MERGERS AND ACQUISITIONS AND MANAGERIAL COMMITMENT TO INNOVATION IN M-FORM FIRMS

Acquisitive growth has become a highly popular strategy in recent years. Thus, more attention has been focused on its outcomes. This paper presents theory suggesting a tradeoff between growth by acquisition and managerial commitment to innovation. The model developed herein proposes that the acquisition process, and the resulting conditions after the acquisition is consummated, affect managerial commitment to innovation. Specifically, the extent to which acquisitions serve as a substitute for innovation, energy and attention required during negotiations, increased use of leverage, increased size, and greater diversification may affect managers' dime and risk orientations. Because of these effects, managers may reduce their comnmitment to innovation. The implications of the relationships specified in the model are also examined.