Mergers & acquisitions and innovation performance in the telecommunications equipment industry

The worldwide telecommunications equipment industry has experienced an enormous number of mergers and acquisitions (M&A). This article examines the innovation determinants of M&A activity and the consequences of M&A on technological potential and innovation performance. We extend the res...

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Bibliographic Details
Published in:Industrial and corporate change 2012-04, Vol.21 (2), p.277-314
Main Authors: Gantumur, T., Stephan, A.
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Communications equipment
R&D
Research & development
Sourcing
Studies
Technological change
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Summary:The worldwide telecommunications equipment industry has experienced an enormous number of mergers and acquisitions (M&A). This article examines the innovation determinants of M&A activity and the consequences of M&A on technological potential and innovation performance. We extend the resource-based theory in elucidating external technology sourcing and provide empirical evidence on the keen reliance of the equipment firms on M&A as a technology sourcing strategy for the period 1988-2004. Employing the matching propensity score approach, this study provides evidence that mergers realize a significant growth in the innovation performance of firms. The postmerger innovation performance, in turn, is driven by both the prior success of in-house R&D commitment and the deterioration of internal technological capabilities at acquiring firms. [PUBLICATION ABSTRACT]
ISSN:0960-6491
1464-3650
DOI:10.1093/icc/dtr052