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Productivity, Innovation Spillovers, and Mergers: Evidence from a Panel of U.S. Firms

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  • Entezarkheir Mahdiyeh

    (Department of Economics, Huron at University of Western Ontario, 1349 Western Rd, London, ON N6G 1H3, Canada)

  • Sen Anindya

    (Department of Economics, University of Waterloo, 200 University Ave. West, Waterloo, ON N2L 3G1, Canada)

Abstract

We investigate the impact of mergers and product innovation on labour productivity through a unique panel data set of roughly 2000 publicly traded U.S. manufacturing firms from 1980 to 2003. OLS estimates reveal that mergers interacted with citation-weighted patents are significantly correlated with increases in labour productivity. OLS and IV estimates of citation-weighted patent stocks with respect to firm-specific labour productivity are positive and consistently significant. Further, mergers are significantly correlated with a rise in citation-weighted patent stocks and research and development (R&D) spending. In tandem, our findings suggest that larger firms resulting from mergers spend more on innovation, which results in higher quality patents, and increased labour productivity.

Suggested Citation

  • Entezarkheir Mahdiyeh & Sen Anindya, 2023. "Productivity, Innovation Spillovers, and Mergers: Evidence from a Panel of U.S. Firms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(2), pages 397-422, April.
    • Handle: RePEc:bpj:bejeap:v:23:y:2023:i:2:p:397-422:n:5
    DOI: 10.1515/bejeap-2021-0440
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    Keywords

    labour productivity; employee value; innovation; patents; mergers;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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