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R&D and M&A: Are cross-border M&A different? An investigation on OECD countries

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  • Bertrand, Olivier
  • Zuniga, Pluvia

Abstract

This paper investigates the incidence of national and cross-border M&A on industrial R&D investment in OECD countries over the period 1990-1999. We use generalized method of moments (GMM) estimation techniques for dynamic panel data and control for market-related and technological determinants of R&D production. Our findings show that the last M&A wave contributed to expand domestic R&D activities, especially in high-technology intensive industries. However, further evidence suggests that cross-border M&A (particularly outward M&A), and not domestic ones, have stimulated more significantly R&D spending. This result gives evidence that anti-competition effects are more likely to affect negatively R&D activities with a domestic M&A. Reversely, efficiency gains might be higher in a cross-border operation, encouraging merging firms to raise their R&D investments.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 24 (2006)
Issue (Month): 2 (March)
Pages: 401-423

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Handle: RePEc:eee:indorg:v:24:y:2006:i:2:p:401-423

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Web page: http://www.elsevier.com/locate/inca/505551

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Cited by:
  1. Chang, C-L. & Chang, S.P. & McAleer, M.J., 2010. "Globalization and Knowledge Spillover: International Direct Investment, Exports and Patents," Econometric Institute Research Papers EI 2010-55, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  2. Stiebale, Joel, 2013. "The impact of cross-border mergers and acquisitions on the acquirers' R&D — Firm-level evidence," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(4), pages 307-321.
  3. Stiebale, Joel, 2014. "Cross-border M&As and innovative activity of acquiring and target firms," DICE Discussion Papers 158, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Ahammad, Mohammad Faisal & Glaister, Keith W., 2013. "The pre-acquisition evaluation of target firms and cross border acquisition performance," International Business Review, Elsevier, vol. 22(5), pages 894-904.
  5. Frey, Rainer & Hussinger, Katrin, 2006. "The role of technology in M&As: a firm-level comparison of cross-border and domestic deals," Discussion Paper Series 1: Economic Studies 2006,45, Deutsche Bundesbank, Research Centre.
  6. Bertrand, Olivier & Hakkala, Katariina & Norbäck, Pehr-Johan, 2007. "Cross-Border Acquisition or Greenfield Entry: Does it Matter for Affiliate R&D?," Working Paper Series, Research Institute of Industrial Economics 693, Research Institute of Industrial Economics.
  7. Joel Stiebale, 2014. "Cross-Border M&As and Innovative Activity of Acquiring and Target Firms," Discussion Papers 2014-06, University of Nottingham, GEP.
  8. Basant, Rakesh & Mishra, Pulak, . "Concentration and Other Determinants of Innovative Efforts in Indian Manufacturing Sector: A Dynamic Panel Data Analysis," IIMA Working Papers WP2013-02-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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