兼并 技术转移

Entrepreneurial human capital, complementary assets, and takeover probability Erik E. Lehmann • Thorsten V. Braun • Sebastian Krispin � Springer Science+Business Media, LLC 2011 Abstract Although acquisitions of high-tech entrepreneurial firms are of great popularity within the technology transfer process, the limited empirical evidence on this type of technology transfer shows that these acquisitions often lead to dismal results in that a large number of acquired key inventors leave their companies after an acquisition and those that remain exhibit poor performance. This study aims at explaining this phenomenon and adds additional empirical results and explanations to the matching theory of ownership changes. Using a hand collected dataset of all German IPOs from 1997 until 2006, this study shows that the probability of ownership in a young and high-tech firm’s assets being reallocated by means of a takeover significantly decreases with the amount of intangible and com- plementary assets that are owned by the owner-manager. Keywords Technology transfer � Matching theory of ownership changes � High-tech firms � Property rights � Ownership structure � Mergers & acquisitions JEL Classifications D23 � D82 � D86 � G32 � G34 � L2 E. E. Lehmann (&) � T. V. Braun Department of Business Administration, University of Augsburg, Universitaetsstr. 16, 86159 Augsburg, Germany e-mail: erik.lehmann@wiwi.uni-augsburg.de T. V. Braun e-mail: thorsten.braun@wiwi.uni-augsburg.de E. E. Lehmann GBM, Augsburg, Germany E. E. Lehmann CCSE, Augsburg, Germany E. E. Lehmann CCSE, Bergamo, Italy S. Krispin Department of Economics, University of Augsburg, Augsburg, Germany e-mail: sebastian.krispin@wiwi.uni-augsburg.de 123 J Technol Transf DOI 10.1007/s10961-011-9225-8 1 Introduction Corporate restructuring plays an important role in industrial and firm development. In the past 50 years numerous articles, both theoretically and empirically, have analyzed the causes and consequences of ownership changes in firms and industries due to mergers, acquisitions, and leveraged buy outs. While most empirical studies focus on corporate governance arguments like the impact of debt on the performance of mergers and lever- aged buy outs (Jensen 1986; Hall 1990; Lichtenberg and Siegel 1990), only a few argue for ‘‘matching’’ arguments in analyzing ownership changes (Lichtenberg and Siegel 1987; Granstrand and Sjo¨lander 1990). This paper adds to the latter literature positing that the market for corporate control serves as a matching mechanism among large and established firms on the one and (significantly) smaller and entrepreneurial firms on the other hand. The ‘‘matching theory of ownership changes’’, introduced by Lichtenberg and Siegel (1987) in analogy to Jovanovic’s (1979) work on job-market matching, considers own- ership changes as a mechanism to correct lapses of efficiency. They base their arguments on asymmetric information and argue that most acquisitions are precipitated by deterio- rations in the target firm’s economic performance (Lichtenberg and Siegel 1987, p. 647f). Thus, the matching theory of plant turnover has two implications: a poor level of pro- ductivity indicates a poor match and accordingly will induce a change in ownership, while a change in ownership will result in an increase in productivity. We follow this line of reasoning and also treat mergers and acquisitions as a matching process among large and established firms and young and innovative entrepreneurial firms. Entrepreneurial firms’ innovation endeavours are assumed to be more likely to create breakthroughs but these firms are not always able to bring their innovations to the market (Wright et al. 2004a). In contrast, established and large firms have sufficient financial resources but often only provide incremental innovations. Thus, taking over an entrepre- neurial firm may lead to a win–win situation for both parties (Gans and Stern 2000). Our study aims at adding to our understanding of this process by analyzing influences on a knowledge-based firm’s probability of being a takeover target for acquirers seeking access to novel technologies and similar widely knowledge-based inputs that they subsequently can exploit in their innovation processes. Our results show that ‘‘mismatches’’ due to an ex ante inability to formulate comprehensive contracts governing individuals’ ex post joint- firm relationship specific investments are anticipated by the market participants and accordingly lower takeover probabilities. Since start-up and entrepreneurial innovation is more radical than that of incumbents (Link and Bozeman 1991; Knockaert et al. 2011), Granstrand and Sjo¨lander (1990) suggest a division of scientific labor between entrepreneurial firms and established firms that implicitly defines their roles as targets and acquirers. Recent academic research focuses on this division of scientific labor and