Post-acquisition Innovation Performance Research Articles

When degree of integration mediates level of acquired ownership and post-acquisition innovation performance: evidence from cross-border technological acquisitions

PurposeThe purpose of this study is to test a model for cross-border technological acquisitions (CBTAs) focusing on the level of ownership acquired in the target firm and the acquiring firm's post-acquisition innovation performance (PAIP), with the degree of integration as a mediator, based on the dynamic capability perspective of the resource-based view. This study further concludes the role of the country-of-origin effect (COE) (when emerging economies' acquiring firms purchase technological resources from developed economies' target firms) on the success of the acquiring firms in CBTAs.Design/methodology/approachData on CBTAs initiated by 542 acquiring firms was quantified from four high technology industries from 1995 to 2015 for the empirical investigation of the research hypotheses. Hierarchical fixed year effect negative binomial regression technique was used to analyze the proposed model for the success of CBTAs.FindingsThe analysis of the CBTAs confirmed that acquiring firms who opt for a higher level of acquired ownership strategy increase the degree of integration of the target firm's technological resource stock. The level of acquired ownership improves the PAIP of the acquiring firms; however, the degree of integration positively accelerates the relationship between the acquired ownership and the PAIP. Considering the COE, acquiring firms that initiated CBTAs from emerging economies to purchase technological resources from developed economies' targets have firm-specific technological capability holes to execute the integration, which negatively impacts the emerging economies acquiring firm's PAIP.Originality/valueThis study contributes to the CBTAs literature by exploring the enabling role of the degree of integration between the level of acquired ownership and the PAIP of the acquiring firms. Further, this study put forward empirics on the COE of the acquiring firms for their integrative capability to integrate the target firm's resource stock and subsequent innovation performance.

Exploring the mediating effect of managerial ability on knowledge diversity and innovation performance in reverse cross-border M&As: Evidence from Chinese manufacturing corporations

There has been an increasing trend that multinational corporations from emerging economies (EMNCs) undertake cross-border mergers and acquisitions (M&As) with corporations in developed economies. As a burgeoning pattern of outward direct investment, reverse cross-border M&As enable EMNCs to access technological resources that are conducive to enhancing innovation efficiency. Deal activity involving Western corporations buying into emerging economies has been extensively studied; conversely, the nature and consequences of reverse cross-border M&As can hardly be explained by internationalization theories. Furthermore, extant studies paid less attention to how diversified knowledge resources affect EMNCs' innovation performance. In contrast, heterogeneous and diversified knowledge has been proven to be vital for generating novel knowledge combinations. We also believe that managerial ability will affect how acquirers reorganize and integrate knowledge, thereby influencing post-acquisition innovation performance. Drawing from the knowledge-based view and upper echelon theory, this study adopted the data of Chinese listed manufacturing corporations that engaged in reverse cross-border M&As from 2010 to 2018 to explore the influencing mechanisms between the two dimensions of knowledge diversity and innovation performance of multinational manufacturing corporations from emerging economies, while managerial ability was additionally analyzed as a mediator of the above relationships. The empirical findings suggested that manufacturing corporations with higher knowledge diversity present better post-acquisition innovation performance. Managerial ability plays a fully mediating effect between the knowledge heterogeneity and innovation performance of EMNCs but imposes a partially mediating effect between technological diversity and innovation performance. The findings help enrich the understanding of the integrating process of reverse cross-border M&A and the endogenous function mechanism of how knowledge diversity and managerial ability affect the promotion of EMNCs’ innovation performance.

Linking ownership acquired in Chinese firms to post-acquisition innovation performance: role of institutional distance

PurposeThe primary purpose of this study is to explore the impact of acquired ownership in Chinese target firm on the innovation performance of developed economies (DE) acquiring firms. Furthermore, the study aims to empirically investigate the moderating influence of institutional distance between two parties’ home countries.Design/methodology/approachFor the empirical investigation of the hypotheses, the authors identified cross-border technological acquisitions from the Securities Data Company between 1995 and 2015. A hierarchical negative binomial regression technique was used to analyze 177 technological acquisitions completed by DE acquiring firms in China.FindingsAnalysis of technological acquisition deals confirmed that acquired ownership undertaken in the Chinese target firms increases the DE acquiring firms’ post-acquisition innovation performance. The authors found that DE acquiring firms underperform in innovation in institutionally distant host countries.Originality/valueThis study contributes to the international business literature by explaining the importance of acquired ownership undertaken in the Chinese target firms for the DE acquiring firm’s innovation performance. Second, institutional theory defines how institutional uncertainty in terms of distance modifies the positive impact of acquired ownership on acquiring firm’s innovation performance.

How can Digital Technology-Related Acquisitions Affect a Firm's Innovation Performance?

