"The technological acquisitions paradox in the beauty industry"

In this paper, Silvia Rita Sedita, Fiorenza Belussi and Ivan De Noni from the Department of Economics and Management of the University of Padova and Roberta Apa from the University of Milan, offer an original perspective of analysis on how technological acquisitions and knowledge recombination shape the innovation trajectories of the acquirer company. It does so by embracing an inductive research design, drawing on a single but very powerful case study, which analyses detailed acquisitions and patent data information of a market leader in the beauty industry, namely L'Oréal.

The purpose is to address the following questions:
(1) Is the innovation trajectory of the acquirer affected by previous acquisitions?
(2) In which direction knowledge recombination from the acquisition is pushed further?
(3) Is technological acquisition more a means for knowledge exploration and radical innovation or, on the contrary, a way for consolidating previous technological specialization?

Their findings show that empirical evidence from a patent data analysis reveals a paradoxical path. On the one hand, acquisitions enable the company to explore new technological spaces; on the other hand, they allow it to reinforce a pre existing technological trajectory, even when the knowledge base of the target is distant from that of the acquirer. Thus, in this case study, the absorption and recombination of knowledge from a variety of domains support specialization more than diversification technology strategies.

Read their "European Journal of Innovation Management" article here