The impact of M&A on the R&D process. An empirical analysis of the role of tehcnological and market relatedness
AbstractUsing information on 31 in-depth cases of individual M&A deals, we show that technological and market-relatedness between M&A partners distinctly affects the inputs, outputs, performance and organisational structure of the R&D process. While the findings in the literature on the effect of M&A on R&D are quite mixed, we can sharpen results by analysing data at the level of the R&D process. This comes at the price of a smaller sample and more qualitative data, for which caution in the interpretation is necessary. M&A between partners with ex-ante complementary technologies result in more active R&D performers after the M&A. In sharp contrast, when merged entities are technologically substitutive, they significantly decrease their R&D level after the M&A. Moreover, R&D efficiency increases more prominently when merged entities are technologically complementary than when they are substitutive. These two findings on the R&D level and the performance support the scope economy effect of M&A, on the one hand, and reject the scale economy effect of M&A, on the other. Next, for cases in which partners were active in the same technological fields before the M&A, the reduction of R&D is more prominent, while the R&D efficiency gain is smaller if merged entities were rivals in the product market prior to their merger than if they were non-rival. This suggests that rival firms reap little technology gains from mergers.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/85584.
Date of creation: Mar 2005
Date of revision:
Publication status: Published in Research Policy (2005-03) v.34, p.195-220
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Web page: http://www.kuleuven.be
Data; Economy; Efficiency; Field; Firms; Information; M&A; Market; Market relatedness; Mergers; Performance; Processes; Product; R&D; Scale and scope; Structure; Technology; Technology-relatedness;
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- Cassiman, Bruno & Colombo, Massimo G. & Garrone, Paola & Veugelers, Reinhilde, 2005. "The impact of M&A on the R&D process: An empirical analysis of the role of technological- and market-relatedness," Research Policy, Elsevier, vol. 34(2), pages 195-220, March.
- Cassiman, B & Colombo, M & Garrone, P & Veugelers, Reinhilde, 2003. "The impact of M&A on the R&D process. An empirical analysis of the role of technological and market relatedness," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/118363, Katholieke Universiteit Leuven.
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