IDEAS home Printed from https://ideas.repec.org/p/bwu/eiiwdp/disbei310.html
   My bibliography  Save this paper

Mergers and Acquisitions by Chinese Multinationals in Europe: The Effect on the Innovation Performance of Acquiring Firms

Author

Listed:
  • Tian Xiong

    (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))

Abstract

This study aims to investigate the effects of mergers and acquisitions (M&As) by Chinese multinational firm in the EU28 on the subsequent innovation performance of acquiring firms with different technological intensities and types of corporate ownership The study does so by applying the Zero-Inflated Negative Binomial estimation to analyze novel longitudinal firm-level data covering the period from 2010 to 2018. The empirical evidence suggests that Chinese acquiring firms are generally able to enhance their innovation performance after merging or acquiring firms from the EU28 countries. Furthermore, this study reveals that medium low- and low-tech firms significantly improved their innovation performance after undertaking M&As, but the same effect cannot be identified for firms in the high- and medium high-tech groups. Finally, strong evidence confirms the significant increase in innovation output of private-owned enterprises in the post-acquisition era compared with state-owned or -controlled enterprises.

Suggested Citation

  • Tian Xiong, 2022. "Mergers and Acquisitions by Chinese Multinationals in Europe: The Effect on the Innovation Performance of Acquiring Firms," EIIW Discussion paper disbei310, Universitätsbibliothek Wuppertal, University Library.
    • Handle: RePEc:bwu:eiiwdp:disbei310
    as

