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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
    DOI: 10.1787/b4efd3ab-en
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    Citations

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    Cited by:

    1. Dumont, Michel & Rayp, Glenn, 2025. "Belgian start-ups in Artificial Intelligence," MPRA Paper 126994, University Library of Munich, Germany.
    2. Yassine Lefouili & Leonardo Madio, 2026. "Mergers and investments : where do we stand ?," Post-Print hal-05543677, HAL.
    3. Martinez Cillero Maria & Napolitano Lorenzo & Rentocchini Francesco & Seri Cecilia & Zaurino Elena, 2025. "M&As, Innovation and Superstar Firms," JRC Working Papers on Corporate R&D and Innovation 2025-03, Joint Research Centre.
    4. Jan Malek & Jo Seldeslachts & Reinhilde Veugelers, 2025. "Are M&As spurring or stifling innovation? Evidence from antidiabetic drug development," Working Papers of Department of Management, Strategy and Innovation, Leuven 768578, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.

    More about this item

    Keywords

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    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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