Research Summary: Using novel data on 1,211 public firms, I show that innovative organizations exposed to environments with lower M&A activity just after their initial public offering (IPO) respond by engaging in fewer technological acquisitions and more internal research. Interestingly, this adaptive reaction becomes inertial shortly after IPO and persists well into maturity. The study advances our understanding of how the environment shapes heterogeneity and capabilities through its impact on firm structure and accumulation of resources. I discuss how these results can help bridge inertial versus adaptive perspectives in the study of organizations, by documenting an instance when the two sequentially interact. Managerial Summary: There has been much evidence to suggest that mature innovative firms tend to have a preferred mode for accessing new technology: either by making it internally or buying it from other firms. However, we do not know very well how firms develop these preferences. This paper investigates how financial market conditions affect young firms around the time of going public, and shows that recently IPO’d firms that experience depressed M&A markets go on to rely less on acquisitions when they mature. Conversely, these firms seem to develop more technologies in-house. These findings suggest that some early events in a firm’s life may have long-lasting consequences, which may be difficult to change later.