How Swiss small and medium-sized firms assess the performance impact of mergers and acquisitions

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. primarily affected by specific M&A characteristics, but not by general market characteristics such as demand development or competition conditions. Rather astonishingly, it is also not affected by firm characteristics such as capital intensity, human capital endowment and firm size. Terms of use: Documents in EconStor mayThere is an interesting exception: innovation activities. This means that with the remarkable exception of innovation activities the level of M&A performance is determined primarily by factors of the M&A process itself. There is a broad theoretical and empirical literature on the economic performance of mergers and acquisitions (M&A) (see, e.g., Agrawal and Jaffe 2000;Kaplan 2000; Martynowa and Renneboog 2008;Gugler et al. 2012). Nevertheless, some aspects remain under-researched, particularly, those that are specific to small and medium-sized firms (SMEs). This neglect of M&A studies that refer to SMEs may be traced back, firstly, to the fact that the majority of empirical studies rely on stock market-based measures of performance (see Bild 1998;King et al. 2004;McDonald et al. 2008;and Meglio and Risberg 2011). As such information is not available for the majority of SMEs, the performance of M&As is almost exclusively analyzed for large M&As and it is unclear whether the implications of these studies are valid also Our study is based on a representative sample that includes all Swiss M&As that took place in the period [2006][2007][2008]. Average size of these firms is just about 320 employees, whereupon only 40% of the firms have more than 100 employees. Accordingly, we are able to draw conclusions regarding the total of M&As in the respective period of time, 86% of which had less than 500 employees. Further, our study is based on survey data that provide us detailed information on the determinants of M&A performance. We investigate the firm characteristics that determine the innovation and economic performance of M&A. The performance measures come from surveybased firms' assessments. These measures are regressed on a series of possible determining factors as postulated in existing theoretical and empirical literature.Previous empirical studies that deal with the determinants of M&A performance are often based on small sample survey results. Probably most closely related to our work are the studies of Capron (1999) and Cassiman et al. (2005). However, both studies are not representative of the M&A population. Furthermore, we analyze ...

Open innovation and intellectual property: a knowledge-based approach

“…Moreover, companies achieve a higher specialization when they have accumulated knowledge through internal development, whereas previous R&D outsourcing and M&As lead to diversification. Such results are consistent with previous research (Arvanitis and Stucki, 2014; Hoberg and Phillips, 2010; Teirlinck and Spithoven, 2013).…”

“…Mergers between firms with similar product markets are associated with larger positive effects than diversifying mergers (Ahuja and Katila, 2001; Arvanitis and Stucki, 2014; Bena and Li, 2014; Fan and Goyal, 2006). Companies merge with partners with technological proximity or complementary assets that expand their range of products through new products introductions (Hoberg and Phillips, 2010).…”

“…It is widely acknowledged that M&As are suitable for large companies, having the resources to better sustain and integrate the assets and the knowledge of the target firm (Arvanitis and Stucki, 2014; Khansa, 2015). Within the bio-pharmaceutical industry, M&As have been a frequent strategic response to the difficulties to refill the product pipelines and manage the growing complexity of R&D (Kirchhoff and Schiereck, 2011).…”

Is M&A Information Useful for Exploring Promising Industries and Technologies?

“…Arvanitis and Stucki [45] analyzed the impact of M&As on the economic performance of SMEs. The authors suggested five groups of motives: growth (increase market share, broaden the product mix, entry into new business), cost (spread fixed costs, rationalization of procurement/production/marketing and sales), resources (obtain access to specific know-how/network), risks (spread the market risk), and innovation (reduce costs of R&D, obtain access to innovation-related know-how/networks, reduce the risk of the R&D portfolio/of being imitated).…”

“…Cost reduction includes the reduction of average or marginal costs of production, fixed costs, financial costs and R&D costs [44,45]. Keywords related to cost reduction can ultimately lead to "growth" and "innovation" as companies can have the same or higher output compared to smaller input by achieving higher efficiency and productivity within the enterprise.…”