Using mergers and acquisitions to prepare for disruption

Abstract

<p>Industry incumbents often encounter significant troubles in the face of disruptive innovations. These types of innovations erode the existing capabilities and resources of the firm, forcing them to seek out new capabilities outside their own organization in order to remain competitive and survive. Exploitation and exploration, organizational learning strategies utilized to develop incremental and radical innovations, respectively, are considered common drivers for mergers and acquisitions (MA) among firms. MA's enable the firm to obtain new capabilities and competencies in order to respond to the threat of substitution of their current ones by disruptive innovations and new entrants employing them. According to the research, firms' operative actions are more strongly linked to preparing for disruption than strategic ones in the motives for acquisitions.</p>