JIBS Working Papers,
Jönköping International Business School

Abstract: The worldwide telecommunications equipment industry has experienced an enormous number of mergers and acquisitions (M&A). This paper examines the innovation determinants of M&A activity and the consequences of M&A on technological potential and innovation performance. We extend the resource-based theory in elucidating external technology sourcing and provide empirical evidence on the keen reliance of the equipment firms on M&A as a technology sourcing strategy for the period 1988–2004. Employing the matching propensity score approach, this study provides evidence that mergers realize a significant growth in the innovation performance of firms. The post-merger innovation performance, in turn, is driven by both the prior success of inhouse R&D commitment and the deterioration of internal technological capabilities at acquiring firms.

Keywords: Mergers & Acquisitions; Innovation Performance; Telecommunications Equipment Industry

37 pages, August 24, 2011

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