Technology Acquisition in Family and Nonfamily Firms: A Longitudinal Analysis of Spanish Manufacturing Firms

Technology acquisition from external sources has been identified as a critical competence for sustained success in innovation, and research has paid a good deal of attention to studying its advantages, drawbacks, determinants, and outcomes. Traditionally, research has modeled the choice to acquire technology from outside a firm's boundaries as the result of a trade‐off between the benefits of external acquisition (e.g., higher return on investment, lower costs, increased flexibility, access to specialized skill sets, and creativity) and its drawbacks (e.g., opening the market to new entrants, risk of imitation of core competencies, and reduced value appropriability). Yet, this view does not capture the behavioral considerations that may potentially encourage or discourage managers from sourcing technology outside the firm's boundaries. This behavioral aspect is especially important if one wants to understand the conduct in external technology acquisition of family firms, which are found to favor strategic actions that preserve the controlling families' control and authority over business, even at the cost of giving up potential economic benefits. Thus, external technology acquisition is likely to be interpreted differently in family and nonfamily firms. Despite its importance, how the involvement of a controlling family affects decisions in technology and innovation management and specifically external technology acquisition is an overlooked topic in extant research and requires further theoretical and empirical examination. This study attempts to fill these gaps by extending the tenets of the behavioral agency model and prior research pointing to particularistic decision‐making in family firms to uncover the behavioral drivers of external technology acquisition in family and nonfamily firms. Theory is developed that relates performance risk, family management, and the contingent effect of the degree of technology protection on external technology acquisition, and the hypotheses are tested with longitudinal data on 1540 private Spanish manufacturing firms. The analyses show that managers are more likely to acquire technology from external sources through research and development contracting when firm performance falls below managers' aspirations. Family firms are generally more reluctant to acquire external technology, and the effect of negative aspiration performance gaps becomes less relevant as family management is higher, which is attributed to family managers' attempts to avoid losing control over the trajectory that technology follows over time. However, family firms become more favorable to considering the adoption of an open approach to technology development when some protection mechanisms (specifically, the filing of patents on the firm proprietary technologies) increase the managers' perceptions of control over the technology trajectory. As such, this study makes a contribution to the understanding of the behavioral factors driving external technology acquisition, and it offers important insights regarding technology strategy in family firms.     

A Note on Family Influence and the Adoption of Discontinuous Technologies in Family Firms

The 4Cs model of command, continuity, community, and connections is useful for examining the effect of family influence on the adoption of discontinuous technologies. However, assuming that family influence differs only in degree rather than kind is naive because such an assumption ignores the likelihood of heterogeneous behaviors among family firms. In this conceptual note, we extend prior work and explain how heterogeneity in the family's relative emphasis on command, continuity, community, and connections requires that the multifaceted and potentially nonlinear nature of family influence be considered when analyzing strategic decisions concerning family firm innovation.     

"Managing" Learning by Doing: An Empirical Study in Semiconductor Manufacturing

This article examines the contributions of human resource and organizational practices to the development and supply chain management interface. It addresses this issue in the context of the semiconductor industry by highlighting the importance of these practices for learning‐based improvement in manufacturing. One of the most important factors for competitiveness in the semiconductor industry is the ability to manufacture new process technologies with high yields and low cycle times. The more effective management of new process technologies within the manufacturing facility aids firms in managing production costs, volumes, and inventories. Efficient management of new process development and introduction translates into enhanced internal supply chain management performance by improving the design of internal workflows, manufacturing performance, and the acquisition and installation of new manufacturing processes. Because much of the knowledge that underpins semiconductor manufacturing is idiosyncratic, however, firm‐level differences in human resource and organizational practices are likely to have consequences for performance. The article derives learning curve models of the rate of improvement in manufacturing yield (i.e., the rate of learning) and cycle time (i.e., the speed of production) following the introduction of a new process technology in a manufacturing facility. It then tests the influence of the use by semiconductor manufacturers of teams for problem solving and intrafirm knowledge transfer, the level of internal adoption of information technology (IT), and more extensive and effective workflow and production scheduling systems on manufacturing performance. It finds that the manners in which semiconductor manufacturers allocate engineering resources to problem‐solving activities, utilize information technology in the manufacturing facility, schedule production, and control the “shop floor” influence the levels and rates of improvement in both manufacturing performance measures. The article makes several contributions to the literature on product and process development and, accordingly, to research on the product development/supply chain interface. In particular, the model of organizational‐based learning provides a better understanding of the determinants of learning‐based performance improvement. In particular, better manufacturing performance results not strictly from greater cumulative volume but also from the actions of managers that affect the organization of establishment‐level problem‐solving activities and information exchange. The article also demonstrates that human resource and organizational practices in both the development and the adoption of new process technologies improve manufacturing performance by accelerating new product introduction, improving workflow, and enhancing the efficiency of manufacturing processes.     

