Merger Wars: Bidding for Complementary Assets

We examine the bidding competition for a set of complementary assets arising between two firms who also compete in a differentiated product market. The bidding contest takes the form of an acquisition battle for a third firm initially holding the assets. Depending on the nature of product competition between the bidding firms, either both bidding firms are made worse off by the availability of these assets or, paradoxically, the firm winning the bidding contest is less profitable than is the firm losing it. Our analysis is relevant to the many recent mergers in telecommunications, finance, and transportation, e.g., Viacom’s purchase of CBS.mergers, product differentiation, bidding

Synergistic effects of organizational innovation practices and firm performance

Organizational innovation has been shown to be favourable for technological innovation. However, the question of which organizational practices should be combined ? and thus of their compatibility ? remains unanswered. We here empirically investigate the complementarities between different organizational practices (business practices, knowledge management, workplace organization and external relations). Firm-level data were drawn from the Community Innovation Survey (CIS) carried out in 2008 in Luxembourg. Supermodularity tests provide evidence of the impact of complementary asset management to raise firms? innovative performance. The organizational practices? combinations differ according to whether the firm is in the first step of the innovation process (i.e. being innovative) or in a later step (i.e. performing as far as innovation is concerned). When adopting organizational practices, managers should therefore be aware of their effects on technological innovation. These results also have implications for public policies in terms of innovation support.Complementarities; Organizational innovation; Technological innovations; Supermodularity; Innovative performance

Should Bitcoin Be Considered a Complementary Asset in a Long-Term Investment Portfolio?

This thesis is set out to examine the risk-adjusted performance impact of including Bitcoin in a Swedish investor’s portfolio, how the allocation of a Swedish investor’s portfolio changes by the inclusion of Bitcoin, and if Bitcoin should be part of a Swedish investor’s portfolio under pessimistic views. To examine these questions, we use the Sharpe ratio, Sortino ratio, Omega ratio and the Black-Litterman model. When maximizing the Sharpe ratio, Sortino ratio and Omega ratio, Bitcoin is included in the portfolio. However, Bitcoin is not part of the new portfolio suggested by the Black-Litterman model for 50 % and 35 % expected downfall, but a part of the portfolio for 10 % expected downfall

When Does Start-Up Innovation Spur the Gale of Creative Destruction?

This paper is motivated by the substantial differences in start-up commercialization strategies observed across different high-technology sectors. Specifically, we evaluate the conditions under which start-up innovators earn their returns on innovation through product market competition with more established firms (such as in many areas of the electronics industry) as opposed to cooperation with these incumbents (either through licensing, strategic alliances or outright acquisition as observed in the pharmaceutical industry). While the former strategy challenges incumbent market power, the latter strategy tends to reinforce current market structure. Though the benefits of cooperation include forestalling the costs of competition in the product market and avoiding duplicative investment in sunk assets, imperfections in the market for ideas' may lead to competitive behavior in the product market. Specifically, if the transaction costs of bargaining are high or incumbents are likely to expropriate ideas from start-up innovators, then product market competition is more likely. We test these ideas using a novel dataset of the commercialization strategies of over 100 start-up innovators. Our principal robust findings are that the probability of cooperation is increasing in the innovator's control over intellectual property rights, association with venture capitalists (which reduce their transactional bargaining costs), and in the relative cost of control of specialized complementary assets. Our conclusion is that the propensity for pro-competitive benefits from start-up innovators reflects an earlier market failure, in the market for ideas.'

VERTICAL AND HORIZONTAL COORDINATION IN THE AGRO-BIOTECHNOLOGY INDUSTRY: EVIDENCE AND IMPLICATIONS

Agro-biotechnology is evolving from a pre-commercial phase dominated by basic research science to a commercial phase oriented around marketing products. In pursuing innovation rents in the commercial phase, firms are reorienting their strategies around complementary marketing and distribution assets. This is impacting vertical and horizontal industry structure. Conversely, industry structure is also impacting firm strategies. Horizontal alliances and consolidation continue from the pre-commercial phase into the commercial phase, while vertical coordination and integration strategies are accelerating rapidly. Interplay between firm strategy and industry structure is too complex for firms to anticipate early in the pre-commercial phase for long-term strategy formulation.Acquisitions, Agricultural biotechnology, Firm strategy, Industry consolidation, Industry structure, Mergers, Industrial Organization, Research and Development/Tech Change/Emerging Technologies,

Acquisitions and use of patents: A theory and new evidence ｆrom the Japanese firm level data

