R&D Activity and Acquisitions in High Technology Industries: Evidence from the U.S. Electronic and Electrical Equipment Industries

Theory argues that R&D intensity and acquisition activity may be either directly or inversely related. However, empirically we know relatively little about which firms are responsible for acquisition activity in high-technology industries. Using a panel of 217 U.S. electronic and electrical equipment firms from 1985-93 and limited dependent variable estimation techniques, we find relatively low R&D-intensity firms are more likely to acquire. This result is true both when looking at between and within estimators, indicating that acquisitions may be used as a short term or long term strategy. These results are robust to a number of sensitivity test.