A longitudinal analysis of the choice between technology-based strategic alliances and acquisitions in high-tech industries: the case of the ASIC industry

Abstract

Firms in the high-tech sector establish strategic alliances (SAs) and are involved in merger and acquisition activities (M&As) to enhance their competitive position. The economic and managerial strands of literature about SAs and M&As tell us virtually nothing about the strategic choice of firms between based SAs and M&As. This article intends to fill this void by examining the circumstances in which firms have a preference for SAs or M&As as a mode for external technology sourcing. By focussing on the dyad as the unit of analysis, this study provides empirical support for the effect of prior direct and indirect ties on the current choice between SAs and M&As. Prior alliances between two companies increase the probability that one will acquire the other. On the contrary, indirect ties in the prior SA-network increase the probability that the two firms will form a SA. There are also relatively more M&As between firms from the same economic block (intra-triad). SAs are preferred between firms located in different economic blocks in the triad because of the higher risk they have to bear.