Technology-focused Acquisitions: Performance and Functionality as Differentiators

Technology-focused Acquisitions Are An Important Complement To The Firm’s Internal Product Development Efforts. There Is Considerable Heterogeneity When Comparing Individual Technology-focused Acquisitions – Especially With Respect To Acquisition Timing And The Deal Value. To Resolve Some Of This Heterogeneity The Author Introduces The Novel Distinction Between Performance- And Functionality-focused Acquisitions. He Characterizes This Distinction Based On A Theoretical Analysis, A Qualitative Study, And Turns To A Sample Of Acquisitions In The Field Of Artificial Intelligence For The Quantitative Study. There Are Two Key Findings. First, Performance-focused Acquisitions Take Place Earlier In A Target’s Life Cycle Than Functionality-focused Ones. Second, The Deal Value Is – At A Comparable Stage In A Target’s Life Cycle – Higher For Performance-focused Acquisitions. This Thesis Is Relevant For Management Scholars And Managers Alike: Scholars Learn About The Implications Of The Distinction Between Performance- And Functionality-focused Acquisitions On Markets For Technology. Managers Gain Insights Into How This Distinction May Guide Their Strategic Decision Making.