Mergers and Acquisitions: A Tool for Knowledge/Technology Transfer

More companies than ever before are turning to Mergers and Acquisition (M&As), at a pace that is not expected to abate any time soon. For many companies M&As represent the fastest possible route to growth. The acquiring companies seek to grow quickly by flowing more of the same products through new sales channels. For other companies, formally aligning oneself with another company makes it possible to enter new markets unavailable before, such as many USand European-based automobile manufacturers have done in China and other Asian countries heretofore closed to foreign car makers. M&As also represent an opportunity to achieve economies of scale and scope and pare operating costs, or to increase their capabilities and innovative capability. M&As facilitate the acquisition and transfer of new knowledge, technologies or systems that are critical for competitive advantage. Many technology leaders routinely snap up smaller companies solely for the promise a new invention may have for the future. The critical nature of time-tomarket makes the purchase of companies whose technology is coveted more attractive than actually developing the technology in-house. Kang and Johansson (2000) argue that the main driver of M&As is the need to acquire complementary intangible assets such as technology, knowledge, human resources, brand names, etc. The paper focus on the role of M&As as a tool for knowledge and technology transfer, a topic that has received very little explicit attention in the literature. However there has been considerable attention devoted to the related questions of knowledge transfer within a single company, knowledge transfer in alliances and joint ventures, and knowledge transfer between independent