Cross-border M&A as a Driver of Global Innovation - A Quantitative Study on Knowledge Transfer through International M&A

University essay from Handelshögskolan i Stockholm/Institutionen för redovisning och finansiering

Abstract: This thesis aims to further elaborate on the topic of cross-border M&A as a driver of international exchange of knowledge by investigating the difference in innovation post M&A, compared to other transactions, for industry-related transactions, transactions between two innovative countries and transactions where the acquiring country is non-innovative while the target is innovative. Unlike previous research that mainly classifies countries as either emerging or advanced based on financial conditions, the classification of non-innovative and innovative countries is based on the Global Innovation Index, which has not before been used as an explanation factor in this research area. Using an OLS fixed-effects regression model on panel data relating to 761 cross-border acquisitions between 2000 and 2015, with data from mainly SDC Platinum and WRDS, while using three different measures of innovation (R&D intensity, Total Factor Productivity and Labour productivity), it is concluded that: i) comparability issues in the research area arise from different innovation unit definitions, ii) the results do not support previous research in terms of implementation issues from non-related transactions nor in terms of economies of scale and scope being the main drivers of innovation in an M&A context, iii) using innovative conditions of countries, rather than financial conditions, further contribute to the research area of cross-border M&A as a driver of global innovation.

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