Acquisition integration and leadership continuity of high-technology acquisitions

Acquisitions of entrepreneurial firms by established firms have become important means for technology transfer through which incumbents accumulate upstream capabilities to enter new product domains. This paper focuses on high-technology acquisitions with an aim to develop a better understanding of how incumbents can realize technology acquisition potentials by accounting for acquisition implementation process, deal and firm specific attributes. We consider two dimensions of acquisition reorganization; acquired firm integration as structural aspect and non-structural aspect of acquired top manager retention. Empirical literature shows that acquirers who buy small technology firms for their innovative potential often discover that the post-acquisition integration can diminish the acquired firm’s innovative potential that was the crucial motive behind the acquisition. On the other hand, structural integration is claimed to be important since it serves as a mechanism of coordination between acquirer and acquired firm, what is particularly significant when high interdependence exists between the two firms. Another important aspect of acquisition implementation is the extent to which the target resources are replaced with acquirer’s resources. In the context of high tech acquisitions, the important resource is the human capital of acquired firm top manager. Starting from the resource and competence based perspectives, the likelihood of structural integration and retention of acquired firm’s top manager is predicted. Specifically, we consider the following factors: i) the motives of acquisition (explorative vs. other motivation), ii) the product relatedness between the acquiring and acquired firms, iii) the existence of prior alliance with target, iv) whether the target’s technology was a component to acquirer’s system.