Technology overlap and the acquisition of external technology by leaders versus laggards

Recent research on technological acquisitions has come by conflicting results due to a lack of accounting for the rationale for undertaking the acquisition. Extending prior research on resource deepening and resource extension acquisitions, I identify four general rationales for acquiring external technology based on the amount of overlap between the technological knowledge of the target and the acquirer and on the technological leader/laggard status of the acquirer. Using a resource-based view lens, I hypothesize about differential value creation among the four rationales. I find that the target's technological capabilities create more value when there is little technological overlap between the target and the acquirer and that the acquirer's technological capabilities create more value when the acquirer is a technological leader. Further, I find that acquirers benefit most from combining the target's and the acquirer's technological capabilities when both little technological overlap is present and the acquirer is a technological leader. Finally, I find that only acquisitions by technological laggards significantly destroy value.