Mergers and acquistions: their effect on the innovative performance of companies in high-tech industries

This study examines the post-m&a innovative performance of acquiring firms in four major high-tech sectors. Non-technological m&as appear to have a negative impact on the acquiring firm's post-m&a innovative performance. With respect to technological m&as, a large relative size of the acquired knowledge base reduces the innovative performance of the acquiring firm. The absolute size of the acquired knowledge base only has a positive effect during the first couple of years after which the effect turns around and we see a negative effect on the innovative performance of the acquiring firm. The relatedness between the acquired and acquiring firms’ knowledge bases has a curvilinear impact on the acquiring firm's innovative performance. This indicates that companies should target m&a ‘partners’ that are neither too unrelated nor too similar in terms of their knowledge base.