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Going out to innovate more at home: Impacts of outward direct investments on Chinese firms' domestic innovation performance

Anthony Howell (), Jia Lin and Stephan Worack
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Jia Lin: Beijing Gas Group - Lvyuanda Compressed Natural Gas Co.Ltd, CEIBS - China Europe International Business School
Stephan Worack: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Paris 1 Panthéon-Sorbonne

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This study explores the effects of cross-border mergers & acquisitions (CBMA) on domestic innovation of Chinese firms. We build a new panel dataset that matches information on CBMA and innovation activities for China's publicly listed firms. We rely on matching techniques combined with a difference-in-differences estimator to study the causal effects of CBMA respectively on firms' investments in innovation, innovation outputs, and financial performance. The main findings reveal that CBMA has both a positive impact on firms' R&D spending and number of patent applications, no statistically significant effect on the number of granted patents or on the quality of those patents, and a negative effect on firms' financial performance. These results depend, however, on the type of CBMA (horizontal or vertical), destination country (OECD or non-OECD), and the technological intensity (high-tech or not) of the acquirer and target firm. Overall, the findings bring into question whether CBMAs, and China's going-out strategy, will significantly boost its indigenous innovation capabilities.

Keywords: China; Innovation; Outward direct investment; Patenting (search for similar items in EconPapers)
Date: 2020-04
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02866804
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Published in China Economic Review, Elsevier, 2020, 60, pp.101404. ⟨10.1016/j.chieco.2020.101404⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-02866804

DOI: 10.1016/j.chieco.2020.101404

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