its impact on firm acquisitions (Bonardo et al. 2010; Colombo et al. 2010). Most of this literature contends that entrepreneurial firms are pre- ferred acquisition targets due to their internally available technological capabilities, which often are measured by numbers of patents as predictors of takeover probability. Although acquisitions of innovative and entrepreneurial firms accordingly are of great popularity in academic literature, there is only limited evidence available on acquisitions of high-tech start-ups and entrepreneurial firms by larger incumbents. This literature shows dismal results in that a large number of acquired inventors leave their companies after an acquisition and those that remain exhibit poor innovation outcome (see e.g. Ernst and Vitt 2000; Paruchuri et al. 2006; Kapoor and Lim 2007). Some studies aim at explaining why these acquisitions often fail and have placed attention for example on whether the acquired E. E. Lehmann et al. 123 firm is kept as a separate entity or integrated into the acquirer’s organization (Kapoor and Lim 2007; Puranam and Srikanth 2007) or how post-deal decision autonomy is granted to individual acquired key inventors. Colombo et al. (2010) conclude that, while structural aspects of the post-acquisition reorganization are still important, one needs to go a step further in order to understand these disillusioning empirical findings. We will go this step forward and contribute to this line of literature by analyzing how the likelihood of entrepreneurial firms of being takeover targets is shaped by the specific role of their owner-manager as the key inventor. We base our arguments on findings from the property rights theory on incomplete contracts, highlighting a mismatch between the acquiring and the target firm if the most important and intangible assets are owned by the key inventor—the founder CEO. Thus, our study differs insofar from earlier work as that we explicitly distinguish between the owner-manager as the owner of intangible assets and the entrepreneurial firm as the legal entity. Taking patents as a proxy for the intangible assets either owned by the owner-manager or incorporated within the entrepreneurial firm as a legal entity, we find compelling evidence that the likelihood of being a takeover target significantly decreases with the patents owned by the owner-manager or key-inventor. Our empirical findings confirm this kind of mismatch in the acquisition process. The remainder of this paper is structured as follows. In the next section we provide a review of the three streams of literature mentioned above. In Sect. 3 we formulate our hypotheses. Section 4 describes the dataset which then is employed in Sect. 5 for testing our hypotheses. Section 5 also summarizes and discusses our findings, before the final section concludes. 2 The market for acquisitions of young and high-tech firms Recent academic research on acquisitions of entrepreneurial firms by larger incumbents has focused on three important streams of literature: The demand for entrepreneurial firms as takeover targets, the incentives of entrepreneurial firms to be taken over, and factors shaping the likelihood of observing takeovers. The first stream of literature analyzes the demand side of the market for corporate control over entrepreneurial firms—established firms’ need to acquire start-ups and entrepreneurial firms. For the last couple of years many of the world’s economies have been facing radical changes in their market places. On the one hand, there has been an explosion of entrepreneurial activities in technology and knowledge intensive sectors all over the world, driven by technological but also by political and cultural changes (Audretsch and Thurik 2001). On the other hand, mainly the same forces have led to an increase in international activities of firms, creating global players, which gives pressure to firms even if they act on national markets only and intensifies ‘‘[t]he race to economic superiority’’ (Tassey 2010, p. 283). In this context, a particular firm’s success increasingly depends on its capability of innovating faster than its best competitors (Teng 2007). One crucial facet of this capability is the continuous development of novel technologies, products, and services (Balkin et al. 2000) which commands successfully enhancing existing and integrating new knowledge assets into an incumbent’s knowledge base (Knockaert et al. 2011). Industries with short innovation cycles and technologically complex products could make it infeasible for firms to inter- nally develop all new technologies they need for innovation at sufficient pace (Ranft and Lord 2002). Thus, incumbents largely depend on novel technologies possessed by high- tech start-ups, given the increasing pressure of timing innovations in many industries (Desyllas and Hughes 2008). Mergers and acquisitions can be viable vehicles in pursuing a