The combined effect of technological relatedness and knowledge utilization on explorative and exploitative invention performance post-M&A

Purpose – The purpose of this paper is to investigate the combined effect of Mergers and Acquisitions (M&A) partners’ technological relatedness and the acquirer’s effective utilization of the target’s knowledge on explorative and exploitative invention performance post-M&A. Design/methodology/approach – Based on the knowledge perspective of an M&A, this study measures how much of the target’s knowledge acquired in an M&A has been effectively transformed into new knowledge. A negative binomial regression on a cross-sectional data set of 152 bio-pharmaceutical firms (59 European firms and 93 North American firms) completing at least one M&A in the period between 2001 and 2005 is conducted. The effect of knowledge utilization is assessed by comparing performance six years before the M&A and six years after. Findings – The effective assimilation and utilization of acquired knowledge positively affects both acquirers’ explorative and exploitative performance post-M&As. The combined effect w...