Technological breadth and depth of knowledge in innovation: the role of mergers and acquisitions in biotech

Maria Rosa Battaggion; Suman Lodh

doi:10.1093/icc/dtu013

Technological breadth and depth of knowledge in innovation: the role of mergers and acquisitions in biotech

Maria Rosa Battaggion
, Suman Lodh

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Abstract

We analyze the diffusion and integration of external knowledge by distinguishing between the depth and breadth of technological knowledge in combination with the type of partner and channel of exchange. Using a latent variable structural equation model with a sample of 202 US biotechnology firms between 1990 and 2009, we investigate the extent to which the mergers and acquisitions with different partners contribute to the depth and breadth of the focal firm's knowledge base. Our analysis also addresses potential endogeneity issues and shows that acquisitions of related firms mainly increase the depth of knowledge, while acquisitions of unrelated firms develop the breadth of knowledge.

Original language	English
Pages (from-to)	383-415
Journal	Industrial and Corporate Change
Volume	24
Issue number	2
DOIs	https://doi.org/10.1093/icc/dtu013
Publication status	Published - Apr 2015

Keywords

Accounting and finance
M&A
depth and breadth of knowledge
knowledge spillover

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10.1093/icc/dtu013

Lodh-S-52710-AAMAccepted author manuscript, 5.63 MBLicence: Unspecified

https://doi.org/10.1093/icc/dtu013

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AB - We analyze the diffusion and integration of external knowledge by distinguishing between the depth and breadth of technological knowledge in combination with the type of partner and channel of exchange. Using a latent variable structural equation model with a sample of 202 US biotechnology firms between 1990 and 2009, we investigate the extent to which the mergers and acquisitions with different partners contribute to the depth and breadth of the focal firm's knowledge base. Our analysis also addresses potential endogeneity issues and shows that acquisitions of related firms mainly increase the depth of knowledge, while acquisitions of unrelated firms develop the breadth of knowledge.

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KW - knowledge spillover

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Technological breadth and depth of knowledge in innovation: the role of mergers and acquisitions in biotech

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