In mergers and acquisitions, a tension arises between devoting resources to activities relating to the integration of the merging firms at the expense of assigning them to ongoing business operations of the target and acquirer. Although numerous scholars have identified this resource tradeoff as being critical, the dynamics and implications thereof remain unexplored. In this paper, we examine such resource allocation decisions, by investigating the impact of integration and operational resource allocation decisions on the post-acquisition product development process in innovation-targeted acquisitions. These aspects are explored through an empirical investigation and a simulation analysis drawing on the acquisitions conducted by leading firms in the telecom networking and software industries. The findings contribute to our understanding of resource allocation processes, acquisition implementation, and innovation management.