Post-merger innovation performance in technological m&as: is acquiring innovation a viable motivation for M&As?

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School of Business | Master's thesis
Degree programme
Management and International Business (MIB)
In this paper, I examine the viability of acquiring innovation as a motive for mergers and acquisitions (m&a) in the context of technological m&as. In the paper, the phenomenon is studied, by examining the relationship between merger and acquisition activity, and the development of the quantity of applied patents. Given the high failure rates of m&as, as demonstrated by prior research and industry reports, this study aims to find an alternative for the traditional motives. Specifically, this paper aims to offer insight on innovation as a motive of m&as, with patenting activity as the proxy of innovation output. The methodology includes constructing a unique data set concerning the leading acquirors of industries most active in m&as as well as patenting. Two industries are examined to mitigate the potential bias associated with singular industry focus, which may result in research characterized by industry-specific nuances and thereby providing conflicting findings. Following the data collection, the analysis is conducted by a simple linear regression analysis studying whether these two have a distinctive relationship. In the selected data set, majority of the data points reflected an increase in patenting activity, comparing the year of the acquisition and three years post-merger. However, the connection between patents and m&a activity cannot be confirmed to be positive, measuring m&as with both, the quantity and financial size of annual acquisitions.
Thesis advisor
Helanummi-Cole, Heli
merger, acquisition, innovation, post-merger performance
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