Text mining to gain technical intelligence for acquired target selection: A case study for China's computer numerical control machine tools industry

© 2016 Elsevier Inc. Technology strategy plays an increasingly important role in today's Mergers and Acquisitions (M&A) activities. Informing that strategy with empirical intelligence offers great potential value to R&D managers and technology policy makers. This paper proposes a methodology, based on patent analysis, to extract technical intelligence to identify M&A target technologies and evaluate relevant target companies to facilitate M&A target selection. We apply the term clumping process and a trend analysis together with policy and market information to profile present R&D status and capture future development signals and trends in order to grasp a range of significant domain-based technologies. Furthermore, a comparison between a selected acquirer and leading players is used to identify significant technologies and sub-technologies for specific strategy-oriented technology M&A activities. Finally, aiming to recommend appropriate M&A target companies, we set up an index-based system to evaluate the acquired target candidates from both firms-side perspective and target firm-side perspective and differentially weigh for specific M&A situations. We provide an empirical study in the field of computer numerical control machine tools (CNCMT) in China to identify technology M&A targets for an emerging Chinese CNCMT company — Estun Automation under different M&A strategies

Searching for Innovations ? The Technological Determinants of Acquisitions in the Pharmaceutical Industry

This article analyzes the individual determinants of acquisition activity and target choices in the pharmaceutical industry over the period 1978-2002. The "innovation gap" hypothesis states that acquiring firms lack promising drug compounds and acquire firms with more promising drug prospects. A duration model implemented over a panel of more than 400 firms relates the probabilities of being an purchaser or a target to financial, R&D ant patent data to investigate this explanation more deeply. Results show that purchasers are firms with a lower Tobin's Q and decreasing sales, which could indicate that acquisitions are used to compensate for low internal growth prospects. Firms with a higher proportion of radical patents in their portfolio, especially in pharmaceutical and biothechnological patent classes, face a higher probability of being targeted, indicating that acquiring firms are indeed searching for innovative competencies. However, acquiring firms also present a significant absorptive capacity : their R&D investment increases in the year preceding the operation and their patent stock is larger and more diversified than for non-acquiring firms. Finally, we observe that over the last ten years of the sample period, firms have paid a greater attention to the size of the target's portfolio.M&A, pharmaceutical, innovations, patent citations.

R&D Appropriability and Planned Obsolescence: Empirical Evidence from Wheat Breeding in the UK (1960-1995)

Plant breeders face a unique appropriation problem - plants are reproducible, genetic information is heritable and seeds can be multiplied. The paper uses indicators of varietal age as a proxy for durability to examine strategies of planned obsolescence. Using wheat breeding in the UK, evidence of strategies of planned obsolescence is confirmed. This is then corroborated with evidence of tendencies towards increased proliferation of varieties on the market and breeding strategies that focus on incremental productivity improvements (i.e. increased efficiency) and narrow and limited disease resistance (i.e. reduced durability).Planned Obsolescence, R&D appropriability, Innovation, Plant Breeding, Crop Production/Industries, L13, O31, Q10,

On the termination of strategic technology alliances: An exploratory study

alliances, technology

Corporate governance – demutualization of stock exchanges: an analysis of its benefits

JEL Classification: G15, N20The stock exchange reality of today is very different to that one our ancestors experienced. Today, due to a variety of reasons, such as competitive pressures, stock exchanges are no longer structured as cooperative venues. Instead, today, trading venues are for-profit enterprises, whose capital is detained by external ownership. This new structure is a result of demutualization. Demutualization consists of the introduction of a residual claimant into the exchange – which maximizes the venues’ value. Furthermore, demutualization is aligned with a structure change, which brings into the exchange a governing board and a separation of ownership and membership rights. Due to an exponential growth of this structure change in the mid 1990s, I was intrigued and, consequently, analysed the benefits of demutualization. Through an analysis of four distinct exchanges: two from Europe, one from North America and one from Asia, I objectively analyse a set of financial and volume indicators, and the evolution of ownership. Through this analysis, I conclude that demutualization is valueenhancing, in the sense that revenues increase, costs become efficient, and the overall performances of the sample exchanges seemingly improve. Moreover, I conclude that competitive pressures tend to reduce the volumes of listed companies in the exchange and, given demutualization, the trend is reversed. Through the analyses of the structure of ownership, I positively correlate the growth of the shareholder base to improved performances. Lastly, I link demutualization with mergers and acquisitions.A realidade bolsista a que hoje assistimos é distinta daquela presenciada noutros tempos. Hoje, resultantes de inúmeros factores, dos quais enalteço o crescimento da concorrência, as bolsas de valores já não são estruturadas como entidades cooperativas. Presentemente, as bolsas são empresas que procuram e lucro e cujo capital é detido por accionistas. Esta nova estrutura veio como consequência do processo de desmutualização. Este processo mais não é que a introdução de um agente que maximiza valor. Há a introdução de um órgão governativo dentro da bolsa, assim como uma separação dos direitos de membros e accionistas. Desde a última década do século passado, o mundo económico tem presenciado um forte crescimento do processo de desmutualização, pelo que, intrigado, tentei analisar o cerne da questão e os seus benefícios. Para examinar, escolhi analisar quatro bolsas de realidades distintas: duas entidades Europeias, uma bolsa Norte Americana e outra Asiática. Após a análise, concluí que esta mudança de estrutura é promotora de valor, uma vez que, após a desmutualização, as receitas crescem, os custos tornam-se eficientes e, na generalidade, há um melhor desempenho geral de cada bolsa. Concluí também, que o efeito concorrência é negativo para o número de empresas listadas em cada bolsa. Contudo, após a desmutualização, esta tendência inverte-se. Outra das minhas conclusões prende-se com o facto de haver uma relação positiva entre melhores desempenhos da bolsa e maior volume the accionistas. Por último, concluí que o processo de desmutualização está também ligado a associações e aquisições entre bolsas

