Bidding wars over R&D-intensive firms: Knowledge, opportunism, and the market for corporate control

The knowledge-based theory of the firm suggests that, as knowledge intensity increases, knowledge management concerns, not opportunism, should increasingly drive organizational boundary decisions. Therefore, as R&D intensity increases, knowledge-based theory should gain explanatory power over transaction cost economics, in which opportunism is the primary driver. However, this study shows problems of opportunism increasing with R&D intensity. For example, as R&D intensity increased, managers actively discouraged bidding wars. Transaction cost economics seems to gain explanatory power as knowledge intensity grows.