Abstract
Technological mergers and acquisitions (M&A) have been major strategic options for firm growth. However, it is not a rudimentary task to build a long list of target firms among a vast number of candidates. Technological relatedness measurement based on patent information is expected to support such a task. Although different measurement indicators have been proposed, there is still room to explore their functionality in regards to M&A. Therefore, we aim to quantify the technological relatedness between acquirers and acquired firms by investigating the cases in the Japanese electric motor industry. Our results showed that the common-IPC mode can efficiently eliminate the effects of irrelevant elements and effectively focus on the novelty level of the technologies in M&A. The measure is expected to help extract potential acquired firms for acquiring firms, construct exit strategies for startups, and monitor the dynamic capability of the focal firm.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Abbott, A., & Banerji, K. (2003). Strategic flexibility and firm performance: the case of US based transnational corporations. Global Journal of Flexible Systems Management, 4(1/2), 1–7.
Aharonson, B. S., & Schilling, M. A. (2016). Mapping the technological landscape: Measuring technology distance, technological footprints, and technology evolution. Research Policy, 45(1), 81–96. https://doi.org/10.1016/j.respol.2015.08.001
Ahuja, G., & Katila, R. (2001). Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study. Strategic Management Journal, 22(3), 197–220. https://doi.org/10.1002/smj.157
Aldieri, L., & Cincera, M. (2009). Geographic and technological R&D spillovers within the triad: Micro evidence from US patents. Journal of Technology Transfer, 34(2), 196–211. https://doi.org/10.1007/s10961-007-9065-8
Aldieri, L., Kotsemir, M., & Vinci, C. P. (2020). The role of environmental innovation through the technological proximity in the implementation of the sustainable development. Business Strategy and the Environment, 29(2), 493–502. https://doi.org/10.1002/bse.2382
Angue, K., Ayerbe, C., & Mitkova, L. (2014). A method using two dimensions of the patent classification for measuring the technological proximity: An application in identifying a potential R&D partner in biotechnology. Journal of Technology Transfer, 39(5), 716–747. https://doi.org/10.1007/s10961-013-9325-8
Arts, S., Cassiman, B., & Gomez, J. C. (2018). Text matching to measure patent similarity. Strategic Management Journal, 39(1), 62–84. https://doi.org/10.1002/smj.2699
Awwad, A. S., Ababneh, O. M. A., & Karasneh, M. (2022). The Mediating Impact of IT Capabilities on the Association between Dynamic Capabilities and Organizational Agility: The Case of the Jordanian IT Sector. Global Journal of Flexible Systems Management, 23(3), 315–330.
Bar, T., & Leiponen, A. (2012). A measure of technological distance. Economics Letters, 116(3), 457–459. https://doi.org/10.1016/j.econlet.2012.04.030
Bart, Degroote Pierre, Held (2018) Analysis of the patent documentation coverage of the CPC in comparison with the IPC with a focus on Asian documentation. World Patent Information 54S78-S84 S0172219016300588. https://doi.org/10.1016/j.wpi.2017.10.001
Benner, M., & Waldfogel, J. (2008). Close to you? Bias and precision in patent-based measures of technological proximity. Research Policy, 37(9), 1556–1567. https://doi.org/10.1016/j.respol.2008.05.011
Bloom, N., Schankerman, M., & Van Reenen, J. (2013). Identifying technology spillovers and product market rivalry. Econometrica, 81(4), 1347–1393. https://doi.org/10.3982/ECTA9466
Breschi, S., Lissoni, F., & Malerba, F. (2003). Knowledge-relatedness in firm technological diversification. Research Policy, 32(1), 69–87. https://doi.org/10.1016/S0048-7333(02)00004-5
Cantwell, J., & Noonan, C. (2001). ‘Technology relatedness and corporate diversification 1890–1995.’In: The Nelson and Winter Conference, Aalborg, Denmark (2001, June 12–15).
Chesbrough, H. (2012). Open innovation where we’ve been and where we’re going. Research-Technology Management, 55, 20–27. https://doi.org/10.5437/08956308x5504085
Cincera, M. (2005). Firms’ productivity growth and R&D spillovers. Centre for Economic Policy Research Discussion Paper (No. 4894). ISSN: 0265–8003.
