Skip Navigation



Cambridge Journal of Economics Advance Access published online on February 25, 2009
Cambridge Journal of Economics, doi:10.1093/cje/bep004
This Article
Right arrow Full Text
Right arrow Full Text (PDF)
Right arrow All Versions of this Article:
33/6/1089    most recent
bep004v1
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Desyllas, P.
Right arrow Articles by Hughes, A.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

The revealed preferences of high technology acquirers: An analysis of the innovation characteristics of their targets

Panos Desyllas and Alan Hughes*

* Manchester Business School, University of Manchester, and Centre for Business Research (CBR) and Judge Business School, University of Cambridge, respectively

Address for correspondence: Panos Desyllas, Manchester Business School, Booth Street West, Manchester M15 6PB, UK; email: pdesyllas{at}gmail.com

This paper investigates whether acquisitions involving public high technology firms are best understood in terms of acquirers taking over firms with ‘superior’ innovation performance to access their assets, or acquiring firms with ‘inferior’ innovation performance to turn them around. Innovation performance is proxied by R&D-intensity (R&D expenditure over assets), patent-intensity (patents per US$million of assets), i.e. the R&D productivity of a firm's assets, and the patent stock, i.e. the accumulated R&D output. We find substantial overlaps between target and non-acquired firm characteristics. Nevertheless targets have a relatively high R&D-intensity and a large patent stock, which is consistent with acquirers targeting firms with a superior innovation performance. However, these targets have significantly lower pre-acquisition patent-intensity and hence a lower R&D productivity. The targets are also experiencing weak financial performance. Our results are consistent with a selection process in which acquirers seek out firms that have a superior past innovation performance, but that are failing in terms of recent R&D productivity and financial performance. A comparison of the performance of the targets with their acquirers reinforces this conclusion.

Key Words: Mergers and acquisitions • Acquisition likelihood • R&D • Patents

JEL classifications: G34, O31, L20

Manuscript received April 30, 2007; final version received November 18, 2008.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.