THE REAL OPTIONS VALUE OF OPEN INNOVATION THROUGH CROSS-BORDER MERGERS AND ACQUISITIONS: EVIDENCE FROM PUBLICLY LISTED FIRMS IN CHINA

Larry Su ()
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Larry Su: Business School, Edge Hill University, Ormskirk, Lancashire, L39 4QP, United Kingdom

International Journal of Innovation Management (ijim), 2023, vol. 27, issue 09n10, 1-34

Abstract: This study examines the impact of open innovation through cross-border Mergers and Acquisitions (M&A) on the real options value of Chinese publicly listed firms between 2008 and 2020. The findings demonstrate that open innovation through cross-border M&A has a positive effect on the upside potential and a negative effect on the downside risk of firm performance. Additionally, absorptive capacity and corporate governance play significant moderating roles in shaping the real options value of open innovation through cross-border M&A. These findings are robust across alternative measures of real options value and open innovation investments, sample classification based on institutional distance, and endogeneity tests. The research implies that cross-border M&A, particularly in countries with a favourable innovation environment, plays a crucial role in strengthening firm performance. Additionally, the study underscores the need for firms to develop absorptive capacity and enhance corporate governance as part of their innovation strategies.

Keywords: Open innovation; cross-border M&A; real options; absorptive capacity; corporate governance (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S1363919623500494

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