Acquisition integration and productivity losses in the technical core: Disruption of inventors in acquired companies

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163 Citations (Scopus)

Abstract

Acquisition integration is a pivotal factor in determining whether the objectives of an acquisition are achieved. In this paper, we hypothesize that the productivity of corporate scientists of acquired companies is generally impaired by integration, but that some scientists experience more disruption than others. In particular, acquisition integration will be most disruptive, leading to the most severe productivity drops, for those inventors who have lost the most social status and centrality in the combined entity. Drawing from prior literatures on the knowledge-based view of the firm, and on mergers and acquisitions, we develop hypotheses about a concise set of conditions that will lead to substantial performance drops for acquired technical personnel. We test our hypotheses, using patent application data, on a sample of 3,933 inventors in pharmaceutical firms whose companies were acquired. Results are strongly in line with our theorized expectations.

Original languageEnglish (US)
Pages (from-to)545-562
Number of pages18
JournalOrganization Science
Volume17
Issue number5
DOIs
StatePublished - Oct 10 2006

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Productivity
Mergers and acquisitions
Industry
Drug products
Personnel
Inventor
Disruption
Social status
Patents
Hypothesis test
Factors
Pharmaceuticals
Centrality
Knowledge-based view of the firm

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

Cite this

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