A significant part of the patents held by a firm are not used. We show that, given the uncertainty of invention quality at the patent application stage and the sunk cost incurred for obtaining and developing a patent, the patent (internal) utilization rate declines with the (anticipated) size of complementary assets, licensing opportunity, and invention quality uncertainty while it increases with the average quality of an invention. We find empirical evidence supportive of these theoretical predictions. Moreover, a firm with larger price cost margin does not have a lower rate of patent utilization, which does not support the view of preemptive R&D and patenting as a primary explanation of unused patents. Finally, a firm with more diversified patent portfolio tends to have more patents but its utilization rate tends to be lower, suggesting that such diversification facilitates appropriation.patent, unused patents, uncertainty, complementary assets

Creative Assets and Program Content Guide: To Build Social and Emotional Learning and Promote Trauma Mitigation and Healing

In 2016, the Adolescent Girl and Creativity Network was commissioned by the Population Council’s Community of Practice to utilize their wealth of knowledge and field experience to critically examine, adapt, and expand the Council’s Building Assets Toolkit© and complementary Asset Exercise. The question explored was: What are the essential assets pertinent to the most-at-risk girls and how can they be built through creative techniques/activities? This guide is the result of that activity—13 creative assets and 50 activities (program content) to build social and emotional learning, mitigate and manage trauma, and promote healing. The 50 creative program content activities to build the 13 creative assets are described in detail. Multiple activities can build each asset

The Governance of Knowledge in Academic Spin-Offs. The Case of Emilia-Romagna.

The phenomenon of academic spin-offs (ASOs) has been widely studied in recent times. Scholars have mainly concentrated on identifying the factors that favours the phenomenon and the incentive alignments of the parties involved in the process. These works tend to remain static in nature by solely investigating the ex ante determinants of the process, that is the elements that favoured a context to be more profitable than others, usually in terms of the number of ASOs generated. More recently scholars have also acknowledged that ASOs are heterogeneous firms and have started investigating the development process of such firms. It has been highlighted that ASOs need to overcome certain defined stage of growth in order to become established firms in the market. Our work continues this line of investigation and aims to gives evidence that the paths of ASO development are heterogeneous themselves. We investigate the flows of knowledge taking place within and across the firm in a dynamic manner, at various stage of the development process of the firm: we study the governance of knowledge in a sub-population of ASOs and give evidence of the variety of possible ways the firm can develop.governance of knowledge; academic spin-off; theory of the firm; technology development

Do Venture Capitalists Affect Commercialization Strategies at Start-ups?

I empirically study the effect of venture capital (VC) on product development and commercialization strategy of start-up organizations. In doing so, I segment entrant commercialization strategies into two camps according to competitive effect: to “cooperate” is to license-out technology or be acquired, while to “compete” is to develop technology independently. Building on the work of Gans, Hsu, and Stern (2000) on the drivers of entrant commercialization strategy, this paper examines the direct and indirect effects of VC on product development and competition. I start with two important determinants of start-up commercialization strategy: (1) the entrant’s relative investment cost of acquiring and controlling complementary assets needed to successfully commercialize its innovation, and (2) the entrant’s ability to effectively protect its intellectual property. I then test a novel sample of 118 technology-based projects divided almost evenly between two mechanisms of entrepreneurial finance. These two mechanisms differ in institutional detail in ways that allow a quasi-experiment of the effect of VC on start-up commercialization strategy. The U.S. Small Business Innovative Research (SBIR) program provides a grant to R&D without taking equity in a start-up or changing the corporate governance of project development. In contrast, VCs take an equity stake and participate in corporate governance in exchange for capital. Neither of these financing mechanisms, however, alters the underlying complementary asset or intellectual property regime associated with the project. Two main findings about the commercialization strategy and product market effects of venture capital emerge: (1) VCbacking skews commercialization strategies across industries toward cooperating, and (2) VCs make their portfolio firms more sensitive to the business environment.Center for Innovation in Product Development at MIT through NSF Cooperative Agreement EEC-9529140 is gratefully acknowledged

Commercialization of Traditional Knowledge Based Technologies by Small Entrepreneurs: An Exploration of Strategic and Policy Options

The paper is based on the case study of an entrepreneur who has invested his career in developing a new product based on traditional knowledge. Using this case we highlight the issues faced by a small entrepreneur in the commercialization of traditional knowledge based technologies in pharmaceuticals industry. The framework developed by Teece is used to analyze the strategic options available to the entrepreneur in a weak appropriability regime. We also analyze a hypothetical scenario of strategic options available to the entrepreneur if the appropriability regime was strong. Since traditional knowledge based entrepreneurial activities have significant scope in India, it is important to explore the policy and strategic options that are available to us. In the context of the case study, the concluding part of the paper reviews these options and the associated implications for the holders of traditional knowledge.