The Oscar Goes to…: High-tech Firms’ Acquisitions in Response to Rivals’ Technology Breakthroughs
71 Pages Posted: 28 Jul 2016 Last revised: 29 Jun 2020
Date Written: June 29, 202
We examine how firms react to their competitors’ highly publicized technology breakthroughs measured by the renowned R&D 100 Award. These awards have been granted to top 100 technological inventions every year since 1965 and have come to be known as the “Oscar of Invention” (e.g., Verhoeven, Bakkera, and Veugelers, 2016). We find that a firm’s propensity to acquire another firm significantly increases after its competitors win these awards. A causal interpretation of our finding is supported by instrumental variable analysis, coarsened exact matched samples, and differential effects of award winners vs. finalists. Such award-driven acquisitiveness is more pronounced among firms with more confident CEOs or in industries with a shorter technology lifecycle and a higher R&D intensity. Moreover, the acquirers with rivals winning awards pursue innovative targets whose products overlap with those rivals, confirming these acquirers’ catch-up purpose.
Keywords: Mergers and acquisitions, R&D; innovation, patents, R&D 100 Award
JEL Classification: G32, M41, O32
Suggested Citation: Suggested Citation