R&D Versus Acquisitions: Role of Diversification in the Choice of Innovation Strategy by Information Technology Firms

• 成果类型: Article
• 署名作者: Banker, Rajiv D.; Wattal, Sunil; Plehn-Dujowich, Jose M.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; University of California System; University of California Riverside; University of Texas System; University of Texas Dallas; University of Texas System; University of Texas Dallas; University of Texas System; University of Texas Dallas; Carnegie Mellon University; Carnegie Mellon University; University of Minnesota System; University of Minnesota Twin Cities; State University of New York (SUNY) System; University at Buffalo, SUNY
• 刊物名称: JOURNAL OF MANAGEMENT INFORMATION SYSTEMS
• ISSN/ISSBN: 0742-1222
• DOI: 10.2753/MIS0742-1222280205
• 发表日期: 2011
• 页码: 109-144
• 关键词: ABSORPTIVE-CAPACITY; MARKET; COMPLEMENTARITY; performance; intensity; entry

摘要

This research examines the role of diversification on incumbent firms' response to the threat of new entry. When faced with threats posed by new technologies, incumbent firms in the information technology (IT) industry can either perform research and development (R&D), or acquire the new entrants who are successful at innovating. We use a two-stage game-theoretic framework to model the relation between diversification and the decision to acquire versus perform R&D. We also collect data on financial indicators for firms in the IT industry using the Compustat database to empirically test the propositions from the analytical model. Our results suggest that firms with a higher degree of diversification are more likely to innovate through acquisition than through R&D. Moreover, diversification has a positive effect on investment in acquisitions, as well as a negative effect on investment in R&D.