Abstract
Mergers and acquisitions are one of the most important strategies for firms in the biotechnology industry to gain access to valuable technological resources. This study investigates how the M&As orientation of biotechnology firms influence their innovation and financial performance. Data were gathered from three sources: SDC, Compustat, and US Patents and Trademarks Office. I used the GLM model of the SPSS software to conduct statistical analysis. Results show that M&As serve as a complementary strategic tool of internal R&D in the acquisition of new technological knowledge. A firm’s M&A orientation is positively associated with its innovation quality and financial performance, while a firm’s M&A orientation can endanger its profitability. I also find that M&A experiences of a firm would contribute to its innovation performance and the cumulative value of its intangible assets. The number of M&A deals and cross-state acquisitions orientation are negatively associated with innovation quality, while the ratio of biotech patents of acquirers’ patent portfolios is positively associated with innovation qualities. Finally, firms can experience diseconomies of scale in innovation outputs.