Acquisition and diffusion of technology innovation

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Ransbotham, Samuel B., III
Mitra, Sabyasachi
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In the first essay, I examine value created through external acquisition of nascent technology innovation. External acquisition of new technology is a growing trend in the innovation process, particularly in high technology industries, as firms complement internal efforts with aggressive acquisition programs. Yet, despite its importance, there is little empirical research on the timing of acquisition decisions in high technology environments. I examine the impact of target age on value created for the buyer. Applying an event study methodology to technology acquisitions in the telecommunications industry from 1995 to 2001, empirical evidence supports acquiring early in the face of uncertainty. The equity markets reward the acquisition of younger companies. In sharp contrast to the first essay, the second essay examines the diffusion of negative innovations. While destruction can be creative, certainly not all destruction is creative. Some is just destruction. I examine two fundamentally different paths to information security compromise an opportunistic path and a deliberate path. Through a grounded approach using interviews, observations, and secondary data, I advance a model of the information security compromise process. Using one year of alert data from intrusion detection devices, empirical analysis provides evidence that these paths follow two distinct, but interrelated diffusion patterns. Although distinct, I find empirical evidence that these paths both converge and escalate. Beyond the specific findings in the Internet security context, the study leads to a richer understanding of the diffusion of negative technological innovation. In the third essay, I build on the second essay by examining the effectiveness of reward-based mechanisms in restricting the diffusion of negative innovations. Concerns have been raised that reward-based private infomediaries introduce information leakage which decreases social welfare. Using two years of alert data, I find evidence of their effectiveness despite any leakage which may be occurring. While reward-based disclosures are just as likely to be exploited as non-reward-baed disclosures, exploits from reward-based disclosures are less likely to occur in the first week after disclosure. Further the overall volume of alerts is reduced. This research helps determine the effectiveness of reward mechanisms and provides guidance for security policy makers.
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