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Interorganizational imitation and acquisitions of high-tech ventures

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Ozmel, Umit, Reuer, J. J. and Wu, Cheng-Wei (2017) Interorganizational imitation and acquisitions of high-tech ventures. Strategic Management Journal, 38 (13). pp. 2647-2665. doi:10.1002/smj.2666 ISSN 0143-2095.

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Official URL: http://dx.doi.org/10.1002/smj.2666

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Abstract

Research summary: This article shows that there is a positive association between the changes in the number of prior acquisitions or the changes in the prominence of prior acquirers within the focal venture's subfield and the venture's likelihood to be acquired. Results are in line with the existence of frequency- and trait-based imitation in acquisitions targeting tech ventures. More importantly, these positive associations are more pronounced when (a) exogenous technological uncertainty within the venture's subfield increases and (b) there are significant differences between the focal venture's and acquirer's technological resources. Our findings are in accord with the suggestion that uncertainty in the technology domain is an important boundary condition in moderating the extent of imitation in technology acquisitions. We also discuss alternative explanations and implications.

Managerial summary: The findings of this article suggest that when deciding whether or not to acquire a technology venture (i.e., startup company in a high-tech industry), managers infer information by observing other acquisitions in the venture's subfield to make assessments about the underlying value of the potential targets. We also find that receiving some informational cues from previous acquisitions would be more useful when there is high technological uncertainty in the potential target's subfield about which technologies will be dominant, and when the potential acquirer and the tech venture operate in dissimilar technological areas. This article shows that imitation can be one way to deal with decision-making under uncertainty when making acquisition decisions in high-tech environments. Copyright © 2017 John Wiley & Sons, Ltd.

Item Type: Journal Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Faculty of Social Sciences > Warwick Business School > Strategy & International Business
Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH): High technology industries, Consolidation and merger of corporations, Venture capital
Journal or Publication Title: Strategic Management Journal
Publisher: John Wiley & Sons Ltd.
ISSN: 0143-2095
Official Date: December 2017
Dates:
DateEvent
December 2017Published
19 April 2017Available
18 January 2017Accepted
Volume: 38
Number: 13
Page Range: pp. 2647-2665
DOI: 10.1002/smj.2666
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access
Date of first compliant deposit: 6 February 2018
Date of first compliant Open Access: 19 April 2019

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