This paper examines the effect of mergers and acquisitions (M&A) on the profile of merging firms’ inventive activity. We conceive of the inventive process as a recombinant search, whose outcome can be characterized along two complementary dimensions, which define its profile: its depth of impact on subsequent inventions, and its breadth of impact across different scientific domains. The profile of firms’ inventive activity depends on two main factors: the resources available to be recombined and the organizational incentives that guide the recombination process. In turn, these factors significantly depend on the upstream, technological resources available and on firms’ downstream, product-market related assets. Importantly, both of these factors may change in the aftermath of M&A, as their specific institutional features facilitate the exchange and redeployment of upstream and downstream resources. We then discuss how variations in the profile of firms’ inventive activity in the aftermath of an M&A reflect the diversity of upstream and downstream resources redeployed by the M&A deal. We test our hypotheses with a panel of firms from the U.S. medical devices and photographic equipment industry. We find that diversity in merging firms’ downstream resources exerts a positive impact on post-acquisition profile of inventive activities, whereas diversity in knowledge bases does not seem to exert a significant direct effect on the two qualitative dimensions of inventive activity we considered. Yet, technological diversity displays a positive effect in deals characterized by high market relatedness.

M&A and the Profile of Inventive Activity / Valentini, Giovanni; Di Guardo, M. C.. - In: STRATEGIC ORGANIZATION. - ISSN 1476-1270. - 10:4(2012), pp. 384-405. [10.1177/1476127012457980]

M&A and the Profile of Inventive Activity

Valentini, Giovanni;
2012

Abstract

This paper examines the effect of mergers and acquisitions (M&A) on the profile of merging firms’ inventive activity. We conceive of the inventive process as a recombinant search, whose outcome can be characterized along two complementary dimensions, which define its profile: its depth of impact on subsequent inventions, and its breadth of impact across different scientific domains. The profile of firms’ inventive activity depends on two main factors: the resources available to be recombined and the organizational incentives that guide the recombination process. In turn, these factors significantly depend on the upstream, technological resources available and on firms’ downstream, product-market related assets. Importantly, both of these factors may change in the aftermath of M&A, as their specific institutional features facilitate the exchange and redeployment of upstream and downstream resources. We then discuss how variations in the profile of firms’ inventive activity in the aftermath of an M&A reflect the diversity of upstream and downstream resources redeployed by the M&A deal. We test our hypotheses with a panel of firms from the U.S. medical devices and photographic equipment industry. We find that diversity in merging firms’ downstream resources exerts a positive impact on post-acquisition profile of inventive activities, whereas diversity in knowledge bases does not seem to exert a significant direct effect on the two qualitative dimensions of inventive activity we considered. Yet, technological diversity displays a positive effect in deals characterized by high market relatedness.
Mergers and acquisitions, Technological performance, Patents, Complementary assets
M&A and the Profile of Inventive Activity / Valentini, Giovanni; Di Guardo, M. C.. - In: STRATEGIC ORGANIZATION. - ISSN 1476-1270. - 10:4(2012), pp. 384-405. [10.1177/1476127012457980]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/221611
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