Geert Duysters

External Sources of Innovative Capabilities: The Preferences for Strategic Alliances or Mergers and Acquisitions

This paper explores the preferences that companies have as they use alternative (quasi) external sources of innovative competencies such as strategic technology alliances, mergers and acquisitions, or a mix of these. These alternatives are studied in the context of distinct industrial, technological and international settings during the first half of the 1990s. Different strategies followed by companies and the role played by routinized sets of preferences are also taken into consideration. The analysis demonstrates that these options are influenced by both different environmental conditions and firm specific circumstances, such as those related to protecting core businesses.

Intellectual property rights, strategic technology agreements and market structure The case of GSM

This paper investigates the role of intellectual property rights (IPRs) in shaping the GSM industry. This industry is an example of a high-tech industry in which standards play a large role. In the process of designing the GSM standard, a lot of attention has been given to IPRs, mainly to avoid a situation in which a single IPR holder could hamper or even totally block the development of the standard. Nevertheless, the ultimate GSM standard contains a large amount of so-called ‘essential IPRs’, i.e., IPRs without which the implementation of GSM products is impossible. The paper starts with a general discussion of the development of GSM, and the role of firm strategy and IPRs in this process. Next, we present a database on the essential IPRs in the GSM standard. This database has been compiled on the basis of international patent statistics, and the data that manufacturers have supplied to ETSI, the European standardization body re sponsible for defining the GSM standard. We use this database to assess the dynamic IPR position of firms in the original GSM standard and its subsequent development. In a next part of our analysis, we relate the firm’s IPR p osition to the trends in strategic technology agreements in the mobile telecommunications field. We ask the question whether firms that are powerful in terms of IPRs are also the firms that are ‘central’ in the technology agreements network (or vice versa). We also investigate whether developments over time in the technology agreements data follow from the dynamic movements in the IPR position of a firm, and which other factors play a role in this.

Learning in Dynamic Inter-Firm Networks: The Efficacy of Multiple Contacts

This paper examines the relevance of both efficiency-based and learning-based network behaviour in the context of inter-firm partnering. The effect of these different forms of network behaviour on company performance is analyzed for companies in the international computer industry. Strategies associated with learning through so-called exploratory networks appear to generate a greater impact on technological performance in a dynamic environment than efficiency strategies through exploitative networks.

The Effect of Mergers and Acquisitions on the Technological Performance of Companies in a High-tech Environment

A large part of the literature from industrial organization and management expects that, compared with unrelated M&As, related M&As show superior economic performance because of synergetic effects that follow from economies of scale and scope. The current contribution takes the debate on the effect of different M&As somewhat further by studying the effect of M&As on the technological performance of companies. In this study the technological performance of M&As is related to a hightech sector, i.e. the international computer industry. The main result of this research is that the so-called strategic and organizational fit between companies involved in M&As seem to play an important role in improving the technological performance of companies

Crafting successful strategic technology partnerships

Despite the trend towards an increasing use of strategic technology alliances, mortality rates of cooperative agreements have always been extremely high. In this paper we argue that rapid economic and technological developments have overthrown traditional thinking about alliances and that firms could benefit from a new perspective on partnering. This new approach is referred to as High Touch Partnering. The new framework stresses the need for a balanced attention to strategic (re-)positioning, establishing adequate alliance capabilities, building business communities with partners and improved partner selection.

The small worlds of strategic technology alliances

Abstract This paper analyzes the phenomenon of strategic technology alliances. It is proposed that the concept of small worlds, which has been adopted from mathematical graph theory, is a useful model to combine two theoretical streams that have previously analyzed this phenomenon. These are the theory of social capital and the theory of structural holes. We outline a small worlds model, and apply it to data on strategic technology alliances. We find that networks of strategic technology alliances can indeed be characterized as small worlds, and that this has favorable implications for knowledge transfer. There are, however, also important differences between two different technology fields that we consider: chemicals and food, and electricals.

