After the exit: acquisitions, entrepreneurial recycling and regional economic development

Colin M. Mason, Richard T. Harrison

Research output: Contribution to journalArticle

81 Citations (Scopus)

Abstract

Most studies of the impact of mergers and acquisitions suggest they have a detrimental impact on economic development in peripheral regions over the longer-term. However, such assessments fail to consider the post-acquisition behaviour of the cashed-out entrepreneurs. It is argued here that acquisition triggers a process of 'entrepreneurial recycling' in which the entrepreneurs use their newly acquired wealth, allied to the experience they have accumulated, to engage in other entrepreneurial activities, notably starting new business ventures and investing in other businesses as business angels or venture capitalists. Case studies of five Scottish technology-based firms that were acquired by non-UK companies illustrate this process. When entrepreneurial recycling is taken into account, the overall impact of acquisition on regional economic development may be considerably more positive than the literature has suggested. Moreover, at a time when 'rustbelt' regions, such as Scotland, are becoming less competitive as locations for foreign direct investment, the acquisition of locally owned knowledge-based companies remains a way in which they can continue to attract such investment. The paper concludes with a research agenda for future studies of the 'harvest event'.
Original languageEnglish
Pages (from-to)55-73
Number of pages18
JournalRegional Studies
Volume40
Issue number1
DOIs
Publication statusPublished - 2006

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recycling
economic development
acquisition
entrepreneur
economics
peripheral region
foreign direct investment
merger
direct investment
foreign investment
firm
event
knowledge
experience

Keywords

  • business angels
  • regional development
  • small business
  • entrepreunership
  • economic development

Cite this

Mason, Colin M. ; Harrison, Richard T. / After the exit: acquisitions, entrepreneurial recycling and regional economic development. In: Regional Studies. 2006 ; Vol. 40, No. 1. pp. 55-73.
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After the exit: acquisitions, entrepreneurial recycling and regional economic development. / Mason, Colin M.; Harrison, Richard T.

In: Regional Studies, Vol. 40, No. 1, 2006, p. 55-73.

Research output: Contribution to journalArticle

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