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

Andersson, Martin LU and Xiao, Jing LU (2016) In Research Policy 45(1). p.272-290
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... (More)
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. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Acquisitions, Post-entry performance, Market selection, Start-ups, New, technology-based firms (NTBFs), Innovation, Entrepreneurship systems, Access to finance
in
Research Policy
volume
45
issue
1
pages
272 - 290
publisher
Elsevier
external identifiers
  • wos:000367484100021
  • scopus:84961615409
ISSN
0048-7333
DOI
10.1016/j.respol.2015.10.002
language
English
LU publication?
yes
id
5d5f57aa-6d42-4b3a-9606-d56c1fb978e6 (old id 8761643)
date added to LUP
2016-02-22 12:30:29
date last changed
2017-07-02 03:57:06
@article{5d5f57aa-6d42-4b3a-9606-d56c1fb978e6,
  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.},
  author       = {Andersson, Martin and Xiao, Jing},
  issn         = {0048-7333},
  keyword      = {Acquisitions,Post-entry performance,Market selection,Start-ups,New,technology-based firms (NTBFs),Innovation,Entrepreneurship systems,Access to finance},
  language     = {eng},
  number       = {1},
  pages        = {272--290},
  publisher    = {Elsevier},
  series       = {Research Policy},
  title        = {Acquisitions of start-ups by incumbent businesses A market selection process of "high-quality" entrants?},
  url          = {http://dx.doi.org/10.1016/j.respol.2015.10.002},
  volume       = {45},
  year         = {2016},
}