Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 44: The Theory of the Firm and the Markets for Strategic Acquisitions

Gunnar Eliasson () and Åsa Eliasson
Additional contact information
Gunnar Eliasson: Royal Institute of Technology, Postal: Infrastructure, SE-100 44 Stockholm, Sweden
Åsa Eliasson: VitiGen AG, Postal: Siebeldingen, Germany

Abstract: Five problems are addressed: (1) the role of competent actors in the venture capital and exit markets supporting the industrialization of winning technologies in small innovative firms, (2) the competence of the large firm to integrate large-scale operational efficiency with small-scale innovative capability through distributed development work and integrated production and (3) the importance of viable markets for strategic acquisitions, both in making this possible and in allowing a flexible choice for the small firm between growing aggressively on its own through own acquisitions, or being acquired strategically itself. We (4) find that the less developed markets in continental Europe may be a disadvantage compared to the US in ushering in a future New Economy. We finally (5) discuss what becomes of the Coasian theory of the firm when production is constantly outsourced in, or insourced from the market as the relative efficiency of coordination through management and over the market changes.

Keywords: competence bloc; experimentally organized economy; heterogeneity; Marshallian industrial district receiver competence; strategic acquisitions

JEL-codes: G24; G34; L16; L23; O33

33 pages, May 24, 2004

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