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How Do Innovations Affect Mergers and Acquisitions—Evidence from Finland?

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Author Info

  • Eero Lehto

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  • Olavi Lehtoranta
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    Abstract

    We have analysed whether innovations in a firm's possession increase a firm's propensity to buy other firms and, on the other hand, whether this possession attracts other firms so that they buy the firm concerned. Our results suggest that in the heavily investing processing industries high entry costs and the incumbency of all the firms make more efficient firms—the possessors of innovations—acquire inefficient firms. On the other hand, in the non-processing industries innovators become, according to our findings, easily purchased by the other firms whose strength obviously lies in other areas than in innovative activity. Copyright Springer Science + Business Media, Inc. 2006

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    File URL: http://hdl.handle.net/10.1007/s10842-005-5647-z
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Industry, Competition and Trade.

    Volume (Year): 6 (2006)
    Issue (Month): 1 (March)
    Pages: 5-25

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    Handle: RePEc:kap:jincot:v:6:y:2006:i:1:p:5-25

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    Web page: http://springerlink.metapress.com/link.asp?id=105724

    Related research

    Keywords: Innovations; mergers; acquisitions;

    References

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    1. Choi, Jay Pil, 1996. "Technology Transfer with Moral Hazard," Economics Series 22, Institute for Advanced Studies.
    2. Granstrand, Ove & Sjölander, Sören, 1990. "The Acquisition of Technology and Small Firms by Large Firms," Working Paper Series 213, Research Institute of Industrial Economics.
    3. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
    4. Granstrand, Ove & Sjolander, Soren, 1990. "The acquisition of technology and small firms by large firms," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 367-386, June.
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    Cited by:
    1. Erik Lehmann & Thorsten Braun & Sebastian Krispin, 2012. "Entrepreneurial human capital, complementary assets, and takeover probability," The Journal of Technology Transfer, Springer, vol. 37(5), pages 589-608, October.
    2. Henkel, Joachim & Rønde, Thomas & Wagner, Marcus, 2010. "And the Winner Is--Acquired: Entrepreneurship as a Contest with Acquisition as the Prize," CEPR Discussion Papers 8147, C.E.P.R. Discussion Papers.

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