--- title: "Impact of Acquistions by Foreign Companies on Innovation Activities" authors: - name: "Ali-Yrkkö, Jyrki" url: "https://www.etla.fi/henkilot/ali-yrkko-jyrki/" sameAs: - "https://orcid.org/0009-0005-2977-6878" - name: "Kauhanen, Antti" url: "https://www.etla.fi/henkilot/kauhanen-antti/" sameAs: - "https://orcid.org/0000-0001-9506-1241" - "https://scholar.google.com/citations?user=AjYlgDoAAAAJ" - "https://twitter.com/Antti_Kauhanen" - "https://sites.google.com/view/antti-kauhanen/home" date_published: "2024-11-27" series: "ETLA Working Papers" series_number: "122" issn: - "2323-2420" - "2323-2439" jel_codes: - "O3" - "L6" - "L64" language: "en" publisher: "ETLA Economic Research" pdf_url: "https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-122.pdf" keywords: - "Acquisition" - "M&A" - "Research" - "Development" - "R&D" - "Innovation" - "Impact" identifier: "https://www.etla.fi/julkaisut/id/ETLA-Working-Papers-122" abstract: "This study examines the impact of foreign acquisitions on innovation activities in Finnish target firms using comprehensive linked employer-employee data from 2010–2021. Unlike previous research that found negative effects on R&D expenditures and patenting, we measure innovation through the share of R&D personnel in total employment. Our main finding is that foreign acquisitions have a statistically insignificant and economically small impact on the share of R&D employees in target firms. Three years post-acquisition, the point estimate shows a 0.9 percentage point increase in R&D employee share, and we can rule out increases over 2 percentage points and decreases below 0.09 percentage points. This null effect persists across different firm sizes and industries. Our results suggest that con-cerns about foreign acquisitions substantially reducing domestic R&D activity may be overstated, at least when measured by R&D employment." --- # Impact of Acquistions by Foreign Companies on Innovation Activities **Published:** 2024-11-27 **Categories:** Working Papers **Tags:** ETLA-WEF **URL:** https://www.etla.fi/en/publications/working-papers-en/impact-of-acquistions-by-foreign-companies-on-innovation-activities/ #### Abstract This study examines the impact of foreign acquisitions on innovation activities in Finnish target firms using comprehensive linked employer-employee data from 2010–2021. Unlike previous research that found negative effects on R&D expenditures and patenting, we measure innovation through the share of R&D personnel in total employment. Our main finding is that foreign acquisitions have a statistically insignificant and economically small impact on the share of R&D employees in target firms. Three years post-acquisition, the point estimate shows a 0.9 percentage point increase in R&D employee share, and we can rule out increases over 2 percentage points and decreases below 0.09 percentage points. This null effect persists across different firm sizes and industries. Our results suggest that con-cerns about foreign acquisitions substantially reducing domestic R&D activity may be overstated, at least when measured by R&D employment. --- ## Additional Information **Kirjoittajat:** Ali-Yrkkö, Jyrki - Kauhanen, Antti **Kansikuva:** https://www.etla.fi/wp-content/uploads/etla-working-papers-122-kansi.jpg **Lataa Pdf:** https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-122.pdf **Key Words:** Acquisition, M&A, Research, Development, R&D, Innovation, Impact **Jel:** O3, L6, L64 **Paivays:** 27.11.2024 **Sivuja:** 26 **Kieli:** en **Sarja:** ETLA Working Papers **Sarja Nro:** 122 **Issn:** 2323-2420, 2323-2439 (Pdf) **Saatavuus:** 2 ## Bibliographic metadata (JSON-LD) ```json { "@context": "https://schema.org", "@type": "ScholarlyArticle", "@id": "https://www.etla.fi/julkaisut/id/ETLA-Working-Papers-122", "headline": "Impact of Acquistions by Foreign Companies on Innovation Activities", "inLanguage": "en", "publisher": { "@type": "Organization", "name": "ETLA Economic Research", "url": "https://www.etla.fi", "logo": { "@type": "ImageObject", "url": "https://www.etla.fi/wp-content/uploads/logo-etla_logo.svg" } }, "datePublished": "2024-11-27T00:00:00+00:00", "author": [ { "@type": "Person", "name": "Ali-Yrkkö, Jyrki", "url": "https://www.etla.fi/henkilot/ali-yrkko-jyrki/", "sameAs": [ "https://orcid.org/0009-0005-2977-6878" ] }, { "@type": "Person", "name": "Kauhanen, Antti", "url": "https://www.etla.fi/henkilot/kauhanen-antti/", "sameAs": [ "https://orcid.org/0000-0001-9506-1241", "https://scholar.google.com/citations?user=AjYlgDoAAAAJ", "https://twitter.com/Antti_Kauhanen", "https://sites.google.com/view/antti-kauhanen/home" ] } ], "abstract": "This study examines the impact of foreign acquisitions on innovation activities in Finnish target firms using comprehensive linked employer-employee data from 2010–2021. Unlike previous research that found negative effects on R&D expenditures and patenting, we measure innovation through the share of R&D personnel in total employment. Our main finding is that foreign acquisitions have a statistically insignificant and economically small impact on the share of R&D employees in target firms. Three years post-acquisition, the point estimate shows a 0.9 percentage point increase in R&D employee share, and we can rule out increases over 2 percentage points and decreases below 0.09 percentage points. This null effect persists across different firm sizes and industries. 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