Technology development and acquisition strategy

Abstract

There are various modes with which research-intensive firms can develop or acquire technologies, including internal R&D, technology licensing, cooperative R&D, minority investments in other firms, and acquisitions of other firms. This paper attempts to present a model that explains the key determinants of technology development and acquisition modes. It is theorised that time pressure and the strategic importance of the technology are the key factors that affect technology development and acquisition modes. In addition, a firm needs to consider the availability of an alliance partner or an acquisition target as well as internal resources including capital or the price of its own equity, and internal R&D capability. It is also suggested that as the strategic importance of the technology or time pressure to develop or acquire such technology changes, a firm needs to shift technology acquisition modes. Thus, the presented model incorporates the dynamic nature of competition in research-intensive industries.