business model innovativeness. Moreover, this effect is enhanced by previous non-digital M&A experience, a diversified M&A history, as well as early experience with digital technology–related M&As. Consequently, our findings reveal that OEMs acquiring complementary and heterogeneous external knowledge on digital technologies and possessing the absorptive capacity to integrate as well as commercialize this type of knowledge are better prepared to master the digital transformation of their business. Furthermore, we find indications of a positive influence of digital business model innovations on the expected future firm performance of automobile manufacturers, thus substantiating the importance of digital transformation

Acquiring IT Competencies through Focused Technology Acquisitions

In the turbulent information technology (IT) industry, firms need to continuously innovate to maintain or increase their competitiveness. Focused technology acquisitions provide a means to rapidly gain IT competencies and innovations. Research consistently identifies knowledge and culture as critical antecedents to success in these acquisitions. Since such studies are typically observational, these constructs have been considered independently and within limited parametric values. Incorporating an agent-based simulation expanding on the March (1991) exploration-exploitation model, we show that there are marginally decreasing returns on knowledge appropriation, but non-decreasing linear returns on cultural appropriation. Our findings also show that combinations of appropriation strategies yield equivalent performance benefits. Gains are improved by insulating retained employees from any exploitive cultural influences. We confirm prior evidence of the “dual-edged” sword effects of cultural appropriation of acquiring underperforming IT firms