R&D Intensity and Acquisitions in High-Technology Industries: Evidence from the US Electronic and Electrical Equipment Industries

Theory suggests R&D intensity and acquisition activity may be either directly or inversely related. However, we know relatively little about which firms are responsible for acquisition activity in high-technology industries, which are not only R&D-intensive, but also have substantial acquisition activity in the United States. Using a panel of 217 US electronic and electrical equipment firms from 1985-93 and limited dependent variable estimation techniques, we find a substantial negative correlation between R&D-intensity and a firm's propensity to acquire. This result is surprisingly robust to numerous sensitivity tests and is significant in both the 'within' and 'between' dimensions of our data.