Key factors affecting acquisition of technological capabilities from foreign acquiring firms by small and medium sized local firms

The objectives of this study are to investigate whether foreign acquiring firms contribute towards enhancing technological capabilities of local firms in foreign markets. Given that drivers promoting technology acquisition from acquiring firms have been largely neglected in the literature, we attempt to identify the key factors influencing this phenomenon. Secondly, although several studies have discussed knowledge exchange through international acquisitions (IAs), little attention has been given to small and medium sized local acquired firms (SMLFs). By using three dimensions of organizational characteristics based on absorptive capacity, our empirical evidence reveals three key findings. First, to develop an effective absorptive capacity, mere exposure to favorable learning environments is not sufficient, and that intensity of effort is a critical component functioning as a facilitator towards the extent of learning. Second, what is already known can be improved when partners share similar business background. This is because the possession of relevant knowledge based on business relatedness increases the boundary of curriculum in organizations. Third, collaborative support from knowledge transferors is a significant catalyst generating a specific learning capability. Crown Copyright (C) 2010 Published by Elsevier Inc. All rights reserved.