Post-acquisition integrative invention and differences in the quality of target and acquirer technological capabilities

Technological acquisitions have taken a prominent role in firm innovation strategies though research suggests that target inventors suffer productivity declines post-acquisition. This especially concerns acquirers that seek to integrate the target’s capabilities with their own because it requires building a collaborative relationship between the target and acquirer knowledge workers. Unfortunately, target workers suffer inertness in developing new post-acquisition relationships and productivity losses when acquired by more technologically capable acquirers. We argue that differences in the quality of the target’s and the acquirer’s technological capabilities negatively affect their ability to develop a productive, collaborative relationship, which we measure by patents jointly developed by the target and acquirer inventors. Additionally, we argue that integration can attenuate the negative effect of quality differences in technological capabilities by providing an environment conducive to interaction, serendipitous discovery, and the re-evaluation of the quality of each other’s technological capabilities.