This paper studies how acquiring digital firms affects the post-acquisition innovation performance of traditional firms. Based on the longitudinal dataset of Chinese listed firms from 2007 to 2017, our findings show that digital technology-related acquisitions have a positive effect on a firm's innovation performance. Furthermore, we propose a contingency model to investigate the moderating effect of unabsorbed slack and internal digital investment. The results indicate that the acquirer's unabsorbed slack has a partially positive moderating effect on the relationship between digital technology-related acquisitions and innovation performance. Meanwhile, the acquirer’s internal digital investment negatively moderates this relationship, but its negative moderating effect would be weakened by the unabsorbed slack. Our paper expands the contingency perspective within a traditional firm's digital transformation and has implications for future research and management practices.

How do mutual dependence and power imbalance condition the effects of technological similarity on post-acquisition innovation performance over time?

How do mutual dependence and power imbalance condition the effects of technological similarity on post-acquisition innovation performance over time?

SETTING THE “RIGHT” GOAL: POST M&A INNOVATION PERFORMANCE AND GOAL ORIENTATION

Pharmaceutical firms spend billions of dollars to develop the next breakthrough drug and to maintain their market shares. We investigate how pharmaceutical firms use mergers and acquisitions to boost their innovation performance which has been found to result in better performance outcomes. Adding to the recent research on mergers and acquisitions, we found that firms that are explicit with their R&D goal orientation from the beginning of the acquisition journey are more successful in their innovation endeavours than firms with other goal orientation. Further, the firms’ prior acquisition experience appears to aid their innovation performance. However, we found that target size can affect the post-acquisition innovation performance but has diminishing returns as target size increases. Ultimately, our findings suggest that having an explicit R&D goal orientation is really important for a healthy innovation pipeline for pharmaceutical firms.

A new discussion on the relationship between M&A and innovation in an emerging market: the moderating effect of post-acquisition R&D investment

ABSTRACTBased on the framework of ‘M&A size-integration process-innovation outputs’, we re-examine the relationship between M&A and post-acquisition innovation performance, and the moderating effect of post-acquisition R&D investment. Using zero-inflated negative binomial regression with data on mergers and acquisitions of 277 high-tech firms in China from 2005 to 2015, we found that M&A size has an inverted U-shaped effect on post-acquisition innovation performance. Post-acquisition R&D investment shows a significant moderating effect on this inverted U-shaped relationship, and puts the inflection point of the inverted U-shaped curve to the right from 23% to 39%. Thus, for the acquiring firm, increasing the post-acquisition R&D investment level can effectively improve its technology absorption capacity, thereby extending the positive effect interval of M&A size on its post-acquisition innovation performance.

The impact of acquisitions on Chinese acquirers\u2019 innovation performance: an empirical investigation of 1545 Chinese acquisitions

Acquisitions by Chinese firms have increased markedly in recent years. So far, we know little about the effects of these acquisitions on the acquirer’s innovation performance. Our paper focuses on two interrelated research questions. First, to what extent can Chinese firms increase their patent output following an acquisition? Second, which factors influence the post-acquisition patent output? Using a comprehensive dataset of 697 publicly listed Chinese firms in the manufacturing sector that conducted 1545 acquisitions from 2000 to 2012, we find no significant overall effect of acquisitions on patent output. However, we find that several acquisition-specific factors have a positive effect on the post-acquisition patent output (e.g., size of the acquired knowledge base, relatedness of the acquired knowledge base, cross-border acquisitions). Our study extends prior research on post-acquisition innovation performance to the context of Chinese acquirers.

Technological Relatedness, TMT Faultlines and Target Selection in Technology Acquisitions

Research suggests that acquisitions of technologically similar or complementary targets can greatly enhance post-acquisition innovation performance, yet we know little about the extent to which fir...

The Impact of Acquisitions on Chinese Acquirerss Innovation Performance: An Empirical Investigation of 1,545 Chinese Acquisitions

Acquisitions by Chinese firms have increased markedly in recent years. So far, we know little about the effects of these acquisitions on the acquirer’s innovation performance. In this regard, we study two related research questions. First, to what extent can Chinese firms increase their patent output following an acquisition? Second, which factors influence the post-acquisition patent output? Using a comprehensive data set of Chinese manufacturing firms, we find no significant overall effect of acquisitions on patent output. However, we find that several acquisition-specific factors have a positive effect on post-acquisition patent output (e.g., characteristics of the acquired knowledge base, cross-border acquisitions), while other factors (e.g., state-ownership) have a negative effect. Our study extends prior research on post-acquisition innovation performance to the context of China.

