Shopping for digital innovation— The role of startup acquisitions for digital innovation in incumbents

Incumbent firms increasingly acquire startups for digital innovation. Startups excel at sensing market opportunities, and incumbents provide valuable resources and knowledge to seize these opportunities in digital business models. While extant research has explored the benefits resulting from such acquisitions, the reasons and strategic motivations for startup acquisitions remain unclear. This paper seeks to explore the motivations behind such acquisitions and their impact on digital business strategies. Drawing on a qualitative analysis of 124 startup acquisitions by retail incumbents, we identify six reasons incumbents acquire digital startups and two strategic goals pursued through these acquisitions. They illustrate how and why the acquisitions contribute to the incumbents' strategic goals for digital innovation and growth, and propose three testable hypotheses to deepen our understanding of this relationship. This study provides valuable insights for incumbents seeking to collaborate with startups and identifies startups suited for acquisition or collaboration.     «

Incumbent firms increasingly acquire startups for digital innovation. Startups excel at sensing market opportunities, and incumbents provide valuable resources and knowledge to seize these opportunities in digital business models. While extant research has explored the benefits resulting from such acquisitions, the reasons and strategic motivations for startup acquisitions remain unclear. This paper seeks to explore the motivations behind such acquisitions and their impact on digital business st...     »