Productivity, Innovation Spillovers, and Mergers: Evidence from a Panel of U.S. Firms

Entezarkheir Mahdiyeh () and Sen Anindya ()
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Entezarkheir Mahdiyeh: Department of Economics, Huron at University of Western Ontario, 1349 Western Rd, London, ON N6G 1H3, Canada
Sen Anindya: Department of Economics, University of Waterloo, 200 University Ave. West, Waterloo, ON N2L 3G1, Canada

The B.E. Journal of Economic Analysis & Policy, 2023, vol. 23, issue 2, 397-422

Abstract: We investigate the impact of mergers and product innovation on labour productivity through a unique panel data set of roughly 2000 publicly traded U.S. manufacturing firms from 1980 to 2003. OLS estimates reveal that mergers interacted with citation-weighted patents are significantly correlated with increases in labour productivity. OLS and IV estimates of citation-weighted patent stocks with respect to firm-specific labour productivity are positive and consistently significant. Further, mergers are significantly correlated with a rise in citation-weighted patent stocks and research and development (R&D) spending. In tandem, our findings suggest that larger firms resulting from mergers spend more on innovation, which results in higher quality patents, and increased labour productivity.

Keywords: labour productivity; employee value; innovation; patents; mergers (search for similar items in EconPapers)
JEL-codes: L10 L40 L60 O30 O31 O34 O38 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/bejeap-2021-0440

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