Abstract
The paper investigates the effects of mergers and acquisitions (M&A) on corporate research and development (R&D) strategies using Community Innovation Survey data on the Dutch manufacturing sector. The focus of the research is whether M&A affect corporate innovation strategies, favouring in-house R&D and innovation expenses versus external technological sourcing. The results show that M&A activities have a positive and significant impact on innovation investments by firms, and particularly on R&D intensity and total expenditure on innovation. M&A affect corporate innovation strategies, favouring in-house R&D versus external technological sourcing. Firm post-merger behaviour favours the consolidation of the knowledge, competences and capabilities that have been acquired by merging with or by buying another firm, confirming that the reasons for a merger or acquisition are most often related to firms’ innovative performance. Following involvement in M&A, firms tend primarily to focus on full integration of their resource bases in order to enable them to produce and sell innovative products that are new to the market.
Acknowledgements
The author would like to thank René Belderbos, Boris Lokshin, Franco Malerba, Bart Nooteboom, Christos Pitelis, Hans Schenk, Marco Vivarelli, the participants at the first European Conference on Corporate R&D (CONCORD-2007), the participants at the European Network of Economics of the Firm, (ENEF 2008), and two anonymous referees for their helpful comments and suggestions, and Mihaela Ghita for valuable research assistance. The empirical analysis in this research has been carried out at the Centre for Research of Economic Microdata at Statistics Netherlands (CBS). The views expressed in this article are those of the author and do not necessarily reflect the policies of Statistics Netherlands. The author thanks Gerhard Meinen and the on-site staff of the CBS for their collaboration. The author gratefully acknowledges the financial supports of NWO (Dynamics of Innovation Programme, grant no.: 472-04-008) and of the University of Bergamo (grant ex 60%, n. 60CEFI08, Dept. of Economics).
Notes
Firm size, industrial sectors and regions are used as stratifying variables.
See Section 5 for more detailed explanations of the two-stage Heckman model used to model R&D and innovation expenses.
λ expresses the effect of the unmeasured firms’ characteristics on firms’ innovation investment decision. In the Heckman 2-stage model, the value of this factor is added as an additional proxy in the second stage – the OLS regression.
I would like to thank an anonymous referee for this useful suggestion.
Additional results showing the distinction among acquisition of new machinery and the purchase of licences or copy rights are available on request.