Chinese multinationals' cross-border mergers & acquisitions and innovation performance in the context of technological catch-up

Details

Supervisors

Defraigne, Jean-Christophe

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

The phenomenon of Chinese cross-border M&As is recent but important in the context of China's economic transition and technological catch-up. Scholars argue that Chinese multinationals engaging in these activities are after strategic assets (knowledge, brands, management know-how...) in developed countries (Deng et al, 2017). While the effects of cross-border M&As on innovation performance has been explored extensively in the case of western companies from developed countries, the case of China remains understudied (Fisch et al, 2017). My research combines theories stemming from the concepts of (i) Foreign Direct Investments, (ii) M&As, (iii) cross-border M&As, and (iv) innovation to explore the effect of Chinese cross-border M&As on the acquirers' post acquisition innovation performance. After having conducted a thorough literature review of the above-mentioned topics, different hypotheses were constructed. My analysis of a sample of 37 Chinese cross-border M&As, using a linear regression model suggests that Chinese companies engaging in cross-border M&As see a significant improvement in their post-acquisition innovation performance. Moreover, absorptive capacity and cultural distance are found to have a positive and significant impact of the post-acquisition innovation performance. I also find significant results that indicate that the larger the number of previous M&As, the worse the post-acquisition performance is. Implications for Chinese managers and policy makers are discussed.