Acquisitions of start-ups by incumbent businesses A market selection process of "high-quality" entrants?

Research output: Contribution to journalArticle

Abstract

We analyze the frequency and nature by which new firms are acquired by established businesses. Acquisitions are often considered to reflect a technology transfer process and to also constitute one way in which a "symbiosis" between new technology-based firms (NTBFs) and established businesses is realized. Using a micro-level dataset for Sweden in which we follow new entrants up to 18 years after entry, we show that acquisitions of recent start-ups are rare and restricted to a small group of entrants with defining characteristics. Estimates from competing risks models show that acquired start-ups, in particular by multinational enterprises (MNEs), stand out from entrants that either remain independent or exit by being much more likely to be spin-offs operating in high-tech sectors, having strong technological competence, and having weak internal financial resources. Our overall findings support the argument that acquisitions primarily concern NTBFs in market contexts where entry costs are large, access to finance is important and incumbents have valuable complementary capabilities and resources. (C) 2015 Elsevier B.V. All rights reserved.

Details

Authors
Organisations
External organisations
  • Blekinge Institute of Technology
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Business Administration

Keywords

  • Acquisitions, Post-entry performance, Market selection, Start-ups, New, technology-based firms (NTBFs), Innovation, Entrepreneurship systems, Access to finance
Original languageEnglish
Pages (from-to)272-290
JournalResearch Policy
Volume45
Issue number1
Publication statusPublished - 2016
Publication categoryResearch
Peer-reviewedYes