Effects of Acquisitions on Product and Process Innovation and R&D Performance

34 Pages Posted: 18 Nov 2005

See all articles by Elena Cefis

Elena Cefis

University of Bergamo - Department of Economics; Utrecht University - Tjalling C. Koopmans Research Institute

Stephanie Rosenkranz

Utrecht University - Utrecht University School of Economics

Utz Weitzel

Utrecht University - Utrecht University School of Economics; Radboud University - Economics Department, IMR

Multiple version iconThere are 2 versions of this paper

Date Written: October 2005

Abstract

Using a game theoretical model on firms' simultaneous investments in product and process innovation, we deduct and empirically test hypotheses on the optimal R&D portfolio, investment, performance, and dynamic efficiency of R&D for acquisitions and in independently competing firms. We use Community Innovation Survey data on Italian manufacturing firms. Theoretical and empirical results show that firms involved in acquisitions invest in different R&D portfolios and invest at least as much in aggregate R&D as independent firms. The empirical results do not support our hypothesis on dynamic efficiency since acquisitions lead to inferior R&D performance.

Keywords: Mergers and acquisitions, innovation, dynamic efficiency, cost reduction, product differentiation

JEL Classification: C72, L1, L13, O32

Suggested Citation

Cefis, Elena and Rosenkranz, Stephanie and Weitzel, Utz, Effects of Acquisitions on Product and Process Innovation and R&D Performance (October 2005). CEPR Discussion Paper No. 5275. Available at SSRN: https://ssrn.com/abstract=851185

Elena Cefis

University of Bergamo - Department of Economics ( email )

via dei Caniana 2
Bergamo, 24127
Italy

HOME PAGE: http://www.elena-cefis.it

Utrecht University - Tjalling C. Koopmans Research Institute ( email )

Adam Smith Building
Kriekenpitplein 21-22
Utrecht, 3584 EC
Netherlands

Stephanie Rosenkranz (Contact Author)

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 30 253 9806 (Phone)
+31 30 253 7373 (Fax)

HOME PAGE: http://www.uu.nl/uupublish/defaculteit/persoonlijkepagi/rosenkranz/

Utz Weitzel

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Radboud University - Economics Department, IMR ( email )

Nijmegen, 6500 HK
Netherlands

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