innovation-rival-consolidation

Do Firms Innovate When the Rivals They Watch Consolidate?

Salma Lemkhente and Carolina Villegas-Sanchez

Working paper, October 2026.

Do firms invest more in research or less when a rival consolidates? We observe whom firms watch through the competitors they name in their disclosures, and follow listed firms across many countries through the control-changing deals of their named rivals. Research spending rises after a watched rival’s consolidation, a little in the year of the deal and more over the following years. The response follows the direction of attention, appearing after the deals of rivals the firm names but not of firms that name it. Deals of the same kind among industry peers are followed by no comparable rise.

• The paper (PDF)
• Supplementary Appendix (PDF): how the data are built, from the competitor records to the deals, the accounts and the patents, and how they are matched to the firms
• Interactive graphs: a map of the firms in the rivalry network, the rivalry flows between countries and an industry-to-industry chord diagram, companions to Section 1 of the Supplementary Appendix
• Code: the estimation code and the code of the interactive graphs

Contents

README.md
Lemkhente_VillegasSanchez_2026.pdf      the paper
Appendix/
    Supplementary_Appendix.pdf          the Supplementary Appendix
    interactive-graphs/                 the three interactive graphs (index.html lists them)
code/
    estimation/                         the estimation, in run order (code/README.md)
    interactive-graphs/                 the code of the three interactive graphs

The data are licensed from their providers and are not included in this repository.