Post-acquisition integrative versus independent innovation: A story of dueling success factors

Abstract

Technological acquisitions have become a popular complement to internal innovation in order to overcome the time-compression diseconomies of internal innovation. As such, acquisition success greatly depends on the expeditious leveraging of target knowledge. Confounding our understanding of leveraging target knowledge is that targets play two distinct innovative roles post-acquisition: conduct innovative activities in conjunction with acquirers (integrative innovation) and continue innovative activities independent of acquirers (independent innovation). To understand how factors differentially affect these two types of innovation, I connect two disparate concepts: relative absorptive capacity and selective intervention. I develop theory and find evidence that while relative absorptive capacity creates the communication capabilities that accelerate integrative innovation, it simultaneously deteriorates the information asymmetries between targets and acquirers leading to greater opportunities for acquirer intervention into target innovative activities that delay independent innovation.