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Externally Sourcing Research through Acquisition: Should it Supplement or Substitute for Internal Research?

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  • Karen Ruckman

Abstract

A technology motivated acquirer can use a target's technology to supplement or substitute for its own internal research. The impact of the extent of integration on post-acquisition performance is further complicated by the effects of pre-acquisition research relatedness between the target and acquirer. This study determines the integration and research relatedness of acquisitions in the US biopharmaceutical industry during the 1990s and then examines their impact on profitability. The results indicate that related research that supplements (or is integrated into) internal research increases post-acquisition profits as does unrelated research which substitutes for (or is kept separate from) internal research.

Suggested Citation

  • Karen Ruckman, 2008. "Externally Sourcing Research through Acquisition: Should it Supplement or Substitute for Internal Research?," Industry and Innovation, Taylor & Francis Journals, vol. 15(6), pages 627-645.
  • Handle: RePEc:taf:indinn:v:15:y:2008:i:6:p:627-645
    DOI: 10.1080/13662710802550976
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