    Download full text from publisher

    File URL: https://eiiw.wiwi.uni-wuppertal.de/fileadmin/eiiw/Daten/Publikationen/Gelbe_Reihe/disbei310.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lu, Jiangyong & Liu, Xiaohui & Wang, Hongling, 2011. "Motives for Outward FDI of Chinese Private Firms Firm Resources, Industry Dynamics, and Government Policies," Management and Organization Review, Cambridge University Press, vol. 7(2), pages 223-248, July.
    2. Edamura, Kazuma & Haneda, Sho & Inui, Tomohiko & Tan, Xiaofei & Todo, Yasuyuki, 2014. "Impact of Chinese cross-border outbound M&As on firm performance: Econometric analysis using firm-level data," China Economic Review, Elsevier, vol. 30(C), pages 169-179.
    3. De Beule, Filip & Elia, Stefano & Piscitello, Lucia, 2014. "Entry and access to competencies abroad: Emerging market firms versus advanced market firms," Journal of International Management, Elsevier, vol. 20(2), pages 137-152.
    4. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2009. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(2), pages 353-354, February.
    5. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    6. Cloodt, Myriam & Hagedoorn, John & Van Kranenburg, Hans, 2006. "Mergers and acquisitions: Their effect on the innovative performance of companies in high-tech industries," Research Policy, Elsevier, vol. 35(5), pages 642-654, June.
    7. Pakes, Ariel & Griliches, Zvi, 1980. "Patents and R&D at the firm level: A first report," Economics Letters, Elsevier, vol. 5(4), pages 377-381.
    8. Sathyajit R. Gubbi & B. Elango, 2016. "Resource Deepening Vs. Resource Extension: Impact on Asset-Seeking Acquisition Performance," Management International Review, Springer, vol. 56(3), pages 353-384, June.
    9. Grossman, Gene M & Helpman, Elhanan, 1990. "Trade, Innovation, and Growth," American Economic Review, American Economic Association, vol. 80(2), pages 86-91, May.
    10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    11. Zvi Griliches, 1998. "Productivity and R&D at the Firm Level," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 100-133, National Bureau of Economic Research, Inc.
    12. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    13. Giuliani, Elisa & Gorgoni, Sara & Günther, Christina & Rabellotti, Roberta, 2014. "Emerging versus advanced country MNEs investing in Europe: A typology of subsidiary global–local connections," International Business Review, Elsevier, vol. 23(4), pages 680-691.
    14. Victor Chen & Jing Li & Daniel Shapiro & Xiaoxiang Zhang, 2014. "Ownership structure and innovation: An emerging market perspective," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 1-24, March.
    15. Ariel Pakes & Zvi Griliches, 1984. "Patents and R&D at the Firm Level: A First Look," NBER Chapters, in: R&D, Patents, and Productivity, pages 55-72, National Bureau of Economic Research, Inc.
    16. Cameron,A. Colin & Trivedi,Pravin K., 2013. "Regression Analysis of Count Data," Cambridge Books, Cambridge University Press, number 9781107014169.
    17. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343, National Bureau of Economic Research, Inc.
    18. Jiangyong Lu & Xiaohui Liu & Hongling Wang, 2011. "Motives for Outward FDI of Chinese Private Firms: Firm Resources, Industry Dynamics, and Government Policies," Management and Organization Review, The International Association for Chinese Management Research, vol. 7(2), pages 223-248, July.
    19. Bruce Kogut & Udo Zander, 1993. "Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(4), pages 625-645, December.
    20. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    21. Gautam Ahuja & Riitta Katila, 2001. "Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study," Strategic Management Journal, Wiley Blackwell, vol. 22(3), pages 197-220, March.
    22. Ariel Pakes & Zvi Griliches, 1980. "Patents and R and D at the Firm Level: A First Look," NBER Working Papers 0561, National Bureau of Economic Research, Inc.
    23. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1, March.
    24. Hennart, J.M.A., 2012. "Emerging market multinationals and the theory of the multinational enterprise," Other publications TiSEM 23818daa-f6ed-4fd6-bca4-3, Tilburg University, School of Economics and Management.
    25. Liu, Xiaohui & Buck, Trevor, 2007. "Innovation performance and channels for international technology spillovers: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 36(3), pages 355-366, April.
    26. Hong Cheng & Hanbing Fan & Takeo Hoshi & Dezhuang Hu, 2019. "Do Innovation Subsidies Make Chinese Firms More Innovative? Evidence from the China Employer Employee Survey," NBER Working Papers 25432, National Bureau of Economic Research, Inc.
    27. Yakob, Ramsin & Nakamura, H. Richard & Ström, Patrik, 2018. "Chinese foreign acquisitions aimed for strategic asset-creation and innovation upgrading: The case of Geely and Volvo Cars," Technovation, Elsevier, vol. 70, pages 59-72.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bettina Peters & Rebecca Riley & Iulia Siedschlag & Priit Vahter & John McQuinn, 2018. "Internationalisation, innovation and productivity in services: evidence from Germany, Ireland and the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(3), pages 585-615, August.
    2. Grazia Cecere & Sascha Rexhäuser & Patrick Schulte, 2019. "From less promising to green? Technological opportunities and their role in (green) ICT innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(1), pages 45-63, January.
    3. Hans Loof & Almas Heshmati, 2006. "On the relationship between innovation and performance: A sensitivity analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 317-344.
    4. Wenxin Guo & Joseph A. Clougherty, 2022. "Cross-border acquisition activity by Chinese multinationals and domestic-productivity upgrading," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 659-695, June.
    5. Alessia Amighini & Claudio Cozza & Elisa Giuliani & Roberta Rabellotti & Vittoria Scalera, 2015. "Multinational enterprises from emerging economies: what theories suggest, what evidence shows. A literature review," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(3), pages 343-370, September.
    6. Cristiano Antonelli & Alessandra Colombelli, 2017. "The locus of knowledge externalities and the cost of knowledge," Regional Studies, Taylor & Francis Journals, vol. 51(8), pages 1151-1164, August.
    7. Marios Zachariadis, 2003. "R&D, innovation, and technological progress: a test of the Schumpeterian framework without scale effects," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 566-586, August.
    8. Rosina Moreno & Raffaele Paci & Stefano Usai, 2005. "Spatial Spillovers and Innovation Activity in European Regions," Environment and Planning A, , vol. 37(10), pages 1793-1812, October.
    9. de Rassenfosse, Gaétan & Schoen, Anja & Wastyn, Annelies, 2014. "Selection bias in innovation studies: A simple test," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 287-299.
    10. Choi, Mincheol & Lee, Chang-Yang, 2021. "Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence," Technovation, Elsevier, vol. 104(C).
    11. Crespi, Gustavo & Zuniga, Pluvia, 2012. "Innovation and Productivity: Evidence from Six Latin American Countries," World Development, Elsevier, vol. 40(2), pages 273-290.
    12. Jiann-Chyuan Wang & Kuen-Hung Tsai, 2003. "Productivity Growth and R&D Expenditure in Taiwan's Manufacturing Firms," NBER Working Papers 9724, National Bureau of Economic Research, Inc.
    13. RM. Serrano & R. Paci & S. Usai, 2003. "Spatial distribution of innovation activity. The case of European regions," Working Paper CRENoS 200310, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    14. Hagedoorn, John & Wang, Ning, 2012. "Is there complementarity or substitutability between internal and external R&D strategies?," Research Policy, Elsevier, vol. 41(6), pages 1072-1083.
    15. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    16. E. Cefis & M. Ghita, 2008. "Post Merger Innovative Patterns in Small and Medium Firms," Working Papers 08-09, Utrecht School of Economics.
    17. Baumann, Julian & Kritikos, Alexander S., 2016. "The link between R&D, innovation and productivity: Are micro firms different?," Research Policy, Elsevier, vol. 45(6), pages 1263-1274.
    18. Carlos J. Serrano, 2010. "The dynamics of the transfer and renewal of patents," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 686-708, December.
    19. Yoichi Matsumoto, 2013. "Heterogeneous Combinations of Knowledge Elements: How the Knowledge Base Structure Impacts Knowledge-related Outcomes of a Firm," Discussion Paper Series DP2013-15, Research Institute for Economics & Business Administration, Kobe University.
    20. Antonelli, Cristiano & David, Paul, 2015. "The Generation of Knowledge as an Emergent System Property: An Introduction," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201540, University of Turin.

    More about this item

    Keywords

    mergers and acquisitions; M&A; innovation performance; emerging market multinationals (EMNEs); learning; China; EU;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bwu:eiiwdp:disbei310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Frank Hoffmann (email available below). General contact details of provider: http://elpub.bib.uni-wuppertal.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.