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Acquisitions and their effect on start-up innovation: Stifling or scaling?

Author

Listed:
  • Marius Berger
  • Sara Calligaris
  • Andrea Greppi
  • Dmitri Kirpichev

Abstract

This paper highlights a critical issue in the innovation ecosystem ‒ whether acquisitions of start-ups by incumbent firms foster or stifle innovation. Using a unique firm-level dataset covering 60 countries for the period 2001-2021, the study finds that acquisition targets are highly innovative before the deal, and acquirors are generally innovation-oriented firms. Acquired start-ups are also technologically close to their acquirors and often share the same industries and countries, suggesting potential market synergies. However, post-acquisition, start-up patenting declines without a corresponding increase in the acquiror's innovation activity, raising concerns that such deals may serve anti-competitive purposes rather than enhancing innovation.

Suggested Citation

  • Marius Berger & Sara Calligaris & Andrea Greppi & Dmitri Kirpichev, 2025. "Acquisitions and their effect on start-up innovation: Stifling or scaling?," OECD Science, Technology and Industry Working Papers 2025/10, OECD Publishing.
    • Handle: RePEc:oec:stiaaa:2025/10-en
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    More about this item

    Keywords

    Acquisitions; Innovation; Start Ups;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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