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Productivity, Innovation Spillovers, and Mergers: Evidence from a Panel of U.S. Firms

  • Mahdiyeh Entezarkheir EMAIL logo and Anindya Sen
Published/Copyright: March 3, 2023

Abstract

We investigate the impact of mergers and product innovation on labour productivity through a unique panel data set of roughly 2000 publicly traded U.S. manufacturing firms from 1980 to 2003. OLS estimates reveal that mergers interacted with citation-weighted patents are significantly correlated with increases in labour productivity. OLS and IV estimates of citation-weighted patent stocks with respect to firm-specific labour productivity are positive and consistently significant. Further, mergers are significantly correlated with a rise in citation-weighted patent stocks and research and development (R&D) spending. In tandem, our findings suggest that larger firms resulting from mergers spend more on innovation, which results in higher quality patents, and increased labour productivity.

JEL Classification: L10; L60; L40; O30; O31; O34; O38

Corresponding author: Mahdiyeh Entezarkheir, Department of Economics, Huron at University of Western Ontario, 1349 Western Rd, London, ON N6G 1H3, Canada, E-mail:

Acknowledgements

We are grateful to an anonymous referee for extremely useful advice. The usual disclaimer applies.

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Received: 2021-11-26
Revised: 2022-08-24
Accepted: 2023-01-30
Published Online: 2023-03-03

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