- New Horizons in International Business series
Edited by Ben L. Kedia and Subhash C. Jain
Chapter 4: Commercializing, catalyzing or cutting innovation? The roles of large acquirers in US global competitiveness
Innovation is fundamental to business success. Top managers responding to the 2010 McKinsey Global Survey confirm this: 84 percent say innovation is very or extremely important to their firm’s growth (Capozzi et al., 2010). Policy makers and economists agree – a firm, country or region cannot be globally competitive in every industry without a steady stream of innovation (e.g. Fagerberg, 1996).To this end, US businesses, entrepreneurs, venture capitalists, universities and government agencies invest in R & D, promote programs in STEM disciplines, and adopt management techniques intended to stimulate creativity. Innovation emerging from these investments is often championed – at least initially – by small start-up firms, and yet the successful commercialization of innovation depends in many cases on key complementary assets owned by larger firms. In a difficult economic climate, small cash-strapped firms are increasingly seeking to be acquired by large firms as an exit strategy to realize the value of their knowledge assets. The market for corporate control (mergers and acquisitions) is therefore a critical intermediary between societal investments in innovation and that innovation’s eventual success in the US and global economy.
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