Entrepreneurial acquisitions, open innovation and UK high growth SMEs

This paper examines the dynamics of entrepreneurial acquisitions undertaken by UK high growth small and medium enterprises (SMEs). While entrepreneurial acquisitions are increasingly deployed by SMEs, little is known about their antecedents, motivational drivers and organisational outcomes. Drawing on detailed case study evidence from Scotland, the key factor found to be driving these acquisitions was the desire to augment and exploit technological complementarities between the acquiring and acquired firms. Acquisition can therefore be conceptualised as an advanced stage of the outside-in ‘open innovation’ strategies proactively used within these innovative SMEs. Firms executing this strategy typically have an acute propensity for risk, a desire for close customer engagement, effective business models and strong external orientation. The work suggests that greater attention should be paid within M&A theory to the dynamics of these kind of smaller scale entrepreneurial acquisitions.