The Relationship of Mergers and Acquisitions and Innovation Activity

This research paper aims to investigate the relationship of mergers and acquisitions and companies’ innovation outputs after transaction. The relevance of this research is that the M&A influence on the companies’ activities and in particular on innovation activity is ambiguous. On the one hand, such transactions have a negative impact, because after an integration of two or more companies the total market competition reduces and therefore an incentive to be better declines too. On the other hand, a competition reduction can guarantee a greater return on R&D. That is why firms’ innovation activity should grow. The main goal is to set factors impact on technical activities. This goal can be achieved by regression analysis of M&A deal of American, European and Asian technology companies. The sample contains panel data for six years. The dependent variables are the number of patents obtained by the firm and the share of R&D expenditures which are explained by such independent variables as financial indicators, the size of the company, merger and acquisition characteristics. Keywords: mergers and acquisitions, R&D, innovation activity.