Technological Similarity in Acquisitions and Innovative Performance Revisited: Does the Nature of Technology Matter?

Technological similarity in acquisitions and innovative performance revisited: Does the nature of technology matter? (2014) Advances in Mergers & Acquisitions, 13: 43-64

Posted: 19 Jun 2019

See all articles by George Chondrakis

George Chondrakis

ESADE Business School

Tomas Farchi

University of Oxford - Said Business School

Date Written: June 11, 2004

Abstract

This article explores the effect of technological similarity in acquisitions on invention quantity and quality. In doing so, we confirm previous findings in the literature suggesting that technological similarity exhibits an inverted U-shaped relationship with innovative output and a negative relationship with average invention quality. However, we identify the nature of the technology as an important moderating factor for both relationships. We distinguish between two types of technologies, complex and discrete, and suggest that at high levels of technological similarity, invention quantity and average quality increase more in complex technology industries as compared to discrete technology industries. These effects are attributed to innovation cumulativeness and the interdependencies developed between patent rights in complex technology settings. A study of acquisition and patenting activity in two industries over a sixteen-year period provides empirical support to our claims.

Keywords: technology acquisitions, technological similarity, patents, innovation

Suggested Citation

Chondrakis, George and Farchi, Tomas, Technological Similarity in Acquisitions and Innovative Performance Revisited: Does the Nature of Technology Matter? (June 11, 2004). Technological similarity in acquisitions and innovative performance revisited: Does the nature of technology matter? (2014) Advances in Mergers & Acquisitions, 13: 43-64, Available at SSRN: https://ssrn.com/abstract=3402603

George Chondrakis (Contact Author)

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Tomas Farchi

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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