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

By E. Cefis, S. Rosenkranz and U. Weitzel

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 performanc

Topics: Mergers and Acquisitions, Innovation, Dynamic Efficiency, Cost Reduction, Product Differentiation, Ordered by external client
Year: 2005
OAI identifier: oai:dspace.library.uu.nl:1874/37091
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