The impact of FDI through mergers and acquisitions on innovation in target firms

Joel Stiebale and Frank Reize

International Journal of Industrial Organization, 2011, vol. 29, issue 2, 155-167

Abstract: This paper analyzes the effects of cross-border mergers and acquisitions on innovation activities in target firms. The empirical analysis is based on survey and ownership data for a large sample of small- and medium-sized German firms. After controlling for endogeneity and selection bias, we find that foreign acquisitions have a large negative impact on the propensity to perform innovation activities and a negative impact on average R&D expenditures in innovative firms. Furthermore, innovation output, measured as product and process innovations, and the share of sales from product innovations, is not significantly affected by a foreign acquisition for a given amount of innovation efforts. Hence, the estimation results do not provide any evidence of significant technology transfer through foreign acquisitions in form of a higher innovation success.

Keywords: Multinational; enterprises; Mergers; and; acquisitions; Innovation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (57)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:29:y:2011:i:2:p:155-167

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