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Effects of Firm R&D Investment and Environment on Acquisition Likelihood*
Author(s) -
Heeley Michael B.,
King David R.,
Covin Jeffrey G.
Publication year - 2006
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2006.00636.x
Subject(s) - dynamism , attractiveness , possession (linguistics) , investment (military) , business , value (mathematics) , enterprise value , industrial organization , microeconomics , economics , finance , psychology , linguistics , philosophy , physics , quantum mechanics , machine learning , politics , political science , computer science , psychoanalysis , law
R&D investments contribute to the development of firm technology resources, and the possession of such resources often increases a firm's attractiveness as a potential acquisition target. However, the value ascribed to a firm's technology resources by would‐be acquirers may be moderated by its industry's environmental characteristics. Using data from 2886 firms, we find that investments in R&D predict acquisition likelihood and that R&D investments are most strongly associated with acquisition of firms under conditions of high environmental munificence and dynamism. Theoretical and managerial implications are discussed.