When do Acquirers Invest in the R&D Assets of Acquired Science-based Firms in Cross-border Acquisitions? The Role of Technology and Capabilities Similarity and Complementarity

Drawing on a multiple case study of acquisitions of UK biopharmaceutical firms, we develop an analytical framework that elucidates how key determinants of the knowledge base of science-based firms and their combinations through M&As interact and affect post-acquisition investment in the target’s R&D projects. We show that two factors — the complementarity/similarity of the technology, and the complementarity/similarity of the discovery and development capabilities of the target and acquiring firm — interact to produce different outcomes in terms of investment in the acquired firm’s R&D assets and for the local science and technology system.