The impact of cross border acquisitions on high technology firms: A comparative study in the Italian biotech industry

The increase in foreign direct investment in industrialized countries since the mid-1980s has largely come about through mergers and acquisitions (M&As) and, as a result, the share of foreign ownership in the total population of firms has grown in many countries. According to the UNCTAD (2014) global cross-border mergers and acquisitions activities have risen from $49.8 billion in 1987 to $1.04 trillion in 2007. In fast growing markets firms do not always have the time to build up new technological capabilities themselves or to strengthen existing competencies within an appropriate time frame. Technology-grafting acquisitions (Desyllas and Hughes, 2008) provide rapid and exclusive access to technologies and are an attractive tool to enhance existing technology portfolios with assets and capabilities of the acquired firm. This paper is part of a wider research that aims at investigating the effects of cross border acquisitions of Italian firms, in order to understand if they can be an opportunity of growth for the Made in Italy or only a cause of pauperization of our economy. It focuses on the impact on R&D activities of the target firms in order to answer these research questions: are these firms in the post-acquisition stage more innovative in terms of improved R&D skills, time to market, product quality and product cost (Capron & Mitchell, 1998; Bresman et al., 1999), R&D intensity, patenting intensity and patent stock? What are the main reasons? Four Red biotech acquired companies are used as multiple case study, chosen for their important technological assets and patent portfolio.