Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output

31 Pages Posted: 29 Jun 2020

See all articles by M. F. Arroyabe

M. F. Arroyabe

Universite du Luxembourg

Katrin Hussinger

ZEW – Leibniz Centre for European Economic Research

John Hagedoorn

Maastricht University, School of Business and Economics

Date Written: 2020

Abstract

Although merger and acquisitions (M&As) are acknowledged as an important means to access innovative assets and know-how, firms’ inventive output often declines in the post-M&A period. Financial, managerial and organizational constraints related to the M&A event contribute to inventive output declines and inventors’ departure. Prior literature treats the acquiring firm as a passive observer of invention declines. This study argues that acquiring firms can take measures by hiring new key inventors. We show that the hiring of new key inventors in the post-M&A period can counteract invention declines in two ways. First, these newly hired inventors are associated with an increase of corporate inventive output after the M&A. Second, they are also associated with an improved inventive output of inventors already working for the acquiring firm. These results suggest that an appropriate hiring policy can counteract declining inventive output of firms in the aftermath of M&As.

Keywords: M&A, post-M&A inventive output, key inventors, KBV

JEL Classification: O34, O32, G34

Suggested Citation

Arroyabe, M. F. and Hussinger, Katrin and Hagedoorn, John, Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-029, Available at SSRN: https://ssrn.com/abstract=3634452 or http://dx.doi.org/10.2139/ssrn.3634452

M. F. Arroyabe (Contact Author)

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

Katrin Hussinger

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

John Hagedoorn

Maastricht University, School of Business and Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

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