Investors\u27 Reactions to Alliance-Engendered Acquisition Ambiguity: Evidence from US Technology Deals

We study how, when target firms are engaged in strategic alliances, the ambiguity surrounding an acquisition\u27s anticipated synergies influences investors\u27 reactions to announcements of acquisitions. Drawing on behavioural finance research and the resource redeployment literature, we predict that investors\u27 limited access to the information encoded in the target firms\u27 alliances and the uncertainty around the re-deployability of their embedded resources generate a negative relationship between the number of target alliances and investors\u27 reactions. We also hypothesize that this negative effect is exacerbated when the alliances involve foreign alliance partners but is attenuated when acquirers are experienced in acquiring targets with alliances. Analysis of a large sample of US technology acquisitions supports all our hypotheses. We contribute to management research by offering a viable explanation of investors\u27 reactions to the announcement of major corporate events, such as acquisitions, whose structural characteristics deny investors material information about these events\u27 potential to create value

The breadth of business model reconfiguration and firm performance

Looking at business models as systems of interdependent elements, we study how the breadth of an incumbent firm’s business model reconfiguration influences its performance. Drawing on the metaphor of firms searching on a performance landscape, we argue that the relationship between business model reconfiguration breadth and performance should form an inverted U-shape. While firms can gain from increasing business model reconfiguration breadth, these benefits need to be traded-off against the increasing complexity of its associated changes. We further predict that this inverted U-shape will flip for highly performing firms while being amplified for firms heavily active in innovation. Using data from an original survey of knowledge-intensive business services firms, we find that, on average, business model reconfiguration has little effect on performance. However, U-shaped effects clearly emerge when accounting for the effects of past performance and innovative activity. Our findings contribute to a better understanding of the conditional nature of the advantages stemming from business model reconfiguration

Innovation collaboration and appropriability by knowledge-intensive business services firms

We uncover a “paradox of formal appropriability mechanisms” in the case of knowledge-intensive business services (KIBS) firms. Despite evidence that KIBS firms do not typically consider formal appropriability mechanisms, such as patents, to be central mechanisms for capturing value from innovation, we show that they are nevertheless important for their innovation collaboration. Drawing on an original survey of publicly-traded UK and US KIBS firms, we find a significant positive association between the importance of innovation collaboration and the importance of formal appropriability mechanisms. We interrogate the evidence for clients, as they are the most important partners for innovation collaboration. We find that the importance of innovation collaboration with clients goes hand-in-hand with the importance of formal appropriability mechanisms, although a negative relation appears when firms assign very high importance to formal appropriability mechanisms. Thus, modest levels of emphasis on formal appropriability mechanisms may prevent conflicts over ownership of jointly developed knowledge assets and knowledge leakages, while also avoiding the possibly negative effects of overly strict controls by legal departments on innovation collaboration. As well as exploring formal appropriability mechanisms, we also investigate the relationship between contractual and strategic appropriability mechanisms and innovation collaboration for KIBS firms

When do Acquirers Invest in the R&D Assets of Acquired Science-based Firms in Cross-border Acquisitions? The Role of Technology and Capabilities Similarity and Complementarity

Drawing on a multiple case study of acquisitions of UK biopharmaceutical firms, we develop an analytical framework that elucidates how key determinants of the knowledge base of science-based firms and their combinations through M&As interact and affect post-acquisition investment in the target’s R&D projects. We show that two factors — the complementarity/similarity of the technology, and the complementarity/similarity of the discovery and development capabilities of the target and acquiring firm — interact to produce different outcomes in terms of investment in the acquired firm’s R&D assets and for the local science and technology system