Collaboration and innovation: a review of the effects of mergers, acquisitions and alliances on innovation

Over the past decades, a strong upheaval in the use of alternative forms of organization gave way to increased attention in the academic literature to the performance effects of, in particular, strategic alliances and mergers and acquisitions (M&A). Whereas mergers and acquisitions and strategic alliances are primarily known for their ability to facilitate entry into new markets and their effectiveness in achieving scale and scope economies we would like to focus on their effects on the innovative performance of companies involved. In spite of the vast and rapidly growing body of literature on the use and structure of strategic alliances and mergers and acquisitions, there are hardly any studies that address the question of whether one mode of partnering is superior to the other in terms of strengthening the innovative capabilities of the partners involved. Moreover, no extensive review of the empirical literature on this specific research topic is available. Given the growing importance of innovation for the competitive position of companies (Porter, 1990) and the fact that innovation is shown to be one of the driving forces of 20th century growth (Franko, 1989) it is of eminent importance that we study the effect of alternative governance mechanisms on the innovative performance of companies (Vanhaverbeke et al., 2002). Since, no general conclusions have been drawn based on the existing literature, knowledge accumulation is inhibited. It is unclear which research questions have already been answered and which are still open for further exploration. The lack of a coherent overview also implies that practitioners have no empirically validated guidelines when preparing for the best mode of organizing for innovation. Should managers opt for M&A or an alliance if they intend to increase innovation? What specific circumstances affect this choice? What type of alliance is best suited to a particular situation? The absence of an exhausting overview of empirical findings so far, makes it impossible to even begin answering these questions. Hence, there is a necessity for a review of empirical studies on the effect of M&A versus alliances on innovation.