Technology convergence capability and firm innovation in the manufacturing sector: an approach based on patent network analysis

As a consequence of the convergence between manufacturing technology and the foundation technologies of Industry 4.0, it is becoming more important for firms to formulate an innovation strategy for their technological capabilities. In this context, the present study measures firm‐level technology convergence (TC) capability using patent network analysis. A firm’s TC capabilities are measured using three centrality indices pertaining to a patent network, which is constructed based on the relationship between patents and their international patent classification. For the empirical analysis, panel regression is conducted to observe the effect of TC capabilities on innovation for the top 30 firms in four manufacturing industries. We find that the TC degree positively influences the firms’ overall innovation, namely their total number of patents, and negatively influences their convergent innovation, calculated as the ratio between the number of TC patents and the total number of patents, while the effect of TC betweenness is the opposite. These findings imply that while concentrating on similar technologies may promote quick technology application, it could hamper the enhancement of a TC’s potential. To promote TC, a firm should thus develop technologies more likely to be involved in TC.     

The impact of outsourcing new technologies on integrative capabilities and performance

Outsourcing plays an important role for firms adopting new technologies. Although outsourcing provides access to a new technology, it does not guarantee that a firm can subsequently integrate the technology with existing business processes and leverage it in the marketplace. This distinction, however, has rarely been made in the literature. In the context of business process enhancing technologies, this study builds on the resource‐based and knowledge‐based views to study the impact of outsourcing on firms' subsequent performance in the market and their integrative capabilities, that is, a firm's capacity to use and assimilate a new technology with its business processes and build upon it. The study argues that greater reliance on outsourcing may reduce a firm's learning by doing, internal investment, and tacit knowledge applications, thereby impeding a firm's integrative capabilities and performance in the market. The study uses survey and archival data on banks' outsourcing strategies for Internet adoption to test for the performance consequences of outsourcing, which are found to be negative. However, the findings also show that outsourcing is less detrimental for firms with experience in prior related technology. Copyright © 2009 John Wiley & Sons, Ltd.     

Commercializing Technological Innovation: Learning from Failures in High‐Tech Markets*

Commercialization is known to be a critical stage of the technological innovation process, mainly because of the high risks and costs that it entails. Despite this, many scholars consider it to be often the least well managed phase of the entire innovation process, and there is ample empirical evidence corroborating this belief. In high‐tech markets, the difficulties encountered by firms in commercializing technological innovation are exacerbated by the volatility, interconnectedness, and proliferation of new technologies that characterize such markets. This is clearly evinced by the abundance of new high‐tech products that fail on the market chiefly due to poor commercialization. Yet there is no clear understanding, in management theory and practice, of how commercialization decisions influence the market failure of new high‐tech products. Drawing on research in innovation management, diffusion of innovation, and marketing, this article shows how commercialization decisions can influence consumer acceptance of a new high‐tech product in two major ways: (i) by affecting the extent to which the players in the innovation's adoption network support the new product; (ii) by affecting the post‐purchase attitude early adopters develop toward the innovation, and hence the type of word‐of‐mouth (positive or negative) they disseminate among later adopters. Lack of support from the adoption network is found to be an especially critical cause of failure for systemic innovations, while a negative post‐purchase attitude of early adopters is a more significant determinant of market failure for radical innovations. There follows a historical analysis of eight innovations launched on consumer high‐tech markets (Apple Newton, IBM PC‐Junior, Tom Tom GO, Sony Walkman, 3DO Interactive Multiplayer, Sony MiniDisc, Palm Pilot, and Nintendo NES), which illustrates how commercialization decisions (i.e., timing, targeting and positioning, inter‐firm relationships, product configuration, distribution, advertising, and pricing) can determine lack of support from the innovation's adoption network and a negative post‐purchase attitude of early adopters. The results of this work provide useful insights for improving the commercialization decisions of product and marketing managers operating in high‐technology markets, helping them avoid errors that are precursors of market failure. It is also hoped the article will inform further research aimed at identifying, theoretically and empirically, other possible causes of poor customer acceptance in high‐tech markets.     

