Managing disruptive innovation with technology acquisitions: the informing case of software-based high-technology industries

ABSTRACT

In high-technology industries, the use of acquisitions as a means of sourcing expertise is important, because it provides a potential remedy to the challenges of disruptive innovation. Investigating this issue empirically in the context of software-based high-technology industries with nested econometric, large-scale descriptive and case study methods confirms a substitutive relationship between acquisitions and firms’ own research activities as a main driver. This relationship confirms that acquisitions are a remedy for disruptive innovations. For a subset of acquisitions, this is related to target characteristics, which reveals that acquisition waves do not explain the timing of acquisitions. This confirms that for software-based industries, disruptive innovation theory needs to be modified, in that the large incumbents need not be tied to an existing technological trajectory. Specifically, those incumbents with low patenting intensity acquire targets with many prior patents, and in doing so avoid being trapped by disruptive innovation.

KEYWORDS:

• Disruptive innovation
• institutional theory
• resource-based view
• acquisition
• software

Acknowledgements

Useful suggestions following presentations of earlier versions of this paper at the 2011 EMAEE Conference (14–16 February, Pisa) and the 2013 ICSOB Conference (11–14 June, Potsdam) are gratefully acknowledged as are comments from two reviewers and the editor-in-chief, Prof. James Fleck. This paper is dedicated to the memory of Gary Smith.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Marcus Wagner is a full professor at Augsburg University and visiting professor at International Hellenic University. His research interests are innovation/entrepreneurship, sustainability and international business. He published on these in journals such as Research Policy, Long Range Planning and Journal of Business Venturing.