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Acquisition Integration and Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies

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  • Srikanth Paruchuri

    (Warrington College of Business, University of Florida, 211E Stuzin Hall, Gainesville, Florida 32611)

  • Atul Nerkar

    (Kenan-Flagler Business School, University of North Carolina at Chapel Hill, CB 3490, McColl 4608, Chapel Hill, North Carolina 27599)

  • Donald C. Hambrick

    (Smeal College of Business Administration, Pennsylvania State University, 414 Business Building, University Park, Pennsylvania 16802)

Abstract

Acquisition integration is a pivotal factor in determining whether the objectives of an acquisition are achieved. In this paper, we hypothesize that the productivity of corporate scientists of acquired companies is generally impaired by integration, but that some scientists experience more disruption than others. In particular, acquisition integration will be most disruptive, leading to the most severe productivity drops, for those inventors who have lost the most social status and centrality in the combined entity. Drawing from prior literatures on the knowledge-based view of the firm, and on mergers and acquisitions, we develop hypotheses about a concise set of conditions that will lead to substantial performance drops for acquired technical personnel. We test our hypotheses, using patent application data, on a sample of 3,933 inventors in pharmaceutical firms whose companies were acquired. Results are strongly in line with our theorized expectations.

Suggested Citation

  • Srikanth Paruchuri & Atul Nerkar & Donald C. Hambrick, 2006. "Acquisition Integration and Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies," Organization Science, INFORMS, vol. 17(5), pages 545-562, October.
    • Handle: RePEc:inm:ororsc:v:17:y:2006:i:5:p:545-562
    DOI: 10.1287/orsc.1060.0207
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