Look at U: Technological scope of the acquirer, technological complementarity with the target, and post-acquisition R&D output

Muhammad Shafique and John Hagedoorn

Technovation, 2022, vol. 115, issue C

Abstract: Different streams of literature in economics and strategy suggest that several characteristics of a firm's technological base such as diversity, breadth, depth, and R&D portfolio affect its R&D output. Separately, strategy literature on technological mergers and acquisitions (M&As) suggests that the relationship between technological knowledge bases of the acquirer and the target, such as their technological similarities and complementarities, also affects the post-acquisition R&D output. This paper integrates the knowledge from these streams to further our understanding of technological M&As by examining how the pre-acquisition technological scope of an acquirer, encompassing the diversity and breadth of its technological knowledge base, affects its post-acquisition R&D output. Our analysis of a panel of technological acquisitions suggests that the acquirer's technological scope has a U-shaped relationship with post-acquisition R&D output, measured in terms of patent filings. Moreover, technological complementarity between the acquirer's and target's knowledge bases positively moderates this relationship. Results show that acquirers have higher post-acquisition R&D output when their pre-acquisition technological scope is either narrow or broad rather than moderate. Besides, acquirers having a narrow technological scope benefit more from technological complementarities. Our findings have important implications for the effectiveness of corporate R&D strategy and M&A strategy in the hi-tech industries.

Keywords: R&D; Technological acquisitions; Technological scope; Technological diversity; Technological complementarity; Knowledge-based view (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:115:y:2022:i:c:s0166497222000803

DOI: 10.1016/j.technovation.2022.102533

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