Mergers & Acquisitions and Innovation Performance in the Telecommunications Equipment Industry
AbstractIn response to global market forces such as deregulation and globalization, technological change and digital convergence, the telecommunications in the 1990s witnessed an enormous worldwide round of Mergers & Acquisitions (M&A). Given both M&A and Innovation a major means of today’s competitive strategy development, this paper examines the innovation determinants of M&A activity and the consequences of M&A transactions on the technological potential and the innovation performance. We examine the telecommunications equipment industry over the period 1988-2002 using a newly constructed data set with firm-level data on M&A and innovation activity as well as financial characteristics. By implementing a counterfactual technique based on a matching propensity score procedure, the analysis not only controls for merger endogeneity and ex-ante observable firms characteristics but also takes account of unobserved heterogeneity. The study provides evidence that M&A realize significantly positive changes to the firm’s post-merger innovation performance. The effects of M&A on innovation performance are in turn driven by both the success in Research and Development (R&D) activity and the deterioration in internal technological capabilities at acquiring firms prior to a merger.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2007-051.
Length: 37 pages
Date of creation: Aug 2007
Date of revision:
Mergers & Acquisitions; Innovation Performance; Telecommunications Equipment Industry.;
Other versions of this item:
- Tseveen Gantumur & Andreas Stephan, 2012. "Mergers & acquisitions and innovation performance in the telecommunications equipment industry," Industrial and Corporate Change, Oxford University Press, vol. 21(2), pages 277-314, April.
- Gantumur, Tseveen & Stephan, Andreas, 2007. "Mergers & Acquisitions And Innovation Performance In The Telecommunications Equipment Industry," Working Paper Series in Economics and Institutions of Innovation 111, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Tseveen Gantumur & Andreas Stephan, 2007. "Mergers & Acquisitions and Innovation Performance in the Telecommunications Equipment Industry," Discussion Papers of DIW Berlin 728, DIW Berlin, German Institute for Economic Research.
- Gantumur, Tseveen & Stephan, Andreas, 2011. "Mergers & Acquisitions and Innovation Performance in the Telecommunications Equipment Industry," JIBS Working Papers 2011-5, Jönköping International Business School.
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-COM-2007-08-27 (Industrial Competition)
- NEP-CSE-2007-08-27 (Economics of Strategic Management)
- NEP-IND-2007-08-27 (Industrial Organization)
- NEP-INO-2007-08-27 (Innovation)
- NEP-MIC-2007-08-27 (Microeconomics)
- NEP-TID-2007-08-27 (Technology & Industrial Dynamics)
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- Volodymyr Perederiy, 2007. "Kombinierte Liquiditäts- und Solvenzkennzahlen und ein darauf basierendes Insolvenzprognosemodell für deutsche GmbHs," SFB 649 Discussion Papers SFB649DP2007-060, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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