External technology acquisition: a double-edged sword

Firms are known to actively utilise external technology acquisition to update and extend theirtechnological knowledge base. Although external technology acquisition has variousadvantages, it should be considered as a double-edged sword as it also has some inherentnegative aspects. This study examines the role of external technology acquisition toinvestigate whether external technology acquisition is complementary or substitutive tointernal R&D activities in creating innovation. The results show that external technologyacquisition has an inverted U-shaped relationship with subsequent technology innovationperformance, and that is not complementary to internal R&D activities. We thus confirmthat external technology acquisition has to be seen as a double-edged sword and thatmanagers need to be aware of the potentially negative effects of strong diversity of thefirm’s external technology acquisition sources on internal R&D and subsequent innovationperformance.