Cross-industry vs. same-industry acquisitions: unveiling their differential impacts on innovation in the smartphone industry

Firm acquisitions have emerged as a pivotal driver of innovation, particularly in the smartphone industry. This study investigates the effects of different acquisition strategies – same-industry and cross-industry – on innovation. By analysing data from 84 acquisitions by smartphone firms between 2007 and 2022, along with United States Patent and Trademark Office (USPTO) patent records, it is evident that cross-industry acquisitions significantly enhance innovation. By contrast, same-industry acquisitions do not impact firm innovation. This trend is also consistent with breakthrough innovations examined through patent citations. The findings underscore the crucial role of cross-industry acquisitions in stimulating substantial innovation and provide key insights for strategic economic decision-making, particularly for firms that consider diverse acquisition strategies.