Institutional Distance and Entry Mode: How do Emerging-Market Multinational Companies Overcome Competitive Disadvantages in a Developed Market?

As latecomers to global business competition, emerging-market multinational companies (EMNCs) utilize cross-border merger and acquisitions to swiftly acquire strategic assets, such as brands and distribution channels, compensating for their competency deficiency. Developed markets with well-established firms and well-developed market-supporting institutions become important destinations for EMNCs\u27 strategic asset-seeking investments. Institutional distance, national differences in the institutional environment, constitutes a major source of competitive disadvantage for foreign firms competing with indigenous firms. Foreign firms need to overcome the challenges of unfamiliarity, relational, and discriminatory hazards to establish legitimacy in the host market. Compared to established multinationals that originate from other advanced markets (AMNCs), EMNCs potentially face additional legitimacy threats derived from their countries of origin. Facing large institutional distance, AMNCs are likely to take less ownership to rely on a local firm\u27s legitimacy, but EMNCs may lack the opportunity to find a willing local partner. The findings of the current study generally support that the negative association between institutional distance and ownership position is less apparent for EMNCs than for AMNCs. Furthermore, not all emerging markets are homogeneous in their country development. EMNCs, originating from countries with higher levels of human capital development and global connectedness are less impacted by institutional distance in their ownership strategy. The findings of the current study also suggest EMNCs\u27 firm level characteristics have minimal effects in alleviating the influence of institutional distance on their ownership decisions. Additionally, controlling for institutional distance, I find that EMNCs with a higher level of ownership position experience better sales growth in subsequent years

Imperfect information in firm growth strategy:Three essays on M&A and FDI activities

This dissertation uses three empirical essays to address a series of research questions regarding imperfect information in firm growth strategy, focusing on firms’ merger and acquisition (M&A) and foreign direct investment (FDI) activities. Chapter 2 builds upon the acquisition motive literature and explores the acquirer’s strategic use of M&A conference calls to influence rivals’ information processing. Chapter 3 focuses on the information benefits of emulating peers’ previous foreign location choices and examines the role of variable risk references in the imitation process. Chapter 4 highlights internal governance challenges due to managerial bounded rationality and bounded reliability and investigates how the board of directors may help overcome information barriers and contribute to the value creation of knowledge-based intangible assets in cross-border M&As

Unobserved Factor Utilization, Technology Shocks and Business Cycles

We derive a measure of technological change using firm-level panel data and controlling for imperfect competition, increasing returns and unobserved factor utilization. We show that the latter variable accounts for a relevant portion of the cyclicality of the Solow residual. Our key finding is that technological shocks result in a contraction of inputs on impact. Whilst this result is hard to reconcile with the transmission mechanism of real business cycle models, it is consistent with simple sticky-price models. Using survey information on the frequency and size of price revisions, we show that the evidence on the contractionary effects of technology shocks is indeed much stronger for firms with stickier prices.factor hoarding, technology shocks, business cycles

Retooling the Intellectual Property-Antitrust Intersection: Insights from Behavioral Economics, 69 Baylor L. Rev. 124 (2017)

This Article argues that courts should operationalize insights offered by behavioral economics in developing jurisprudence at the patent-antitrust interface