Choosing Equity Stakes in Technology-Sourcing Relationships: An Integrative Framework

Choosing Equity Stakes in Technology-Sourcing Relationships: An Integrative Framework Spring 2004 | V ol.46, No.3 | REPRINT SERIES California Review Management Choosing Equity Stakes in Technology Sourcing Relationships: An Integrative Framework Prashant Kale Phanish Puranam © 2004 by The Regents of the University of California Choosing Equity Stakes in Technology-Sourcing Relationships: AN INTEGRATIVE FRAMEWORK Prashant Kale Phanish Puranam echnology-sourcing relationships between firms involve one firm seeking access to another firm’s technology as embodied in its prod- ucts, services, or capabilities. Studies on technology-intensive indus- T tries reveal the widespread use of such relationships. They span a continuum, ranging from non-equity arrangements at one end to complete ownership at the other. For instance, a pharmaceutical firm such as GlaxoSmithKline could have a non-equity partnership to in-license a molecule from its technology partner, or a hardware firm such as Cisco Systems could acquire a start-up firm for its product development team. Although both are examples of technology-sourcing relationships, they vary in terms of the level of equity that the technology-sourcing company holds in its partner. Managers routinely use technology-sourcing relationships in industries where the pace of innovation is rapid, but numerous studies show that such arrangements have significantly high failure rates. Given this situation, prac- titioners and academics have devoted http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png California Management Review SAGE

Choosing Equity Stakes in Technology-Sourcing Relationships: An Integrative Framework

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Publisher
SAGE Publications
Copyright
© 2004 The Regents of the University of California
ISSN
0008-1256
eISSN
2162-8564
D.O.I.
10.2307/41166222
Publisher site
See Article on Publisher Site

Abstract

Spring 2004 | V ol.46, No.3 | REPRINT SERIES California Review Management Choosing Equity Stakes in Technology Sourcing Relationships: An Integrative Framework Prashant Kale Phanish Puranam © 2004 by The Regents of the University of California Choosing Equity Stakes in Technology-Sourcing Relationships: AN INTEGRATIVE FRAMEWORK Prashant Kale Phanish Puranam echnology-sourcing relationships between firms involve one firm seeking access to another firm’s technology as embodied in its prod- ucts, services, or capabilities. Studies on technology-intensive indus- T tries reveal the widespread use of such relationships. They span a continuum, ranging from non-equity arrangements at one end to complete ownership at the other. For instance, a pharmaceutical firm such as GlaxoSmithKline could have a non-equity partnership to in-license a molecule from its technology partner, or a hardware firm such as Cisco Systems could acquire a start-up firm for its product development team. Although both are examples of technology-sourcing relationships, they vary in terms of the level of equity that the technology-sourcing company holds in its partner. Managers routinely use technology-sourcing relationships in industries where the pace of innovation is rapid, but numerous studies show that such arrangements have significantly high failure rates. Given this situation, prac- titioners and academics have devoted

Journal

California Management ReviewSAGE

Published: Apr 1, 2004

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