Wednesday, September 18, 2019 | 2:00pm-3:30pm | Room 335, HSBC Business School Building

Abstract

This paper examines how cross-border technological acquisitions in high-tech industries affect subsequent innovation trajectories of acquiring firms using emerging market multinationals (EMNEs) as an example. Drawing on the dynamic capability theory, we develop the logic that innovation improvement of EMNEs resulting from cross-border technological acquisitions (i.e., acquiring technological knowledge from foreign target firms) is evolutionary, emphasizing exploitative innovation in the initial stage and exploratory innovation in the later stage. The geographical focus of innovation enhancement is also evolutionary, emphasizing on serving foreign markets in the initial stage and expanding domestic markets later. Moreover, we find that EMNEs can further enhance their innovative capabilities when target firms are located in developed countries or when they control dominant shares in post-merger entities. A longitudinal study of 5,905 firm-year observations of 296 public firms in technology-intensive industries from 12 emerging markets, which have completed cross-border technological acquisitions from 1995 through 2014, validates the above arguments.