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Technological similarity, post-acquisition R&D reorganization, and innovation performance in horizontal acquisitions

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  • Colombo, Massimo G.
  • Rabbiosi, Larissa

Abstract

This paper aims to disentangle the mechanisms through which technological similarity between acquiring and acquired firms influences innovation in horizontal acquisitions. We develop a theoretical model that links technological similarity to: (i) two key aspects of post-acquisition reorganization of acquired R&D operations – the rationalization of the R&D operations and the replacement of the R&D top manager, and (ii) two intermediate effects that are closely associated with the post-acquisition innovation performance of the combined firm – improvements in R&D productivity and disruptions in R&D personnel. We rely on PLS techniques to test our theoretical model using detailed information on 31 horizontal acquisitions in high- and medium-tech industries. Our results indicate that in horizontal acquisitions, technological similarity negatively affects post-acquisition innovation performance and that this negative effect is not mediated by the reorganization of the acquired R&D operations. However, replacing the acquired firm's R&D top manager leads to R&D productivity improvements that positively affect innovation performance.

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  • Colombo, Massimo G. & Rabbiosi, Larissa, 2014. "Technological similarity, post-acquisition R&D reorganization, and innovation performance in horizontal acquisitions," Research Policy, Elsevier, vol. 43(6), pages 1039-1054.
    • Handle: RePEc:eee:respol:v:43:y:2014:i:6:p:1039-1054
    DOI: 10.1016/j.respol.2014.01.013
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    2. Aghasi, Keivan & Colombo, Massimo G. & Rossi-Lamastra, Cristina, 2017. "Acquisitions of small high-tech firms as a mechanism for external knowledge sourcing: The integration-autonomy dilemma," Technological Forecasting and Social Change, Elsevier, vol. 120(C), pages 334-346.
    3. Shafique, Muhammad & Hagedoorn, John, 2022. "Look at U: Technological scope of the acquirer, technological complementarity with the target, and post-acquisition R&D output," Technovation, Elsevier, vol. 115(C).
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    6. Freije, Inmaculada & de la Calle, Alberto & Ugarte, José V., 2022. "Role of supply chain integration in the product innovation capability of servitized manufacturing companies," Technovation, Elsevier, vol. 118(C).
    7. Méndez Ortega, Carles, & Teruel, Mercedes, 2018. "To acquire or not to acquire: Mergers and Acquisitions in the Software Industry," Working Papers 2072/307043, Universitat Rovira i Virgili, Department of Economics.
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    16. Chen, Feiqiong & Meng, Qiaoshuang & Li, Xueying, 2018. "Cross-border post-merger integration and technology innovation: A resource-based view," Economic Modelling, Elsevier, vol. 68(C), pages 229-238.
    17. Gamal Atallah, 2016. "Endogenous Efficiency Gains from Mergers," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 202-235, July.
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    20. Luca Verginer & Federica Parisi & Jeroen van Lidth de Jeude & Massimo Riccaboni, 2022. "The Impact of Acquisitions in the Biotechnology Sector on R&D Productivity," Papers 2203.12968, arXiv.org, revised Jan 2024.
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    23. Santos, David Ferreira Lopes & Basso, Leonardo Fernando Cruz & Kimura, Herbert, 2018. "The trajectory of the ability to innovate and the financial performance of the Brazilian industry," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 258-270.
    24. Christofi, Michael & Vrontis, Demetris & Thrassou, Alkis & Shams, S.M. Riad, 2019. "Triggering technological innovation through cross-border mergers and acquisitions: A micro-foundational perspective," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 148-166.
    25. Chen, Feiqiong & Liu, Huiqian & Ge, Yuhao, 2021. "How does integration affect industrial innovation through networks in technology-sourcing overseas M&A? A comparison between China and the US," Journal of Business Research, Elsevier, vol. 122(C), pages 281-292.

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