STP-M&A.1 Exploring the potential transition from strategic technology partnering to mergers and acquisitions

Exploring the potential transition from strategic technology partnering to mergers and acquisitions This paper studies a number of research topics derived from the basic question: do inter-firm partnerships with different intermediary modes of company organization change over time as one of the companies that were previously cooperating becomes integrated by its partner? As such this contribution addresses the rather 'strong' variant in such a transformation process where companies are merged or taken over instead of a transformation of an equity agreement in which one of the partners increases its share in the equity distribution of an alliance. The present analysis is limited to the group of strategic technology alliances, i.e. those inter-firm agreements for which joint technology development or technology sharing are part of the agreement. The paper first explores the literature that refers to the possible transition within strategic technology alliances from contractual to equity modes and from cooperation through alliances to mergers and acquisitions. Based on this we formulate a number of hypotheses regarding the change in modes of governance and several dimensions such as size of firms, international distribution and industry specificity. The empirical analysis employs two large data sets, one on strategic technology alliances and one on mergers and acquisitions. The major finding of our research is that the transformation from strategic technology alliance to merger and acquisition hardly ever takes place. This suggests that alliances and mergers and acquisitions are not part of a rather smooth continuum but they are first of all different modes of governance where one mode certainly does not lead to the other. 1 INTRODUCTION The present research has to be understood in the context of Williamson's (1985) well known continuum that reaches from market transactions via the 'swollen middle' (Hennart, 1993) to integrated hierarchical structures such as mergers and acquisitions. Most of the research on these alternative modes of organization has concentrated on economic or strategic implications for firms regarding each of the segments of the continuum or the trade-off in the choice between these alternatives. So far little empirical research has been performed that concerns the possible transitory aspects of different modes of company organization, e.g. the possible dynamic relationship between intermediary modes and integration. In short, this topic concerns the possible transformation of inter-firm cooperation from contractual agreements through equity agreements such as joint ventures into mergers and acquisitions. A small number of contributions link up to the …