Effects of Acquisitions on Product and Process Innovation and R&D Performance

Stephanie Rosenkranz, Elena Cefis and Utz Weitzel

No 5275, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a game theoretical model on firms' simultaneous investments in product and process innovation, we deduct and empirically test hypotheses on the optimal R&D portfolio, investment, performance, and dynamic efficiency of R&D for acquisitions and in independently competing firms. We use Community Innovation Survey data on Italian manufacturing firms. Theoretical and empirical results show that firms involved in acquisitions invest in different R&D portfolios and invest at least as much in aggregate R&D as independent firms. The empirical results do not support our hypothesis on dynamic efficiency since acquisitions lead to inferior R&D performance.

Keywords: Mergers and acquisitions; Innovation; Dynamic efficiency; Cost reduction; Product differentiation (search for similar items in EconPapers)
JEL-codes: C72 L1 L13 O32 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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