M&A and diversification strategies: what effect on quality of inventive activity?

Maria Chiara Di Guardo (), Kathryn Rudie Harrigan () and Elona Marku ()
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Maria Chiara Di Guardo: University of Cagliari
Kathryn Rudie Harrigan: Columbia University
Elona Marku: University of Cagliari

Journal of Management & Governance, 2019, vol. 23, issue 3, No 4, 669-692

Abstract: Abstract The aim of this paper is to examine how an acquirer’s diversification strategy shapes the multiple dimensions of inventive activity. Differing from prior research, we use a set of indicators to investigate this phenomenon. In particular, we consider three different but complementary dimensions of inventive quality: technological impact, originality of the synthesized knowledge streams, and generality of applicability across different technological domains. The results obtained using a quasi-experimental approach show that diversification via acquisitions has a negative effect on post-acquisition technological impact. However, firms that have diversified outperform those firms that have not. Last, the acquirer’s originality and generality increase after the merger and acquisition transaction, evidencing that the inventive activity benefited from the diversification strategy.

Keywords: M&A; Diversification; Inventive performance; Patents (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10997-018-9437-5

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