Do Cross-Border Mergers and Acquisitions by Emerging Market Enterprises Enhance Long-Term Productivity? The Host Country Market Size Effect Moderated by Technological Absorption Efforts

Abstract

The purpose of this study was to establish a spatial structural framework to explore how cross-border mergers and acquisitions (M&As) in emerging markets can enhance long-term productivity and select the appropriate host country market structures. Utilizing cross-border M&A data from Chinese companies from 2008 to 2016, we developed a moderated U-shaped mediation model. Employing Two-Stage Least Squares and the Generalized Method of Moments for endogeneity analysis, we offer robust empirical insights. Our findings illustrate that enterprise productivity progression from cross-border M&As is significantly influenced by a U-shaped mediation of the host country’s market size effect, which is further moderated by the technological distance between the home and host countries. A high technological distance intensifies the U-shaped mediation of market size effects on enterprise productivity, while low technological distances result in an inverted U-shaped curve, indicating that such markets may boost short-term productivity but limit long-term growth. Conversely, larger markets with greater technological distances better support sustained productivity increases, even requiring persistent technological absorption efforts. This study underscores the necessity of selecting appropriate host country market structures and effectively managing the acquisition timeline to positively impact both short- and long-term productivity. By conceptualizing firm-level technological absorption efforts as the technological gap between the home and host countries, this study highlights the crucial moderating role that the technological gap plays in influencing long-term productivity at the macro level, providing new insights into the economic geographic strategic decisions and spatial planning for emerging market enterprises in cross-border acquisitions.

Keywords

• cross-border M&A
• enterprise productivity
• spatial structure
• emerging markets
• technological absorption efforts