Do mergers of potentially dominant firms foster innovation? An empirical analysis for the manufacturing sector
AbstractWe investigate the effects of M&A on innovation in the specific context of potential or realized market dominance. Authorities are challenged by balancing both detrimental and beneficial effects of mergers on innovation, especially when a merger threatens to result in market dominance, while firms would wish to uncover all the potential benefits arising from M&A. The effects of M&As on innovation have been tested on a panel dataset, constructed from the Dutch Community Innovation Survey and the Dutch Business Register, including around 1000 manufacturing companies. We have adopted a comprehensive approach, taking into consideration three dimensions of innovation: innovation inputs, innovation outputs and efficiency. The results show that M&As performed in the previous 3-5 years have a positive and significant effect on innovation except R&D expenses and innovation efficiencies. The results also suggest that technological regimes are critical to understanding the patterns of innovation.
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Bibliographic InfoPaper provided by Utrecht School of Economics in its series Working Papers with number 07-20.
Length: 27 pages
Date of creation: 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-24 (All new papers)
- NEP-BEC-2007-09-24 (Business Economics)
- NEP-COM-2007-09-24 (Industrial Competition)
- NEP-CSE-2007-09-24 (Economics of Strategic Management)
- NEP-EFF-2007-09-24 (Efficiency & Productivity)
- NEP-IND-2007-09-24 (Industrial Organization)
- NEP-INO-2007-09-24 (Innovation)
- NEP-IPR-2007-09-24 (Intellectual Property Rights)
- NEP-MIC-2007-09-24 (Microeconomics)
- NEP-TID-2007-09-24 (Technology & Industrial Dynamics)
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