An Economic System of Technology-related Acquisitions and Spin-offs

This paper argues that an economic system of large and small technology-based firms which interact through technology-related acquisitions and spin-offs can be highly conducive to overall innovativeness and growth. Based on Williamson's (1975) suggestion of a 'systems solution by classical specialisation', and the empirical research on Swedish technology-based firms reported by Lindholm (1994), an 'extended systems approach' is proposed and presented in this paper. This extended system includes the process by which firms spin off small technology-based firms (STBFs) for possible acquisition so that a market for technology-based firms is created as a supplement to other forms of technology markets.