Coad, A., & Kato, M. (2020). Growth paths and routes to exit: ‘Shadow of death’ effects for new firms in Japan. Small Business Economics. https://doi.org/10.1007/s11187-020-00341-z
Cotei, C., & Farhat, J. (2018). The M&A exit outcomes of new, young firms. Small Business Economics, 50(3), 545–567. https://doi.org/10.1007/s11187-017-9907-1
de Man, A. P., & Duysters, G. (2005). Collaboration and innovation: A review of the effects of mergers, acquisitions and alliances on innovation. Technovation, 25(12), 1377–1387. https://doi.org/10.1016/j.technovation.2004.07.021
Dezi, L., Battisti, E., Ferraris, A., & Papa, A. (2018). The link between mergers and acquisitions and innovation: A systematic literature review. Management Research Review, 41(6), 716–752. https://doi.org/10.1108/mrr-07-2017-0213
Dhar, B. K., Stasi, A., Döpping, J. O., Gazi, M. A. I., Shaturaev, J., & Sarkar, S. M. (2022). Mediating Role of Strategic Flexibility Between Leadership Styles on Strategic Execution: A Study on Bangladeshi Private Enterprises. Global Journal of Flexible Systems Management, 23(3), 409–420.
Dice, L. R. (1945). Measures of the amount of ecologic association between species. Ecology, 26(3), 297–302. https://doi.org/10.2307/1932409
Dushnitsky, G., & Lenox, M. J. (2005). When do firms undertake R&D by investing in new ventures? Strategic Management Journal, 26(10), 947–965. https://doi.org/10.1002/smj.488
Engelsman, E. C., & van Raan, A. F. J. (1994). A patent-based cartography of technology. Research Policy, 23(1), 1–26. https://doi.org/10.1016/0048-7333(94)90024-8
Ganzaroli, A., De Noni, I., Orsi, L., & Belussi, F. (2016). The combined effect of technological relatedness and knowledge utilization on explorative and exploitative invention performance post-M&A. European Journal of Innovation Management, 19(2), 167–188. https://doi.org/10.1108/EJIM-08-2014-0092
Gaschet, F., Becue, M., Bouaroudj, V., Flamand, M., Meunie, A., Pouyanne, G., et al. (2017). Related variety and the dynamics of European photonic clusters. European Planning Studies, 25(8), 1292–1315. https://doi.org/10.1080/09654313.2017.1306027
Gilsing, V., Nooteboom, B., Vanhaverbeke, W., Duysters, G., & van den Oord, A. (2008). Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density. Research Policy, 37(10), 1717–1731. https://doi.org/10.1016/j.respol.2008.08.010
Hagedoorn, J., & Duysters, G. (2002). The effect of mergers and acquisitions on the technological performance of companies in a high-tech environment. Technology Analysis and Strategic Management, 14(1), 67–85. https://doi.org/10.1080/09537320220125892
Hjaltadóttir, R. E., Makkonen, T., & Mitze, T. (2020). Inter-regional innovation cooperation and structural heterogeneity: Does being a rural, or border region, or both, make a difference? Journal of Rural Studies, 74, 257–270. https://doi.org/10.1016/j.jrurstud.2019.10.008
Homberg, F., Rost, K., & Osterloh, M. (2009). Do synergies exist in related acquisitions? A meta-analysis of acquisition studies. Review of Managerial Science, 3(2), 75–116. https://doi.org/10.1007/s11846-009-0026-5
Huang, L., Shang, L. N., Wang, K. R., Porter, A. L., & Zhang, Y. (2016). Identifying targets for technology mergers and acquisitions using patent information and semantic analysis. In T. Daim, A. L. Porter, D. Chiavetta, & O. Saritas (Eds.), Anticipating future innovation pathways through large data analytics (pp. 173–186). Springer.
Hussinger, K. (2010). On the importance of technological relatedness: SMEs versus large acquisition targets. Technovation, 30(1), 57–64. https://doi.org/10.1016/j.technovation.2009.07.006
Jaccard, P. (1912). The distribution of the flora in the alpine zone. New Phytologist, 11(2), 37–50.
Jaffe, A. B. (1986). Technological opportunity and spillovers of research-and-development-Evidence from firms patents, profits, and market value. American Economic Review, 76(5), 984–1001.