Entrepreneurial human capital, complementary assets 123 resource-based strategy as they allow for access to strategic and possibly otherwise not marketable resources that enable acquirers to create a sustainable competitive advantage (Granstrand and Sjo¨lander 1990; Gick 2008; Steffens et al. 2009). As a consequence of this rationale, the acquisition of technologies, competencies, and knowledge from external sources has become one of the major motives for corporate mergers and acquisitions in recent years (Dushnitsky and Lenox 2005; Desyllas and Hughes 2009). A second strand of the literature focuses on the supply side of this market—the supply of takeover targets. This supply of entrepreneurial firms as acquisition targets seems to largely depend on initial owners exit decisions. DeTienne and Cardon (2011) argue that while every entrepreneur must decide on the mode of exiting their venture, they have several distinct options in how to conduct their eventual exit and find direct acquisitions by incumbent firms to be the most likely exit modes chosen by this group of initial owners. Many high-tech start-ups are thus taken over by larger firms early in their firm life cycles because these larger firms own the necessary resources to bring entrepreneurial firms’ innovations to the market (Dai 2005; Audretsch and Lehmann 2007). Additionally, if there are advantages to be gained from exploiting economies of scale or scope, incumbent firms typically enjoy competitive advantages over smaller start-ups (Audretsch 2001) so that their willingness-to-pay for the target might exceed the value that can be extracted by initial owners from running the firm independently. If the number of entrepreneurial firms largely exceeds the number of established firms, entrepreneurial firms may compete for being acquired (Henkel et al. 2010), otherwise established firms may compete to acquire successful entrepreneurial firms (Norba¨ck and Persson 2009). High quality signals for entrepreneurial firms to discriminate themselves from low quality firms may be patent applications (Gick 2008) or the IPO (Zingales 1995). Both mechanisms are important means of reducing information asymmetries in the matching process of transferring control rights from the owner-manager of a privately held firm to another firm (Ang and Kohers 2001; Markman et al. 2001; Shen and Reuer 2005; Audretsch and Lehmann 2007). Finally, a significant body of literature has applied itself to predicting takeover targets with models based on publicly available information. Empirical research suggests that predominantly firm size, an imbalance of growth and resource base, management ineffi- ciency, and industry effects such as an increase in takeover activities within a certain industry influence a firm’s takeover probability (see e.g. Palepu 1986; Barnes 1999; Powell 2004). Takeover probability seems to be higher if the target is small and technology driven (Lehto and Lehtoranta 2006; Grimpe and Hussinger 2008, 2009; Gao and Jain 2011) as it also seems to be higher for younger firms (Gao and Jain 2011). Desyllas and Hughes (2009) find substantial evidence for Lichtenberg and Siegel’s (1987) matching theory of ownership change in that takeovers are more likely if both the acquirer and the target firm overlap in firm characteristics such as R&D intensity (Grimpe and Hussinger (2008, 2009) correspondingly find technological relatedness between bidder and target to have a sig- nificantly positive influence on deal value). While Desyllas and Hughes (2009) find that takeover probability is positively influenced by complementarities among the target’s and the bidder’s technology portfolios, Wang and Zajac (2007) find that both technological similarity as well as technological complementarity generally increase the likelihood of organizational arrangements that combine resources across firms. Only a small number of studies, however, focuses on the role of firm owners in the acquisition process, like Gimeno et al. (1997) or Powell (2004), who find that friendly takeovers are significantly more often directed towards smaller firms. Gao and Jain (2011) find that a firm’s takeover probability is negatively impacted if its initial owner continues as the firm’s CEO after its IPO, which in their study proxies a source of power of initial E. E. Lehmann et al. 123 owners. In science-based IPO-firms, Bonardo et al. (2010) find a significantly negative impact of the concentration of ownership of substantial shareholders at the IPO on the firm’s hazard of being targeted by a takeover. 