Cross-border mergers and acquisitions: A double-edged sword for Chinese firms’ innovation performance

Abstract

AbstractThis study examines the impact of the incompatibility between Chinese firms’ learning ability and knowledge-seeking opportunities on their innovation performance following cross-border mergers and acquisitions. Using a sample of 239 firms from 2014 to 2018, a quasi-Poisson model is employed to analyze the direct and indirect relationships among study variables. The findings indicate that firms that aggressively pursue cross-border mergers and acquisitions experience a decline in innovation performance. In contrast, innovation performance is strengthened when the host countries’ legal frameworks are strict. The study suggests that firms seeking to enter the global market must strike a balance between their learning abilities and knowledge-seeking opportunities. The study also infers that managers should consider not only firm-level factors but also industry-level and country-level factors that could affect the relationship between cross-border mergers and acquisitions and innovation outcomes.

Keywords

• innovation
• cross-border mergers and acquisitions
• Chinese firms