Kay, L., Newman, N., Youtie, J., Porter, A. L., & Rafols, I. (2014). Patent overlay mapping: Visualizing technological distance. Journal of the Association for Information Science and Technology, 65(12), 2432–2443. https://doi.org/10.1002/asi.23146
Kosaka, M., & Nie, Y. (2019). ‘Entrepreneurship in Manufacturing Industry.’ Entrepreneurship in the Asia-Pacific: Case Studies (pp. 24–46). Springer.
Makri, M., Hitt, M. A., & Lane, P. J. (2010). Complementary technologies, knowledge relatedness, and invention outcomes in high technology mergers and acquisitions. Strategic Management Journal, 31(6), 602–628. https://doi.org/10.1002/smj.829
Malaviya, P., & Wadhwa, S. (2005). Innovation management in organizational context: An empirical study. Global journal of flexible system management, 6(2), 1–14.
McNamee, R. C. (2013). Can’t see the forest for the leaves: Similarity and distance measures for hierarchical taxonomies with a patent classification example. Research Policy, 42(4), 855–873. https://doi.org/10.1016/j.respol.2013.01.006
Melicher, R. W., & Hempel, G. H. (1971). Differences in financial characteristics between conglomerate mergers and horizontal or vertical mergers. Nebraska Journal of Economics and Business, 10(4), 61–74.
Mind the Bridge (2018). Tech startup M&A 2018 report (p. 1). Retrieved September 22, 2020, from https://mindthebridge.com/mtbcrunchbase-techstartup-mas-2018/ (Accessed 27 November 2021).
Mowery, D. C., Oxley, J. E., & Silverman, B. S. (1996). Strategic alliances and interfirm knowledge transfer. Strategic Management Journal, 17(S2), 77–91. https://doi.org/10.1002/smj.4250171108
Nidec Corporation. (2013) ‘Nidec to Acquire Honda Elesys Co., Ltd’ (released on October 30, 2013). Immediate release. Retrieved November 27, 2021, from https://www.nidec.com/-/media/www-nidec-com/corporate/news/2013/1030-02/131030-02e.pdf.
Nidec Corporation. (2014) ‘Financial results explanatory materials for FY 2013 (released on April 23).’ Retrieved November 27, 2021, from https://www.nidec.com/-/media/www-nidec-com/ir/library/earnings/archive/2014/FY13Q4_1_jp.pdf.
Nidec Corporation. (2019) ‘Fiscal 2018 financial results’ (released on April 24).’ Retrieved September 17, 2022, from 190424_nidec_eng.
Nihon Keizai Shimbun (2019, Jun 11). ‘Anatomy of a big biz: The rules of Nidec's undefeated M&A’ Nikkei Inc. Retrieved November 27, 2021, from https://www.nikkei.com/article/DGKKZO45831160X00C19A6TJ1000/.
Nikkei business daily (1989, May 22). ‘Nidec Acquires Shinano Tokuki - HDD Motor, Market Share 90%.’ Nikkei Inc.
Nooteboom, B. (1999). Innovation, learning and industrial organisation. Cambridge Journal of Economics, 23(2), 127–150. https://doi.org/10.1093/cje/23.2.127
Nooteboom, B., Van Haverbeke, W., Duysters, G., Gilsing, V., & van den Oord, A. (2007). Optimal cognitive distance and absorptive capacity. Research Policy, 36(7), 1016–1034. https://doi.org/10.1016/j.respol.2007.04.003
Olsson, O., & Frey, B. S. (2002). Entrepreneurship as recombinant growth. Small Business Economics, 19, 69–80. https://doi.org/10.1016/j.wpi.2017.10.001
Ornaghi, C. (2009). Mergers and innovation in big pharma. International Journal of Industrial Organization, 27(1), 70–79. https://doi.org/10.1016/j.ijindorg.2008.04.003
Paruchuri, S., Nerkar, A., & Hambrick, D. C. (2006). Acquisition integration and productivity losses in the technical core: Disruption of inventors in acquired companies. Organization Science, 17(5), 545–562. https://doi.org/10.1287/orsc.1060.0207
Petricevic, O., & Teece, D. J. (2019). The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise. Journal of International Business Studies, 50(9), 1487–1512. https://doi.org/10.1057/s41267-019-00269-x
Podolny, J. M., Stuart, T. E., & Hannan, M. T. (1996). Networks, knowledge, and niches: Competition in the worldwide semiconductor industry, 1984–1991. American Journal of Sociology, 102(3), 659–689. https://doi.org/10.1086/230994
Roberts, N., & Stockport, G. J. (2009). Defining strategic flexibility. Global Journal of Flexible Systems Management, 10, 27–32. https://doi.org/10.1007/BF03396553
Rosenkopf, L., & Almeida, P. (2003). Overcoming local search through alliances and mobility. Management Science, 49(6), 751–766. https://doi.org/10.1287/mnsc.49.6.751.16026
Savino, T., Petruzzelli, A. M., & Albino, V. (2017). Search and recombination process to innovate: A review of the empirical evidence and a research agenda. International Journal of Management Reviews, 19(1), 54–75. https://doi.org/10.1111/ijmr.12081
Schary, M. A. (1991). The probability of exit. Rand Journal of Economics, 22(3), 339–353. https://doi.org/10.2307/2601051
Settembre-Blundo, D., González-Sánchez, R., Medina-Salgado, S., & García-Muiña, F. E. (2021). Flexibility and resilience in corporate decision making: a new sustainability-based risk management system in uncertain times. Global Journal of Flexible Systems Management, 22(Suppl 2), S107–S132.
