Effects of Firm R&D Investment and Environment on Acquisition Likelihood

23 Pages Posted: 6 Nov 2006

See all articles by Michael B. Heeley

Michael B. Heeley

Colorado School of Mines

David R. King

U.S. Air Force Academy - Department of Mangement

Jeffrey G. Covin

Indiana University - Kelley School of Business - Management & Entrepreneurship

Abstract

R&D investments contribute to the development of firm technology resources, and the possession of such resources often increases a firm's attractiveness as a potential acquisition target. However, the value ascribed to a firm's technology resources by would-be acquirers may be moderated by its industry's environmental characteristics. Using data from 2886 firms, we find that investments in R&D predict acquisition likelihood and that R&D investments are most strongly associated with acquisition of firms under conditions of high environmental munificence and dynamism. Theoretical and managerial implications are discussed.

Suggested Citation

Heeley, Michael B. and King, David R. and Covin, Jeffrey G., Effects of Firm R&D Investment and Environment on Acquisition Likelihood. Journal of Management Studies, Vol. 43, No. 7, pp. 1513-1535, November 2006, Available at SSRN: https://ssrn.com/abstract=942390 or http://dx.doi.org/10.1111/j.1467-6486.2006.00636.x

Michael B. Heeley

Colorado School of Mines ( email )

816 15th Street
Golden, CO 80401
United States
303-273-3167 (Phone)

David R. King

U.S. Air Force Academy - Department of Mangement ( email )

2354 Fairchild Drive
Suite 6H-94
Academy, CO 80840-2944
United States

Jeffrey G. Covin (Contact Author)

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

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