WHAT DO ACQUIRING FIRMS DO WITH ACQUIRED KNOWLEDGE? THE IMPLICATION OF EXPLOITATION AND EXPLORATION FOR KNOWLEDGE LEVERAGE BEHAVIORS IN TECHNOLOGY ACQUISITIONS

Obtaining knowledge through acquisitions is an important avenue with which firms can build a competitive advantage. However, to fully exploit the value associated with technology acquisitions, acquiring firms must effectively leverage knowledge acquired from these acquisitions. This study examines what firms do with acquired knowledge and how they create values by utilizing acquired knowledge in post acquisition. In particular, this paper identifies two distinct types of knowledge leverage behaviors by acquiring firms, knowledge integration and knowledge detachment, and it investigates how the previous innovation patterns of acquiring firms (exploitation vs. exploration) influence the modes of knowledge leverage behaviors in post acquisition. We find that exploration of acquiring firms tend to separate acquired knowledge of target firms from their prior knowledge so as to generate innovation in post acquisition. In addition, this paper finds that knowledge relatedness between acquiring and target firms moderates the relationship between previous innovation pattern of acquiring firms and their knowledge leverage mode.