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Are Acquisitions A Poison Pill For Innovation?, Michael A. Hitt, Robert E. Hoskisson, R. Duane Ireland, Jeffrey S. Harrison
Are Acquisitions A Poison Pill For Innovation?, Michael A. Hitt, Robert E. Hoskisson, R. Duane Ireland, Jeffrey S. Harrison
Management Faculty Publications
The recent wave of acquisition activity may be damaging the innovative capabilities of American firms, thus making them less competitive in the global marketplace. In fact, acquisitions often serve as a substitute for innovation, which may cause further neglect of internal research and development (R&D) programs. Additionally, acquisitions often lead to increases in leverage, diversification, and absorb significant amounts of executive time, which may lead to reduced managerial commitment to innovation.
In this article, evidence is presented suggesting that acquisition activity may result in reductions in R&D inputs and outputs. On average, the 191 firms in the sample reduced their …