M&A and Corporate Innovation: A Literature Review

The relation between M&A and innovation has received a lot of attention from both academia and practice. The existing studies show that M&A can improve the level of innovation and that the level of innovation before M&A can increase the likelihood of a company to participate in M&As. Since acquiring companies (larger companies) and target companies (small companies) have different motivations and performance of M&A, our paper reviews the existing literature from two perspectives: one is the relation between acquiring companies and innovation, while the other is the relation between target companies and innovation. The paper also discusses the contributions of these studies to theory and practice, and suggests a few future research directions.