Investigating the Integration of Acquired Firms in High-technology Industries: Implications for Industrial Policy

Acquisition activity persists despite evidence that acquisitions do not improve firm performance. Further, government policy toward the defense industry has advocated consolidation in the name of nominal cost savings. We explore the role acquisitions play toward technology transfer and begin to identify factors associated with acquisition success through a review of existing research on post-acquisition performance that primarily considers acquiring firm stock performance. Using this research as a foundation, we build a model to analyze post-acquisition performance using a sample of high-technology firms. Results suggest critical success factors associated with post-acquistion stock performance are poorly understood. We conclude that proactive government policy toward high-technology industry mergers and acquisitions may be misguided due to difficulty in predicting acquisition outcomes