Resource complementarity and value capture in firm acquisitions: The role of intellectual property rights

Authors

  • Christoph Grimpe,

    Corresponding author
    1. Department of Innovation and Organizational Economics, Copenhagen Business School, Frederiksberg, Denmark
    2. Research Policy Institute, Lund University, Lund, Sweden
    • Correspondence to: Christoph Grimpe, Department of Innovation and Organizational Economics, Copenhagen Business School, Kilevej 14A, 2000 Frederiksberg, Denmark. E-mail: cg.ino@cbs.dk

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  • Katrin Hussinger

    1. Center for Research in Economics and Management, Faculty of Law, Economics and Finance, University of Luxembourg, Luxembourg, Luxembourg
    2. Department of Industrial Economics and International Management, ZEW Centre for European Economic Research, Mannheim, Germany
    3. Managerial Economics, Strategy, and Innovation, Catholic University of Leuven, Leuven, Belgium
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Abstract

Extant literature holds that firm acquisitions create value through innovation if the knowledge bases of the acquirer and the target complement each other. Little is known about the value that patents associated with a target's knowledge convey to the acquirer, i.e., their value in securing market exclusion and freedom to operate in R&D. We argue that such property rights hold preemptive power allowing firms to capture the value from combining complementary technologies and to realize gains from trade in strategic factor markets. Our results for a sample of 1,428 acquisitions indicate that—controlling for technological value—acquired preemptive power is an important determinant of the acquisition price, particularly when the acquirer is technology intensive and acquired patents are highly related to the acquirer's knowledge base. Copyright © 2013 John Wiley & Sons, Ltd.

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