Determinants of alliance portfolio complexity and its effect on innovative performance of companies

Alliance formation is often described as a mechanism used by firms to increase voluntary knowledge transfers. Access to external knowledge has been increasingly recognized as a main source of firm’s innovativeness. A phenomenon that has recently emerged is alliance portfolio complexity. In line with recent studies this article develops a measure of portfolio complexity in technology partnerships in terms of diversity of elements of the alliance portfolio with which a firm must interact. The analysis considers an alliance portfolio that includes different partnership types (competitor, customer, supplier, and university & research center). Factors that determine portfolio complexity and its impact on technological performance of firms remain largely unexplored. This article examines firms’ decisions to form alliance portfolios of foreign and domestic partners by two groups of firms: innovators (firms that are successful in introducing new products to the market), and imitators (firms that are successful at introducing new products, which are not new to the market). This study also assesses a non-linear impact of the portfolio complexity measure on firms’ innovative performance. The empirical models are estimated using data on more than 1800 firms from two consecutive Community Innovation Surveys conducted in 1998 and 2000 in the Netherlands. The results suggest that alliance portfolios of innovators are broader in terms of the different types of alliance partners as compared to those of imitators. This finding underlines the importance of establishing a ‘radar function’ of links to various different partners in accessing novel information. Specifically, the results indicate that foremost innovators have a strong propensity to form portfolios consisting of international alliances. This underlines the importance of this type of partnerships in the face of the growing internationalization of R&D and global technology sourcing. Being an innovator or imitator also increases the propensity to form a portfolio of domestic alliances, relative to non-innovators; but this propensity is not stronger for innovators. Innovators appear to derive benefit from both intensive (exploitative) and broad (explorative) use of external information sources. The former type of sourcing is more important for innovators, while the latter is more important for imitators. Finally, alliance complexity is found to have an inverse U-shape relationship to innovative performance. On the one hand, complexity facilitates learning and innovativeness; on the other hand, each organization has a certain management capacity to deal with complexity which sets limits on the amount of alliance portfolio complexity that can be managed within firm. This clearly suggests that firms face a certain cognitive limit in terms of the degree of complexity they can handle. Despite the noted advantages of an increasing level of alliance portfolio complexity firms will at a certain stage reach a specific inflection point after which marginal costs of managing complexity are higher than the expected benefits from this increased complexity.

Core competences and company performance in the world-wide computer industry

Abstract This paper contributes to the understanding of the importance of dynamic firm capabilities for company performance in isolating the effect of the creation of core competences on the performance of companies in the international computer industry. It discusses and tests the assumed relation between different dimensions of core competences and performance. This is followed by a further study of the relation between the external appropriation of core competences through mergers and acquisitions, as well as through strategic technology alliances. A major conclusion of this study is that a specific set of endogenous technological core capabilities is needed to generate performance differentials. Also, the external appropriation of competences does not seem to be an easy solution through which companies can improve their existing capabilities in the short-run.

Learning in strategic technology alliances

Abstract In this paper we examine the influence of strategic technology alliances on organisational learning. From an empirical perspective we examine the pre- and post-alliance knowledge bases of allying firms. We find that the pre-alliance knowledge base overlap of the allying firms has an inverted U-shaped relationship with the degree of learning taking place in the alliance. Alliances established for the purpose of learning also show a significantly greater increase in knowledge base overlap for the allying firms than for non-learning alliance or non-allying firms. This shows the particular importance of learning alliances as a vehicle for organisational learning and competence development. Contrary to what we expected we found that weak ties are more important than strong ties in organisational learning within strategic alliances.

Transitory Alliances: An Instrument for Surviving Turbulent Industries?

Over the past decades, firms have constantly struggled to deal effectively with their rapidly changing environment. Especially in high tech industries, costs of R&D have rocketed, whereas steep learning curves and ever shortening product and technology life cycles have reduced the time to recoup these costs. Under such conditions of turbulence, a new form of alliances becomes an important part of the innovators toolkit: transitory alliances. Transitory alliances can be defined as short-lived alliances that focus on completing narrowly defined tasks in a very short time frame. Companies can no longer rely exclusively on their traditional alliance and M&A practices to survive industry turbulence. Furthermore, transitory alliances can be a wellspring of innovation and provide companies with access to a portfolio of new ideas. They can help companies to acquire knowledge in a swift manner, thereby strengthening their ability to survive the high speed of change. The specific characteristics of this alliance type are discussed in this paper. Typical examples are taken from Internet related sectors.