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Inventors? Response to Firm Acquisitions

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  • Hussinger, Katrin

Abstract

Mergers and acquisitions (M&As) constitute a disruption to the working environment of the inventive labor force of the acquired company. If inventors would respond with a decline of their patent productivity or departure from the firm this can be detrimental to the innovative process within the merged entity and can be contradictory to the aims of the firm acquisition. This paper provides empirical evidence on post-merger mobility and productivity of 673 inventors employed by European acquisition targets in the years 2000 and 2001. The empirical results show that 1.) the most productive and experienced individuals stay with the merged entity; 2.) inventors that left the acquired firm are less productive in post-merger years than those that stayed with the merged entity; 3.) M&As trigger inventor mobility, but do not lead to a decline in patent productivity if compared to a control group of inventors that have not been involved in a firm acquisition.

Suggested Citation

  • Hussinger, Katrin, 2007. "Inventors? Response to Firm Acquisitions," ZEW Discussion Papers 07-078, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:6898
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    References listed on IDEAS

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    1. Levin, Sharon G & Stephan, Paula E, 1991. "Research Productivity over the Life Cycle: Evidence for Academic Scientists," American Economic Review, American Economic Association, vol. 81(1), pages 114-132, March.
    2. 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, pages 195-220.
    3. Manuel Trajtenberg & Gil Shiff & Ran Melamed, 2009. "The "Names Game": Harnessing Inventors, Patent Data for Economic Research," Annals of Economics and Statistics, GENES, issue 93-94, pages 67-77.
    4. Ornaghi, Carmine, 2006. "Mergers and innovation: the case of the pharmaceutical industry," Discussion Paper Series In Economics And Econometrics 0605, Economics Division, School of Social Sciences, University of Southampton.
    5. Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998. "Patent Breadth, Patent Life, and the Pace of Technological Progress," Journal of Economics & Management Strategy, Wiley Blackwell, pages 1-32.
    6. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-748, September.
    7. Frey, Rainer & Hussinger, Katrin, 2006. "The Role of Technology in M&As: A Firm Level Comparison of Cross-Border and Domestic Deals," ZEW Discussion Papers 06-069, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Hoisl, Karin, 2006. "Does Mobility Increase the Productivity of Inventors?," Discussion Papers in Business Administration 2023, University of Munich, Munich School of Management.
    9. Dosi, Giovanni, 1982. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, pages 147-162.
    10. Ornaghi, Carmine, 2006. "Mergers and innovation: the case of the pharmaceutical industry," Discussion Paper Series In Economics And Econometrics 605, Economics Division, School of Social Sciences, University of Southampton.
    11. Dosi, Giovanni, 1993. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, pages 102-103.
    12. Karin Hoisl, 2009. "Does mobility increase the productivity of inventors?," The Journal of Technology Transfer, Springer, vol. 34(2), pages 212-225, April.
    13. Hussinger, Katrin & Grimpe, Christoph, 2007. "Firm Acquisitions and Technology Strategy: Corporate versus Private Equity Investors," ZEW Discussion Papers 07-066, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:

    1. Lougui, Monia & Broström, Anders, 2016. "New firm formation in the wake of mergers and acquisitions: Are employees pushed or pulled into entrepreneurship?," Working Paper Series in Economics and Institutions of Innovation 427, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

    More about this item

    Keywords

    M&As; inventor mobility and productivity;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • 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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