Try Before You Buy: Measuring Innovation Synergy Using Textual Analysis

An increasing number of acquirers are adopting a “two-step merger” strategy by making corporate venture capital (CVC) investments in private firms prior to engaging in mergers and acquisitions (M&A). This dissertation investigates the strategic role of CVC using a three-stage framework and applies advanced textual analyses to examine how these investments reduce in-formation asymmetry and improve innovation outcomes. Drawing on real options theory (ROT), the analyses conceptualizes CVC investments as staged commitments that offer acquirers valuable flexibility under uncertainty. In the pre-CVC stage, I use textual analysis of patent documents to measure technological information asymmetry between acquirers and potential targets. I find that acquirers are more likely to initiate CVC investments in private firms that exhibit higher levels of technological opacity. In the post-CVC stage, I assess the potential for innovation synergy and show that investor-investee pairs with greater technological alignment are more likely to proceed to an M&A deal. In the post-merger stage, I evaluate realized innovation synergy at both the firm and inventor levels. At the firm level, acquirers that previously invested via CVC expand their technological scope. At the inventor level, textual analysis reveals that post-merger patents filed by target and acquirer inventors share more newly aligned keywords and exhibit closer thematic similarity, compared to withdrawn M&A pairs. Collectively, these findings demonstrate how CVC investments serve as a real option and an information-gathering mechanism and lay the foundation for innovation-driven synergies in subsequent M&A transactions.

Name thesis:degree_name

Doctor of Philosophy

Discipline thesis:degree_discipline

Business Administration

Grantor

Texas A&M University

Year dc:date.issued

2025

Author dc:creator

• Yi, Haneul 1987-

Advisor dc:contributor.advisor

• Liu, Xiaoding

Committee members dc:contributor.committeemember

• Rice, Sarah
• Fitzgerald, Tristan

• Business Administration, General

Language dc:language.iso

English

Handle dc:identifier.uri

https://hdl.handle.net/1969.1/1599641

OAI record oai:identifier

https://oaktrust.library.tamu.edu/server/oai/request?verb=GetRecord&metadataPrefix=dim&identifier=oai%3Aoaktrust.library.tamu.edu%3A1969.1%2F1599641