Technology sourcing by large incumbents through acquisition of small firms

Innovation activities in high technology industries provide considerable challenges fortechnology and innovation management. In particular, since these industries have a long historyof radical innovations taking place through distinct industry cycles of higher and lower demand,firms frequently consider the option to use acquisitions as a means for technology sourcing. Thepaper investigates this behaviour for three high technology industries, namely semiconductormanufacturing, biotechnology and electronic design automation which is a specific sub-segmentof the semiconductor industry. It analyses the association of firm characteristics with differentaspects of acquisition behaviour with a particular focus being put on innovation-related firmcharacteristics. The paper confirms a substitutive relationship between acquisitions and ownresearch activities as well as between own and acquired firm patenting, but also finds that firmsize, financial conditions and geographical origin of the firm matter for acquisition behaviour.