Acquiring Firm Inventors’ Performance: Exploring the Alignment of Inventors’ Knowledge Base with Firms’ Innovation Trajectories
Acquirer inventors usually lose innovation performance after innovation-sourcing acquisitions, generalists and those aligned with the new trajectory losing least.
Summary
The paper looks at what happens to the acquiring firm's own inventors after the firm buys another company to source innovation. It argues that their performance depends on the technological distance between acquirer and target, and on how well each inventor's knowledge aligns with the firm's innovation trajectory after the deal. On average, acquirer inventors lose innovation performance after such acquisitions, with the smallest declines among generalists and among inventors whose knowledge fits the new trajectory.
Editor's opinion
Buying innovation can quietly cost the buyer some of its own: the acquirer's inventors tend to become less productive after the deal, unless their knowledge is broad or lines up with the new direction. Acquirers should plan for the effect on their existing R&D staff, and should not count only the target's contribution when they value an innovation-driven deal.
Key concepts
innovation-sourcing acquisitions · inventors · absorptive capacity · knowledge alignment