Inter-firm Inventor Collaboration and Path-breaking Innovation: Evidence from Inventor Teams Post-merger

Abstract

Using a large and novel data set over the period 1976-2019 tracking inventors’ career paths following mergers and acquisitions, we show that collaboration between acquirer and target inventors post-merger is associated with more path-breaking patents than those filed by either acquirer or target inventor-only teams. We further show that such collaboration is more important in improving acquirers’ innovation capabilities than hiring target inventors and knowledge spillovers. Finally, we show that recombining tacit knowledge embodied in the human capital of acquirer and target inventors is likely the mechanism. We conclude that inter-firm inventor collaboration is one key means for achieving synergies.

Keywords: human capital synergies, mergers and acquisitions, inter-firm inventor collaboration, knowledge spillovers, radical innovation, impactful innovation, valuable innovation

JEL Classification: G34, O32, O34