| Incumbent firms have been observed to face challenges in maintaining impactful innovative streams and responding to technological changes over time. One approach which has been actively pursued by established players to address these challenges over the past decade is the acquisition of other companies to supplement internal innovation efforts in rapidly changing high-technology industries. While this strategy to buy novel products, technologies, and capabilities may offer much potential, it also comes with certain risks. This study investigates the operational drivers of performance in such innovation-targeted acquisitions.; Blending findings from the literature on mergers and acquisitions with insights from the work on technological innovation illuminates the problem. Acquisitions research indicates that complexity around the necessary assimilation of products, processes, and people is one inherent challenge, while studies on new product development suggest that uncertainty surrounding technologies and markets is another factor to consider. To shed further light upon these aspects, I conducted a two-phased, in-depth empirical investigation of the past acquisitions of three leading high-technology companies in the communications equipment and software industries. Qualitative case studies were used to inductively generate theory, while quantitative analyses subsequently tested the resulting hypotheses.; Results of both analyses indicate that companies have been able to recognize and manage integrative complexity, but that they have been unable to cope with the effect of product and environmental uncertainty in these acquisitions. Technical incompatibility is found to slow down time to market of post-acquisition products, but has no negative impact on financial performance. Target maturity meanwhile has a positive influence on both time to market and financial performance. In contrast, technical and market uncertainty both have substantial adverse effects on time to market and financial performance. Further analyses show that each of the inherent acquisition challenges can to some extent be managed with corresponding integration strategies, where levels of organizational integration, process adoption, and product knowledge sharing are aligned with the nature of the specific complexity or uncertainty variable. Overall, the findings enhance our understanding of innovation management, acquisition implementation, and adaptation in changing environments. |
