Mergers and Innovation: Evidence from the Hard Disk Drive Market

63 Pages Posted: 19 Jun 2018 Last revised: 8 Jun 2020

See all articles by Anna Rita Bennato

Anna Rita Bennato

Loughborough University - School of Business and Economics

S. W. Davies

University of East Anglia (UEA)

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy

Peter L. Ormosi

University of East Anglia (UEA) - Centre for Competition Policy; Norwich Business School

Date Written: June 5, 2020

Abstract

This is an ex-post evaluation of how innovation changed following mergers and subsequent policy interventions, using an industry case study involving the 5-to-3 consolidation of three related mergers in the worldwide hard disk drive (HDD) industry, in 2011/12. Unlike most previous empirical papers in the merger-innovation literature, it drills down to the firm level to explore heterogeneity in the innovation response to the merger. It adopts a holistic view of innovation, employing four different measures: R\&D and patents as indicators of innovative inputs, and the number of new models, and their unit prices as indicators of innovative output. This allows us to distinguish the magnitude of the merging parties’ innovative efforts from the productivity of those efforts. The results confirm that there are indeed important asymmetries between the players, which are at least partly attributable to differences in the severity of remedies required by competition authorities. Methodologically, the paper sheds light on some of the challenges when conducting future retrospective studies on innovation, in a market which is world-wide with no obvious comparators, and at a specific part of its product cycle, which may be difficult to replicate in a comparator industry.

Keywords: Mergers, Innovation, R&D, Patents, Evaluation

JEL Classification: O30, L10, L40

Suggested Citation

Bennato, Anna Rita and Davies, Steve W. and Mariuzzo, Franco and Ormosi, Peter L., Mergers and Innovation: Evidence from the Hard Disk Drive Market (June 5, 2020). Available at SSRN: https://ssrn.com/abstract=3190156 or http://dx.doi.org/10.2139/ssrn.3190156

Anna Rita Bennato

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Steve W. Davies

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Peter L. Ormosi (Contact Author)

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Norwich Business School ( email )

Norwich
NR4 7TJ
United Kingdom

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