Acquihires by SMEs as a strategic response to industry digitalization

As digital technologies pervade established industries, their constituent firms are likely to become technologically dependent upon industry outsiders due to increased mobility of strategic resources and porosity of inter-industry boundaries. We conceptually study this global phenomenon and argue that firms in established industries mitigate their cross-industry resource dependence arising from digitalization via corporate venturing. Unlike their larger counterparts, small and medium enterprises (SMEs) in established industries may pursue alternatives to traditional corporate venturing practices such as mergers, acquisitions, joint ventures, or corporate venture capital investments. Specifically, we propose that SMEs may use acquihiring as a response to mitigate their technological dependence on digital outsiders. This study conceptualizes the “who, what, when, where, why, and how” of acquihiring by SMEs in established industries. In doing so, it contributes to the literature on cross-industry M&A strategies for SMEs in the digital era, entrepreneurial exits, and novel modes of corporate venturing.