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on Technology and Industrial Dynamics |
| By: | Gautier Duflos (Centre d'Economie de la Sorbonne - Paris School of Economics); Etienne Pfister (BETA-Règles - Université de Nancy II) |
| Abstract: | This article analyzes the individual determinants of acquisition activity and target choices in the pharmaceutical industry over the period 1978-2002. The "innovation gap" hypothesis states that acquiring firms lack promising drug compounds and acquire firms with more promising drug prospects. A duration model implemented over a panel of more than 400 firms relates the probabilities of being an purchaser or a target to financial, R&D ant patent data to investigate this explanation more deeply. Results show that purchasers are firms with a lower Tobin's Q and decreasing sales, which could indicate that acquisitions are used to compensate for low internal growth prospects. Firms with a higher proportion of radical patents in their portfolio, especially in pharmaceutical and biothechnological patent classes, face a higher probability of being targeted, indicating that acquiring firms are indeed searching for innovative competencies. However, acquiring firms also present a significant absorptive capacity : their R&D investment increases in the year preceding the operation and their patent stock is larger and more diversified than for non-acquiring firms. Finally, we observe that over the last ten years of the sample period, firms have paid a greater attention to the size of the target's portfolio. |
| Keywords: | M&A, pharmaceutical, innovations, patent citations. |
| JEL: | G34 L15 L21 O3 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:bla08057&r=tid |
| By: | Werner Bönte (Schumpeter School of Business and Economics, University of Wuppertal); Lars Wiethaus (ESMT Competition Analysis) |
| Abstract: | It is a common concern that pricing pressure by powerful buyers discourages suppliers' R&D investments. Employing a simple monopsonist - competitive upstream industry - framework, this paper qualifies this view in two respects. First, the monopsonist has an incentive to subsidize upstream R&D which yields more upstream R&D and higher profits in both industries than the monopsonist's commitment to higher prices. Secondly, in the presence of intra-industry R&D spillovers between upstream firms, the monopsonist has an even stronger incentive to finance upstream R&D. If the monopsonist finances more than fifty percent of suppliers R&D efforts, R&D investments in upstream industry will be higher than in the case of buyer competition. |
| Keywords: | Vertical Relationships, Monopsony, Buyer Power, R&D, Knowledge Spillovers |
| JEL: | O31 O32 L13 L20 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp08004&r=tid |
| By: | Jyrki Ali-Yrkkö; Olli Martikainen |
| Abstract: | ABSTRACT : This study investigates the relationship between innovations and firm growth, based on the data of Finnish firms operating in the software industry. We find that in terms of turnover and employment, firms with only technological innovations do not grow more rapidly than other firms. However, firm growth is positively associated with the combination of technological and non-technological innovations. |
| Keywords: | innovation, technological, non-technological, R&D, firm, development, employment, growth, Finland |
| JEL: | O3 O33 L2 |
| Date: | 2008–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1165&r=tid |