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Do high technology acquirers become more innovative?

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  • Desyllas, Panos
  • Hughes, Alan
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    Abstract

    Drawing on organizational, managerial and financial theories, we explore whether acquirers become more innovative and the factors that can enhance their absorptive and financial capacity to benefit from acquisition. Over a 3-year post-acquisition window, our sample of 2624 high technology US acquisitions records early reverses followed by positive R&D-intensity changes and insignificant R&D productivity changes. Controlling for acquisition endogeneity and deal-specific effects, significant acquirer characteristic effects emerge. In related acquisitions, a large knowledge base tends to increase R&D productivity, consistent with an enhanced capacity to select and absorb targets. In unrelated acquisitions, however, this relationship becomes increasingly negative as knowledge base concentration increases, consistent with arguments for an impaired peripheral vision and core rigidities. High leverage levels raise R&D productivity gains, consistent with enhanced monitoring induced efficiency. However, high leverage growth reduces R&D-intensity, consistent with increased financial constraints and short-termism.

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    Bibliographic Info

    Article provided by Elsevier in its journal Research Policy.

    Volume (Year): 39 (2010)
    Issue (Month): 8 (October)
    Pages: 1105-1121

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    Handle: RePEc:eee:respol:v:39:y:2010:i:8:p:1105-1121

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    Web page: http://www.elsevier.com/locate/respol

    Related research

    Keywords: Acquisitions Innovation Propensity score;

    References

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    Citations

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    Cited by:
    1. Schön, Benjamin & Pyka, Andreas, 2013. "The success factors of technology-sourcing through mergers & acquisitions: An intuitive meta-analysis," FZID Discussion Papers 78-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    2. Ruth, Derek & Iyer, Dinesh N. & Sharp, Barton M., 2013. "Motivation and ability in the decision to acquire," Journal of Business Research, Elsevier, vol. 66(11), pages 2287-2293.
    3. Marcela Miozzo & Lori DiVito & Panos Desyllas, 2011. "Cross-border acquisitions of science-based firms: Their effect on innovation in the acquired firm and the local science," DRUID Working Papers 11-17, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    4. Florian Szücs, 2013. "M&A and R&D: Asymmetric Effects on Acquirers and Targets?," Discussion Papers of DIW Berlin 1331, DIW Berlin, German Institute for Economic Research.
    5. Humphery-Jenner, M., 2011. "Internal and External Discipline Following Securities Class Actions," Discussion Paper 2011-044, Tilburg University, Center for Economic Research.
    6. 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, vol. 31(4), pages 307-321.
    7. Colombo, Massimo G. & Rabbiosi, Larissa, 2014. "Technological similarity, post-acquisition R&D reorganization, and innovation performance in horizontal acquisitions," Research Policy, Elsevier, vol. 43(6), pages 1039-1054.
    8. Joel Stiebale, 2014. "Cross-Border M&As and Innovative Activity of Acquiring and Target Firms," Discussion Papers 2014-06, University of Nottingham, GEP.
    9. Effelsberg, Martin, 2011. "Wissenstransfer in Innovationskooperationen: Ergebnisse einer Literaturstudie zur "Absorptive Capacity"," Arbeitspapiere 107, Westfälsche Wilhelms-Universität Münster (WWU), Institut für Genossenschaftswesen.
    10. Wagner, Marcus, 2011. "To explore or to exploit? An empirical investigation of acquisitions by large incumbents," Research Policy, Elsevier, vol. 40(9), pages 1217-1225.

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