Going out to innovate more at home: Impacts of outward direct investments on Chinese firms' domestic innovation performance
Anthony Howell (),
Jia Lin and
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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
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)
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Published in China Economic Review, Elsevier, 2020, 60, pp.101404. ⟨10.1016/j.chieco.2020.101404⟩
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Journal Article: Going out to innovate more at home: Impacts of outward direct investments on Chinese firms' domestic innovation performance (2020)
Working Paper: Going out to innovate more at home: Impacts of outward direct investments on Chinese firms' domestic innovation performance (2020)
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