The Impact of Acquisitions on the Individual Productivity

From the Change of Co-Inventor Network

Abstract

In social capital theory, network and assets embedded in tie have been studied as antecedent of individual innovation activity. Although acquisitions are reported resulting in the change of co-inventor network for R&D personals in acquired firms due to the position allocation and turnover, the prior studies have not enough investigated the impact of such a social capital change on the individual innovation activity after acquisition. This paper investigates the effect of the two types of their ego-network changes on the postacquisition innovation performance. First is disruption of exiting tie after acquisition, and second is the extension of new tie to inventors in acquiring firms. Using patent data, on a sample of 429 inventors in American semiconductor industry, we find that their old ties which are preserved after acquisition, and their new ties to acquirer's inventors increase the performance. Furthermore, we find that the positive impact of new ties is expanded as the degree of overlap in the technological knowledge of acquiring and acquired firm becomes lower.