On the diffusion of electronic commerce

This paper analyzes retailers' adoption of e-commerce in a technology adoption race framework. An internet-based firm with no traditional market presence competes with an established traditional firm to adopt the e-commerce technology and sell to a growing number of consumers with on-line shopping capability. The focus of the analysis is on identifying how consumer loyalty, differences in firms' technology and consumers' preferences for the traditional versus the virtual market, and the expansion in market size made possible by the internet can affect the timing and sequence of adoption by firms, as well as the post-adoption evolution of prices. The model's implications are used to discuss empirical evidence on adoption patterns for different product categories and firm types.     

HRM Practices and the Within‐Firm Gender Wage Gap

The effect of HRM practices on the within‐firm gender gap in wages in manufacturing is investigated merging a 1999 survey on work practices among Danish firms to matched employer–employee panel data. Self‐managed teams, project organization and job rotation schemes are the most widely introduced practices. Accounting for non‐randomness in adoption, the pay gap is reduced among hourly paid workers but increases among salaried workers. Considering practices individually, wage gains from adoption accrue to males except for salaried workers in firms that adopt project organization and for hourly paid workers in firms that introduce quality control circles.     

Strategic incentives to human capital

Motivating human capital in knowledge‐intensive activities is a serious managerial challenge because it is difficult to link rewards to actions or performance. Firms instead might motivate knowledge workers by offering them opportunities to increase personal benefits (e.g., learning, satisfaction) through autonomy in the decision‐making process. Our model shows that firms can offer less autonomy in projects closer to their core business: Because firm specialization raises the value of the project's outcomes, it also increases the benefits for knowledge workers, who derive motivation even though they make fewer decisions to support their realization of personal goals. Projects farther from the core offer weaker firm contributions, so firms can motivate knowledge workers by allowing them to benefit from greater autonomy. We discuss several implications of our analysis. Copyright © 2013 John Wiley & Sons, Ltd.     

Configurations of Innovations across Domains: An Organizational Ambidexterity View

How do firms balance explorative and exploitative innovation for superior firm performance? While most prior studies have approached this issue by focusing on technology‐related innovation, the role of balancing exploration and exploitation in other important organizational domains, i.e., marketing, and the interaction effect of ambidexterity across different domains have been overlooked. This study contributes to this line of research by investigating how firms simultaneously balance exploration and exploitation across two critical domains, namely technology innovation and market innovation. The study distinguishes four types of configurations: market leveraging (technology exploration and market exploitation), technology leveraging (technology exploitation and market exploration), pure exploitation (technology exploitation and market exploitation), and pure exploration (technology exploration and market exploration). From an organizational ambidexterity perspective, the current work investigates whether and how these different combinations exert distinctive effects on firm performance. Specifically, the article posits that (a) technology exploration and market exploitation complement each other, and (b) technology exploitation and market exploration also complement each other, such that both market leveraging and technology leveraging strategies have positive effects on firm performance. The article also maintains that such positive relationships are fully mediated by differentiation and low cost advantages. Conversely, it is argued that (c) technology exploration and market exploration conflict with each other, and (d) so do technology exploitation and market exploitation, such that both pure exploration and pure exploitation have negative effects on firm performance. Hypotheses were tested using survey data collected from 292 manufacturing and service firms in China. The results supported most of the hypotheses, except that pure exploration demonstrated no significant relationship with firm performance.     

Investigating Adoption of Free Beta Applications in a Platform‐Based Business Ecosystem

Planning new product development (NPD) activities is becoming increasingly difficult, as contemporary businesses compete at the level of business ecosystems in addition to the firm‐level product‐market competition. These business ecosystems are built around platforms interlinking suppliers, complementors, distributors, developers, etc. together. The competitiveness of these ecosystems relies on members utilizing the shared platform for their own performance improvement, especially in terms of developing new valuable offerings for end users. Therefore, managing the development of the platform‐based applications and gaining timely end‐user input for NPD are of vital importance both to the ecosystem as a whole and to the developers. Subsequently, to succeed in NPD planning developers utilizing beta testing need a thorough understanding of the adoption dynamics of beta products. Developers need to plan for example resource allocation; development costs; and timing of commercial, end‐product launches. Therefore, the anticipation of the adoption dynamics of beta products emerges as an important antecedent in planning NPD activities when beta testing is used for gaining end‐user input to the NPD process. Consequently, we investigate how free beta software products that are built upon software platforms diffuse among their end users in a cocreation community. We specifically study whether the adoption of these beta products follows Bass or Gompertz model dynamics used in the previous literature when modeling the adoption of stand‐alone products. Further, we also investigate the forecasting abilities of these two models. Our results show that the adoption dynamics of free beta products in a cocreation community follow Gompertz's model rather than the Bass model. Additionally, we find that the Gompertz model performs better than the Bass model in forecasting both short and long out‐of‐sample time periods. We further discuss the managerial and research implications of our study.     