Cross border acquisitions and R&D activities: a comparative study in the Italian red biotech industry

In fast growing markets, technology-grafting acquisitions provide rapid and exclusive access to technologies and capabilities of the acquired firm. This paper focuses on the impact of cross border acquisitions on R&D activities of the target firms in order to answer these research questions: are these firms in the post-acquisition stage more innovative? What are the main reasons? Four Red biotech acquired companies are used as multiple case study. Results suggest that the target companies take advantage of the acquisition in terms of: a boost to their R&D activities; R&D synergies with the buyer; developments of their research and growth in sales worldwide. Managers may benefit from a mutual exchange of knowledge and competences between acquired firms and MNEs. Policy makers should encourage FDI attraction strategies. This study for the first time analyses the post-acquisition innovation performance of all the Italian acquired mid-sized firms.

CROSS BORDER ACQUISITIONS AND R&D ACTIVITIES: A COMPARATIVE STUDY IN THE ITALIAN RED BIOTECH INDUSTRY

In fast growing markets, technology-grafting acquisitions provide rapid and exclusive access to technologies and capabilities of the acquired firm. This paper focuses on the impact of cross border acquisitions on RD RD developments of their research and growth in sales worldwide. Managers may benefit from a mutual exchange of knowledge and competences between acquired firms and MNEs. Policy makers should encourage FDI attraction strategies. This study for the first time analyses the post-acquisition innovation performance of all the Italian acquired mid-sized firms.

Market-Driven Technological Innovation Through Acquisitions

This study is an effort to reveal market-driven innovation via acquisitions. By differentiating the organizational process of resource integration pertaining to market- versus technology-driven innovation via acquisitions, we show that product market relatedness and technology relatedness have differential effects on postacquisition innovation performance, depending on the size of the acquirer. Our analysis of acquisitions in high-tech industries indicates that larger firms maximize their postacquisition technological innovation performance at a lower level of technology relatedness and, in contrast, at a higher level of product market relatedness, whereas the opposite is true for smaller firms. This study contributes to the acquisitions research by identifying (a) market-driven innovation via acquisitions and (b) different mechanisms through which product market and technological resources affect postacquisition technological innovation.

Knowledge-acquisitions and post-acquisition innovation performance: a comparative hazards model

Do acquisitions lead to instrumental innovations related to the acquired knowledge? Past arguments on vertical integration espouse how a quest for knowledge drives acquisitions culminating in innovation performance. Using Google and Yahoo as cases-in-point, we examine how facets of acquired innovation knowledge impact post-innovation performance. In particular, the apparently opposing fortunes of Google and Yahoo allow us to investigate the pace of their innovation performance as a hazards model. Results from our investigation highlight Google’s ambidexterity over Yahoo with a swifter, systematic pace of innovation performance – from hastening time to patenting new ideas to the time to releasing new applications from acquisitions.

Domestic technological acquisitions and the innovation performance of acquiring firms

This study explores how the external technology base affects innovation performance of domestic technological acquisition based on multiple cases of 108 Chinese firms undertaking technological acquisition from 2001 to 2008. This study reveals interesting results. First, technological acquisitions improve innovation performance of the acquiring firm. Second, based on a Poisson regression with 108 observations, the result shows that the absolute size positively affects post-acquisition innovation performance while the relative size of the acquired external technology negatively affects post-acquisition innovation performance. In addition, the absorptive capacity does not have the positive impact on the relationship between acquired technology and innovation performance. This result, however, is not similar to the conclusion that is drawn in developed countries. This paper is a helpful answer to the question as to how firms obtain resources and competitive advantages in developing countries.

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

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.

The Effect of Product and Geographic Market Diversity on Post-Acquisition Innovation Performance of the Acquirer

The Effect of Product and Geographic Market Diversity on Post-Acquisition Innovation Performance of the Acquirer

Target-Specific Relational Resources and Post-Acquisition Innovation Performance

This study investigates the influences of target-specific alliance experiences on post-acquisition innovation. We first focus on the insights in extant literature that firms face dilemma in the pro...

La delega dell'autoritŕ decisionale nelle acquisizioni di NTBF: l'impatto sull'innovazione

The paper considers the acquisition of a high-tech start-up and analyzes how the allocation of innovation decision-making powers has an impact on the post-acquisition innovation activity of the target firm. These powers may be delegated to the key inventors of the acquired firm or centralized by the acquiring firm. The authors develop a theoretical model that integrates the insights offered by the competence- and resource-based views into a framework based on recent developments in delegation theory. The model leads to testable predictions related to the moderating effect of several factors on the relationship between the delegation (or centralization) of decisions and the post-acquisition innovation performance. Specifically, we consider the following factors: i) the reasons behind the acquisition (explorative vs. exploitative); ii) the technological connection between the acquiring and the acquired firms; and iii) the nature of the buyer’s previous acquisition experience. The model has relevant normative implications for the management of the buyer firm relating to the post-acquisition reorganization of the start-up.