Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output

Marta F. Arroyabe (), Katrin Hussinger and John Hagedoorn ()
Additional contact information
Marta F. Arroyabe: Essex Business School, UK
John Hagedoorn: UNU-MERIT, United Nations University - Maastricht, NL

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: (To consult this DP, please send an e-mail to dem@uni.lu) Although merger and acquisitions (M&As) are acknowledged as an important means to access innovative assets and know-how, firms’ inventive output often declines in the post-M&A period. Financial, managerial and organizational constraints related to the M&A event contribute to inventive output declines and inventors’ departure. Prior literature treats the acquiring firm as a passive observer of invention declines. This study argues that acquiring firms can take measures by hiring new key inventors. We show that the hiring of new key inventors in the post-M&A period can counteract invention declines in two ways. First, these newly hired inventors are associated with an increase of corporate inventive output after the M&A. Second, they are also associated with an improved inventive output of inventors already working for the acquiring firm. These results suggest that an appropriate hiring policy can counteract declining inventive output of firms in the aftermath of M&As.

Keywords: M&A; post-M&A inventive output; key inventors; KBV . (search for similar items in EconPapers)
JEL-codes: G34 M10 O32 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cfn, nep-sbm and nep-tid
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Citations: View citations in EconPapers (2)

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Working Paper: Hiring new key inventors to improve firms' post-M&A inventive output (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:20-19

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