Learning: What and How? An Empirical Study of Adjustments in Workplace Organization Structure

We seek to understand how firms learn about what adjustments they need to make in their organization structure at the workplace level. We define four organizational systems: traditional (the simplest system), high‐performance (the most complex system), decision‐making oriented, and financial‐incentives oriented (intermediate complexity). We analyze (1) learning‐by‐doing on adoption of more or less complex systems, (2) the performance–experience learning curves associated with different systems, (3) the match between perceived organizational capabilities and the choice of systems, the influence of (4) other firms’ systems and performance on a firm’s adjustment decisions, and of (5) a firm’s location on its decisions.     

Shareholder valuation of foreign investment and expansion

This study analyzes when different foreign investment location choices are value creating for firms at different stages of international expansion. I argue that because direct investment in developing countries is riskier than in advanced countries, shareholders may not value a firm's investment in developing countries until that firm has experience from previous international investments and capabilities to better manage and hedge the higher levels of risk and uncertainty. Using a panel of 191 U.S. manufacturing firms and their foreign investments over a 20‐year period (1981–2000), the empirical results show that firm investments in advanced and developing countries are valued differently by shareholders, depending on the firm's prior international expansion, the firm's capabilities and experiences, and the knowledge intensity of the firm's industry. These results highlight the importance of considering firm location decisions, prior experiences, and resources when analyzing. Copyright © 2006 John Wiley & Sons, Ltd.     

Entry timing and innovation strategy in feature phones

Research summary : This inductive study examines how firms make decisions about the timing of innovations, focusing on the mobile handset industry during the feature‐phone era. Through qualitative and quantitative data, we reveal how individual technology‐entry decisions are influenced by a portfolio‐level timing preference, and how this preference informs other aspects of innovation strategy, too. Early movers address greater, more uncertain revenue opportunities with broader, less selective innovation portfolios. Conversely, late movers target lower, more certain revenue opportunities with narrower, more selective portfolios. While timing per se seems unrelated to performance, a timing‐strategy alignment is. Future research on the equifinal configurations we propose—broad/nonselective for early movers and narrow/selective for late movers—could thus help resolve the debate about the link between timing and performance. Managerial summary : We study how firms make decisions about the entry of new product features, in this case mobile phone technologies. During development firms weigh the scale and likelihood of features' commercial success. Some firms display a preference for earlier entry, which offers temporary monopoly rewards if uncertainty resolves favorably, while others tend to opt for later entry, which offers greater certainty but lower rewards due to competitive preemption. The innovation portfolios of these companies thus pursue differently structured opportunities, bringing about different strategic approaches. Since early movers aim for big hits to compensate for a higher failure rate, they launch a broader set of features and exert little selective pressure on the development portfolio. By contrast, late movers' lower payoffs reduce their tolerance for failure, making them launch fewer features and emphasize selectiveness; i.e., they invest in learning from the resolution of uncertainty so as to choose features more discriminately. When we examine innovation performance, timing has no significant effect but matching timing with feature breadth does. Copyright © 2015 John Wiley & Sons, Ltd.     

Bigger and safer: the diffusion of competitive advantage

Research on the diffusion of technologies that give competitive advantage is needed to understand the role of technology in competition. Predictions on which firms first obtain useful technologies are made by cluster theory, which holds that the diffusion is geographically bounded, and network theory, which holds that adoption is more rapid in central network positions. These predictions can be evaluated using data on the diffusion of supplier innovations that give competitive advantage to firms in the buyer industry. Here, the diffusion of new ship types is studied using the heterogeneous diffusion model and data on shipping firm‐shipbuilder networks, showing that valuable innovations remain rare because they are not adopted by distant firms in geographical and network space. The strong influence of geographically dispersed interfirm networks on technology diffusion justifies a greater role of interorganizational networks in the theory of competitive advantage. Copyright © 2008 John Wiley & Sons, Ltd.     