3 Theoretic framework and hypotheses The following sections develop our hypotheses concerning influences of different alloca- tions of ownership in a high-tech IPO-firm’s intangible assets as well as of a potential target’s characteristics on its probability of receiving a takeover bid. Unlike previous research on acquisitions of newly public high-tech firms by incumbents seeking access to novel technologies and innovations, we differentiate among intangible assets that are allocated to the firm as the legal entity and those allocated to the firm’s owner-manager. While the former can readily be employed in an incumbent’s innovation processes sub- sequent to an acquisition of the target firm, the latter are inalienably bound to the target’s former owner-manager. 3.1 Firm specific intangible assets and takeover probability Our first hypothesis is based on the matching argument that takeover probability increases with the amount of intangible assets incorporated in the entrepreneurial target firm. Spe- cific human capital and technological know-how play key roles in these ‘‘New Enterprises’’ (Rajan and Zingales 2000) as they can allow for competitive advantages, if successfully employed. Due to their organizational specifics, entrepreneurial firms provide both strong incentives to specifically invest in the innovation process and corresponding selection devices (Rajan and Zingales 2001; Fabel 2004) so that younger firms seem to identify opportunities more successfully as compared to incumbents. Entrepreneurial firms often- times cannot develop competitive advantages in the exploitation of their inventions independently (Ireland et al. 2003; Meuleman et al. 2009; Steffens et al. 2009) and this exploitation of a majority of opportunities and corresponding innovations identified by new enterprises requires a tedious period of further research and product development. In this course, many knowledge-based small firms face severe resource gaps, mostly with respect to funding, or simply lack basic business and similar skills (see e.g. Wright et al. 2004b; Meuleman et al. 2009; Bjørna˚li and Gulbrandsen 2010; Knockaert et al. 2011), a relative disadvantage that seems to be further intensified by increasingly global competition for innovation (Tassey 2010). Since competitive advantage not only requires control over strategic resources and capabilities but also the ability to exploit these (Barney 1995), these resource gaps might hinder initial owners from independently exploiting innovative resources and might provide them with incentives to seek alternatives in appropriating the returns on these intangible assets. The M&A market might thus be a useful mechanism in establishing new ownership and management structures in entrepreneurial firms that can improve their productivity and maximize the financial returns on embodied human and technological capital (Bonardo et al. 2010). Within the ‘‘matching theory of ownership change’’ (Lichtenberg and Siegel 1987, p. 647), given entrepreneurial start-ups’ relative advantages in exploration of promising innovations and capabilities and incumbents relative advantages in their exploitation, the combination of corresponding resources and capabilities accumulated within entrepre- neurial start-ups with those of an incumbent firm by means of mergers and acquisitions can be an efficient way for incumbents to innovate in order to sustain competitive advantages. Entrepreneurial human capital, complementary assets 123 Hypothesis 1 A firm’s probability of receiving a takeover bid increases with its internally available intangible resources such as innovative, intellectual, and technological capabilities. 3.2 Owner-manager specific intangible assets and takeover probability Successful exploitation of entrepreneurial firms’ intangible resources generally seems to pose exceptional difficulties to both their initial owners and to potential acquirers. Entrepreneurial firms existentially depend on both their knowledge-workers’ innovative knowledge and their involvement with and commitment to the firm (Knockaert et al. 2011), most importantly continued investment in their firm specific human capital, but unlike other assets cannot own these resources (Colombo et al. 2010). Therefore, a knowledge- intense firm’s success hinges on its ability to provide efficient incentives which induce individuals to make relationship-specific investments. For individuals employed by an entrepreneurial firm, incentives arguably will not change due to a change in the counter- party to their employment contracts. For the initial owner as a residual claimant, however, a takeover of their firm will have impacts on their power to contradict unfavorable dis- tributions of residual income after they have made specific investments. This change in their ability to ex post appropriate a commensurate fraction of residual income in turn will have an impact on their incentives for corresponding value-increasing investments ex ante. As Soubeyran and Stahn (2007) argue, optimal specific investments in knowledge and human capital maximize the quality of the component they are specified to. However, these investments are non-contractible and an outside party cannot verify the quality of any component but only that of the