Negative consequences of being acquired on new product quality: Evidence from US medical device industry

Jongsoo Kim, Moonsik Shin, Joon Mahn Lee

Research output: Chapter in book/report/conference proceedingConference proceedingpeer-review

Abstract

Technology acquisition is a widely used strategy for firms to access new technologies and enhance their innovation outcomes. However, existing literature primarily focuses on the post-acquisition innovation outcomes of the acquiring firm, neglecting the potential impact on the innovation outcomes of the acquired firm. This research aims to address this gap by investigating the post-acquisition new product quality at acquired firms. We argue that the acquisition process can introduce coordination problems in the innovation process and routines of the acquired firm, leading to a higher likelihood of new product failure. To test our hypotheses, we examine the U.S. medical device industry as our empirical setting. Through product-level analyses, we find evidence supporting our claim that products introduced by acquired firms are more prone to experience product failure. Furthermore, we identify specific conditions under which these coordination problems are mitigated or intensified. These conditions include the relatedness of the acquiring and acquired firms' technologies, the incorporation of the acquiring firm's product component into the acquired firm's new product, the retention of the acquired firm's CEO after the acquisition, and the acquiring firm's prior acquisition experiences. To strengthen the robustness of our findings, we employ various analytical approaches, including two-stage instrumental variable analyses and Heckman method.

Original languageEnglish
Title of host publicationAcademy of Management Proceedings 2023
EditorsSonia Taneja
PublisherAcademy of Management
DOIs
Publication statusPublished - Aug 2023
Event83rd Annual Meeting of the Academy of Management, AOM 2023: Putting the Worker Front and Center - Boston, United States
Duration: 4 Aug 20238 Aug 2023
https://www.xcdsystem.com/aom/program/A5p5d1k/index.cfm?pgid=891&RunRemoveSessionFilter=1 (Link to conference programme )
https://journals.aom.org/toc/amproc/2023/1

Publication series

NameAcademy of Management Annual Meeting Proceedings
PublisherAcademy of Management
Number1
Volume2023
ISSN (Print)0065-0668
ISSN (Electronic)2151-6561

Conference

Conference83rd Annual Meeting of the Academy of Management, AOM 2023
Country/TerritoryUnited States
CityBoston
Period4/08/238/08/23
Internet address

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