We investigate the effect of M&A on the innovation strategy of merging firms’ competitors. We argue that while merging firms may reduce their commitment to innovation in the period following the deal because of an increased focus on short-term M&A implementation and financial considerations, rival firms can on the contrary exploit this moment of inertia to broaden their research and outperform rivals, producing more impactful innovations. We suggest merging firms’ competitors increase the breadth of their technological search, even though this may be risky: If their attempts do not achieve the desired results, the consequences are relatively less harmful, as also their competitors are slowing down their innovation pace in the aftermath of M&A. Using data from European firms in the pharmaceutical industry, we find evidence consistent with these hypotheses.

The impact of M&A on rivals' innovation strategy / Valentini, Giovanni. - In: LONG RANGE PLANNING. - ISSN 1873-1872. - 49:2(2016), pp. 241-249. [10.1016/j.lrp.2015.02.007]

The impact of M&A on rivals' innovation strategy

Valentini, Giovanni
2016

Abstract

We investigate the effect of M&A on the innovation strategy of merging firms’ competitors. We argue that while merging firms may reduce their commitment to innovation in the period following the deal because of an increased focus on short-term M&A implementation and financial considerations, rival firms can on the contrary exploit this moment of inertia to broaden their research and outperform rivals, producing more impactful innovations. We suggest merging firms’ competitors increase the breadth of their technological search, even though this may be risky: If their attempts do not achieve the desired results, the consequences are relatively less harmful, as also their competitors are slowing down their innovation pace in the aftermath of M&A. Using data from European firms in the pharmaceutical industry, we find evidence consistent with these hypotheses.
2016
M&A, innovation
The impact of M&A on rivals' innovation strategy / Valentini, Giovanni. - In: LONG RANGE PLANNING. - ISSN 1873-1872. - 49:2(2016), pp. 241-249. [10.1016/j.lrp.2015.02.007]
File in questo prodotto:
File Dimensione Formato  
LRP2016.pdf

Solo gestori archivio

Tipologia: Versione dell'editore
Licenza: Tutti i diritti riservati
Dimensione 252.46 kB
Formato Adobe PDF
252.46 kB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/221629
Citazioni
  • Scopus 19
  • ???jsp.display-item.citation.isi??? 17
  • OpenAlex ND
social impact