Balancing Autonomy and Integration of Acquired Innovative Capability : A Process Study of a High-Tech Firm

Improving technology products and services by acquiring requisite innovation capability can be challenging: The acquired firm needs to be integrated into the provider’s operation to realize synergies, but such integration might jeopardize the acquired firm’s continued ability to innovate. However, we know little about how technology providers manage this autonomy-integration dilemma after an acquisition. Against this backdrop, we conducted a qualitative process study of how GlobalTech, a large, multi-national provider of telecommunications solutions, acquired and integrated SmartTech, a small, innovative firm with a cutting-edge adaptive infrastructure management solution and innovate approaches to continuously develop this solution in close interaction with its customers. As analytical lens, we adapted existing theory on inter-organizational work design. Based on access to rich data from both firms, the study reveals how influential and credible managers from the two firms took joint leadership over the process; how they applied vertical and horizontal organizational design moves in an incremental fashion to allow for learning; and, how they introduced networked organizational design moves to establish a viable platform for spreading SmartTech’s innovative capability to other parts of GlobalTech. As a result, we offer two contributions to the literature on managing acquired innovative capability. First, we offer important empirical findings that increase our understanding of how such managerial processes may play out over time. Second, we offer a new theoretical framing of the autonomy-integration dilemma viewing innovation as an ongoing process involving complex organizational design moves