Capabilities,technologies, and firm exit during industry shakeout: Evidence from the global solar photovoltaic industry

Research Summary: Explanations of entrants’ survival in an emerging industry are premised on pre‐entry capabilities or technology entry choices prior to the emergence of the dominant design. We consider how these drivers interact to strengthen or nullify firms’ pre‐entry advantage, and facilitate adaptation as the industry evolves. We also expand the treatment of exit by separating dissolution from acquisition, in which firms’ capabilities continue to be utilized in the industry. Studying a recent shakeout in the global solar photovoltaic industry, we find that pre‐entry capabilities and technology choices act in a complementary manner for some firms, thereby enhancing survival, and as buffers against exit for others. Nearly half of exits were via acquisitions, and technology choice at entry played an important role in determining how firms exited. Managerial Summary: New industries are often characterized by intense technology competition that culminates in a dominant technology followed by industry shakeout. Although prior research underscores the central role of technology choice and firm capabilities to survival, we do not actually know how firms with different capabilities and who have made competing technology choices survive an industry shakeout. In this article, we show how entrants’ capabilities and technology choices can act in a complementary manner for some firms, enhancing their chance of survival, and as buffers against failure for others. Moreover, we explain why some firms that do exit are acquired, when others are dissolved.     

Competitive drivers and international plant configuration strategies: a product‐level test

We analyze the determinants of the decision to invest abroad and the choice of spatial configurations of overseas plants for 120 Japanese firms active in 36 well‐defined electronic product markets. We find that key competitive drivers at the firm and industry levels have a critical impact on the choice between alternative international plant configurations. Regional configurations focused on Asia are chosen by firms with weaker competitiveness for products with established manufacturing technologies. Plant configurations focused on the United States and the European Union are chosen by technology‐intensive firms facing competitive threats in foreign markets. Global configurations are chosen by firms with a strong competitive position in the Japanese and world market for their core product businesses and are more common in the case of strong oligopolistic rivalry between Japanese firms. Copyright © 2005 John Wiley & Sons, Ltd.     

Network location and learning: the influence of network resources and firm capabilities on alliance formation

This paper presents a dynamic, firm‐level study of the role of network resources in determining alliance formation. Such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed. Data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners, such resources are an important catalyst for new alliances, especially because alliances entail considerable hazards. This study also assesses the importance of firms’ capabilities with alliance formation and material resources as determinants of their alliance decisions. I test this dynamic framework and its hypotheses about the role of time‐varying network resources and firm capabilities with comprehensive longitudinal multi‐industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989. The results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms’ decisions to enter into new alliances. This study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior. Copyright © 1999 John Wiley & Sons, Ltd.     

Survey measures of first‐ and second‐order competences

Research summary : This study tests and validates survey measures of first‐ and second‐order competences in order to foster cumulative empirical research and theoretical refinement in the area of dynamic capabilities. Data from two informants and two time periods for a sample of publicly traded U.S. manufacturing firms are used to examine the convergent, discriminant, and nomological validity, and the reliability of scales to measure various levels and types of competences. Findings suggest that customer competence, technological competence, marketing competence, and R&D competence are related but distinct dimensions, evidencing strong validity and reliability. Qualifying this empirical support, it was found that items regarding manufacturing operations and facilities seemed to measure aspects unrelated to the focal competences, and that marketing competence had no relation to future market‐resource accumulation. Managerial summary : This study enhances understanding and measurement of dynamic capabilities, in particular, marketing and R&D second‐order competences. Marketing and R&D second‐order competences are a firm's ability to build new competences to serve new markets or use new technologies, respectively. The ability of a firm to add new market‐related resources (such as brands and distribution channels) and technological resources (such as patents and engineering skills) helps it cope with environmental change and grow in new directions. For firms in stable environments, being able to serve new markets and use new technologies provide opportunities for growth. For firms in turbulent environments, these skills are a matter of survival. Using data collected from publicly traded U.S. manufacturing firms, this study tests and validates questions that can be asked in questionnaires presented to management. It finds that even if a firm has strong skills in serving current customers and great technology, it may not be able to go after new markets or technologies. The survey questions tested here could be used not only by other researchers, but also by practitioners. Managers, management consultants, and industry association advisors could use the scales as diagnostic instruments or to perform benchmarking. Copyright © 2015 John Wiley & Sons, Ltd.     

The Determinants of Technology Adoption in Italian Manufacturing Industries

The adoption of new technologies in Italian manufacturing industries is analysed using data for 13,334 firms selected from the 1990–92 Community Innovation Survey. The determinants of technology adoption are analysed in an econometric framework (logit model) which is a general test of different theoretical explanations of technological diffusion. We particularly refer to the rank, epidemic and information effects which significantly affect the use of new technology in Italian manufacturing industries. We use a set of explanatory variables which enables us to set up a well specified empirical model and to use odds ratios to determine the effect of their changes on the adoption probability, thus giving a more precise picture of the determinants of technology adoption.