How do Pre-Entrants to the Industry Incubation Stage Choose between Alliances and Acquisitions for Technical Capabilities and Specialized Complementary Assets?
47 Pages Posted: 26 Mar 2020
Date Written: February 29, 2020
Focusing on the incubation stage of a potential new industry, this paper addresses a gap at the intersection of the external sourcing and market entry literatures by examining pre-entry external sourcing of new resources. Besides drawing on their legacy resources, pre-entrants during industry incubation commonly use alliances and acquisitions to obtain technical capabilities and complementary assets, thereby creating a portfolio of sourcing modes that collectively shapes the firms’ paths to potential market entry. We identify a key pattern at the intersection of type of sourcing mode and type of resource: pre-entrants to the incubation stage are more likely to use alliances to source technical capabilities and acquisitions to source specialized complementary assets. Our empirical context is the agricultural biotechnology industry.
Keywords: alliance, acquisition, incubation stage, entry mode, nascent industries, capabilities
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