Simon, H., & Sick, N. (2016). Technological distance measures: New perspectives on nearby and far away. Scientometrics, 107(3), 1299–1320. https://doi.org/10.1007/s11192-016-1888-3
Simpson, G. G. (1960). Notes on the measurement of faunal resemblance. American Journal of Science, 258, 300–311.
Stuart, T. E., & Podolny, J. M. (1996). Local search and the evolution of technological capabilities. Strategic Management Journal, 17(S1), 21–38.
Tan, G. N. D. (2021). A business-model approach on strategic flexibility of firms in a shifting value chain: The case of coffee processors in Amadeo and Silang, Cavite, Philippines. Global Journal of Flexible Systems Management, 22(1), 17–28.
Teece, D. J., Rumelt, R., Dosi, G., & Winter, S. (1994). Understanding corporate coherence. Journal of Economic Behavior and Organization, 23(1), 1–30. https://doi.org/10.1016/0167-2681(94)90094-9
vom Stein, N., Sick, N., & Leker, J. (2015). How to measure technological distance in collaborations-The case of electric mobility. Technological Forecasting and Social Change, 97, 154–167. https://doi.org/10.1016/j.techfore.2014.05.001
Wennberg, K., Wiklund, J., DeTienne, D. R., & Cardon, M. S. (2010). Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers. Journal of Business Venturing, 25(4), 361–375. https://doi.org/10.1016/j.jbusvent.2009.01.001
WIPO (2020). ‘Guide to the international patent classification version 2020.’ World intellectual property organization. Retrieved November 27, 2021, from https://www.wipo.int/publications/en/details.jsp?id=4490&plang=EN.
Xiang, X. Y., & Huang, W. C. (2019). Does distance affect the role of nonlocal subsidiaries on cluster firms’ innovation? An empirical investigation on Chinese biotechnology cluster firms. Sustainability, 11(23), 18. https://doi.org/10.3390/su11236725
Funding
No funds, grants, or other support was received, and the authors have no financial or proprietary interests in any material discussed in this article.
Author information
Authors and Affiliations
Contributions
All authors contributed to this study conception and design. Method designing, material preparation, and data collection were performed mainly by K Kaneko under advice of Y Kajikawa. Evaluation and analysis of those and results were performed by K Kaneko and Y Kajikawa. The first draft of the manuscript was written by Katsuyuki Kaneko and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.
Corresponding author
Ethics declarations
Conflict of interest
There is no conflict of interests on this manuscript.
Human or Animal Rights
In addition, this manuscript does not involve human participants and/or animals and informed consent.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Kaneko, K., Kajikawa, Y. Novelty Score and Technological Relatedness Measurement Using Patent Information in Mergers and Acquisitions: Case Study in the Japanese Electric Motor Industry. Glob J Flex Syst Manag 24, 163–177 (2023). https://doi.org/10.1007/s40171-022-00330-z
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s40171-022-00330-z
Keywords
- Electric motor industry
- M&A
- Patent classification
- Startup
- Technological distance
- Technological relatedness