Inter-Firm Inventor Collaboration and Path-Breaking Innovation: Evidence From Inventor Teams Post-Merger

Abstract

Using a large and novel data set over the period of 1976 to 2019 tracking inventors’ career paths following mergers and acquisitions, we show that collaboration between acquirer and target inventors post-merger is associated with more path-breaking patents than those filed by either acquirer or target inventor-only teams. We further show that such collaboration is more important in improving acquirers’ innovation capabilities than hiring target inventors and knowledge spillovers. Finally, we show that recombining tacit knowledge embodied in the human capital of acquirer and target inventors is likely the mechanism. We conclude that inter-firm inventor collaboration is one key means for achieving synergies.

The sustainable development trend in environmental, social, and governance issues and stakeholder engagement: Evidence from mergers and acquisitions in China

“…(Laplume et al, 2008; Miles, 2017; Wallace, 2003). In this sense, high‐ESG firms would not excessively use their ESG advantages to act as a lever for increasing the probability of high bid premiums, which would be conflict with the interest of maintaining their high corporate responsibility (Leiva et al, 2016) and reputation (Chen et al, 2022; Li & Wang, 2021), as well as conflicting with the interest of all benefitting all shareholders' and stakeholders.…”

“…On the other hand, stakeholder theory (Donaldson & Preston, 1995;Freeman, 1984) states that there is no mutually exclusive relationship between ethical behavior and profit in ESG-related corporate operations, and that a company's behavior can meet stakeholders' interests while still ultimately benefitting shareholders. From this perspective, high-ESG firms should not excessively use their ESG advantages as a lever for increasing the probability of bid premiums if it would jeopardize the maintenance of corporate responsibility (Leiva et al, 2016) or their reputation (Chen et al, 2022;Li & Wang, 2021).…”

Hiring by professional affiliation: The benefits and challenges of leveraging prospective hires’ prior employment ties to improve matching and access to resources

“…■ Hiring many individuals at once reduces research and information costs through scale economics (Kim, 2022). -Post-merger, inventors from the acquiring firm experience increased patent output and convey knowledge spillovers to inventors from the target firm (Li & Wang, 2021).…”

“…Examples include knowledge of a competitor's capabilities that a new hire developed while employed at the competitor (e.g., Somaya et al., 2008) and, in the case of a liftout, team‐specific knowledge (e.g., Groysberg & Abrahms, 2006). Even for knowledge that may be available through alternative means, a hiring firm's access to new hires with first‐hand experience with the knowledge (e.g., involvement with patents; Li & Wang, 2021) and/or its source eases the challenges of knowledge integration and use.…”

“…Other examples of relevant knowledge sourced through HBPA include boomerang hires’ knowledge of the hiring firm's social system (based on their prior employment with the firm) (Keller et al., 2021) and knowledge stocks shared among co‐mobile hires who enter the organization together in the context of acqui‐hiring and liftouts (Groysberg, 2010; Li & Wang, 2021; Ouimet & Zarutskie, 2020). In each case, through the newly hired employee(s), hiring firms gain preferential access to knowledge that would be less available (e.g., more difficult to identify, locate, or access) through alternative hiring or knowledge‐sourcing practices.…”