The Impact of Acquisitions on Innovation: Poison Pill, Placebo, or Tonic?

Do acquisitions increase, decrease, or have no effect on innovation? The empirical research on this question suggests that acquisitions may hurt innovation; that is, they may be a "poison pill" for innovation. The authors present an alternative view. For firms that first engage in internal...

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Bibliographic Details
Published inJournal of marketing Vol. 69; no. 1; pp. 114 - 130
Main Authors Prabhu, Jaideep C., Chandy, Rajesh K., Ellis, Mark E.
Format Journal Article
LanguageEnglish
Published Chicago American Marketing Association 01.01.2005
SAGE PUBLICATIONS, INC
Subjects
Acquisitions & mergers
Business innovation
Corporate strategies
Educational innovation
Hypotheses
Innovations
Knowledge
Knowledge acquisition
Marketing
Pharmaceutical industry
Product development
Product innovation
R&D
Research & development
Statistical analysis
Studies
Target acquisitions
Technological change
Technological innovation
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Summary:Do acquisitions increase, decrease, or have no effect on innovation? The empirical research on this question suggests that acquisitions may hurt innovation; that is, they may be a "poison pill" for innovation. The authors present an alternative view. For firms that first engage in internal knowledge development, the knowledge-based view the authors present suggests that acquisitions can help innovation; that is, they can be a tonic for innovation. Analysis of cross-sectional, time-series data on a sample of pharmaceutical firms during 1988-97 provides evidence to support the thesis.
ISSN:0022-2429
1547-7185
DOI:10.1509/jmkg.69.1.114.55514