Mergers and acquisitions: Their effect on the innovative performance of companies in high-tech industries

This study examines the post-M&A innovative performance of acquiring firms in four major high-tech sectors. Non-technological M&As appear to have a negative impact on the acquiring firm's post-M&A innovative performance. With respect to technological M&As, a large relative size...

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Bibliographic Details
Published in:Research policy 2006-06, Vol.35 (5), p.642-654
Main Authors: Cloodt, Myriam, Hagedoorn, John, Van Kranenburg, Hans
Format: Article
Language:English
Subjects:
Acquisitions & mergers
High tech industries
Impact analysis
Innovations
Innovative performance
M&As
Studies
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Summary:This study examines the post-M&A innovative performance of acquiring firms in four major high-tech sectors. Non-technological M&As appear to have a negative impact on the acquiring firm's post-M&A innovative performance. With respect to technological M&As, a large relative size of the acquired knowledge base reduces the innovative performance of the acquiring firm. The absolute size of the acquired knowledge base only has a positive effect during the first couple of years after which the effect turns around and we see a negative effect on the innovative performance of the acquiring firm. The relatedness between the acquired and acquiring firms’ knowledge bases has a curvilinear impact on the acquiring firm's innovative performance. This indicates that companies should target M&A ‘partners’ that are neither too unrelated nor too similar in terms of their knowledge base.
ISSN:0048-7333
1873-7625
DOI:10.1016/j.respol.2006.02.007