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The impact of acquisitions on the innovation performance of inventors at semiconductor companies

Author: Kapoor, Rahul ; Lim, KwanghuiINSEAD Area: Strategy In: Academy of Management conference proceedings - Book Language: EnglishDescription: p. Q1-Q4.Type of document: INSEAD ChapterNote: Please ask us for this itemAbstract: In RandD-intensive industries, corporate acquisitions are becoming increasingly important as a mechanism for acquiring new knowledge. In this paper, the authors examine the impact of corporate acquisitions on the innovation performance of inventors at the acquired firms. They also explore several factors that shape the post-acquisition performance of these inventors. Their study utilizes a novel dataset comprising 353 inventors from semiconductor firms acquired between 1991 and 1998. A control group was constructed by pairing each inventor from the acquired firm with a carefully chosen inventor from the acquiring firm. Their results show a significant decline in the post-acquisition productivity of inventors, as compared to the control group. However, a higher post-acquisition performance is obtained when there is a high degree of business overlap, a low level of integration between the acquiring and acquired firm, and when the acquired company is not a startup. Their findings suggest that managers should be cautious when using acquisitions as a means of knowledge acquisition: there is a real risk that the acquired technical team will become unproductive, and the results are sensitive to the way the integration and business scope is managed.
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In RandD-intensive industries, corporate acquisitions are becoming increasingly important as a mechanism for acquiring new knowledge. In this paper, the authors examine the impact of corporate acquisitions on the innovation performance of inventors at the acquired firms. They also explore several factors that shape the post-acquisition performance of these inventors. Their study utilizes a novel dataset comprising 353 inventors from semiconductor firms acquired between 1991 and 1998. A control group was constructed by pairing each inventor from the acquired firm with a carefully chosen inventor from the acquiring firm. Their results show a significant decline in the post-acquisition productivity of inventors, as compared to the control group. However, a higher post-acquisition performance is obtained when there is a high degree of business overlap, a low level of integration between the acquiring and acquired firm, and when the acquired company is not a startup. Their findings suggest that managers should be cautious when using acquisitions as a means of knowledge acquisition: there is a real risk that the acquired technical team will become unproductive, and the results are sensitive to the way the integration and business scope is managed.

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