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
California Management Review – SAGE
Published: Apr 1, 2004
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