Assessing the Risk of Acquired Information Technology Knowledge Loss

Mergers and Acquisitions in Information Technology (IT) industry have reached record levels in the last decade. Especially in the fast-growing market of IT, more and more companies merge or acquire for the purpose of gaining access to knowledge, skills, and innovation. However, even in a sector that recognizes the importance of knowledge, where smart people are the competitive edge of a company little attention is being paid to the turnover of acquired employees. We develop two hypotheses related to increase of employee turnover following an acquisition consideration and potential loss of future innovation capacity. Given the limited availability of empirical data approximations like Quarterly Workforce Indicator and U.S. Patents are considered to test the increase in turnover of acquired employees and loss of innovators for the acquiring firm. Preliminary data analysis shows mixed results steering the consideration towards additional factors like acquirer’s reputation and form of acquisition to mediate turnover decisions.