Research On The Improvement Of Technical Capabilities Of Cross-border M&A In Heterogeneous Firm

After the economic development has entered the new normal,the demographic dividend,the dividends of reform and opening up,the resources and environment dividends,and the resulting low-cost advantages of labor will no longer exist.The phenomenon of “Do not innovate or die” is becoming more and more important among SMEs.In spite of this,it is more pressing than ever for SMEs to speed up structural transformation and upgrade their technological capabilities.Foreign direct investment provides a possibility for companies that do not have competitive advantages to achieve technological catch-up through reverse technology spillovers.Some data shows that since the State Council introduced the “Going Abroad Enterprise” in August 1979,it has developed foreign direct investment as a national policy.The scale of foreign direct investment by Chinese companies has grown rapidly,and the investment structure has gradually evolved from the mainly based on mineral resources and natural resources in the past into based on manufacturing and high-tech industries.Cross-border mergers and acquisitions(M&A),as a form of direct foreign investment,have become more and more popular among Chinese companies because of their advantages in technology acquisition,strategic asset transfer,and information sharing.With the "The Belt and Road" initiative,Chinese companies’ cross-border M&As will usher in a new round of rapid growth.So,does cross-border mergers and acquisitions promote the upgrading of Chinese companies’ technological capabilities? This paper attempts to comprehensively and systematically examine the impact of cross-border M&As on the technological capabilities on Chinese companies under the framework of heterogeneous corporate trade theories,and reveals the key role of corporate absorptive capacity in the promotion of the effects of crossborder M&A technological capabilities.Based on the theory of heterogeneous corporate trade and the reality of Chinese companies’ cross-border M&As,this paper uses micro-enterprise data for empirical analysis to discuss the following three issues: What is the relationship between productivity heterogeneity and cross-border M&A decision making? Can cross-border mergers and acquisitions improve the technological capabilities of heterogeneous companies? Are there any correlations between absorptive capacity and heterogeneous companies’ technological capabilities in cross-border mergers and acquisitions? Compared with previous studies,this paper mainly has the following features: First,there is a large amount of research in the field of international trade that discusses the relationship between outbound investment and business productivity,but there is very little literature paying attention to the relationship between cross-border M&As and business productivity.Since foreign investment has two forms,one is cross-border mergers and acquisitions,the other is greenfield investment,and the two have different characteristics,it is necessary to conduct an in-depth discussion on the productivity effect of cross-border M&A.Second,most of the research on the influence of cross-border M&As on the technological capabilities of enterprises used the target company to analyze,scarcely considered the impact of technology transfer and knowledge spillovers after cross-border mergers and acquisitions on the parent company’s technological capabilities.Third,although there is a small amount of literature concerned about the impact of cross-border M&As on R&D innovation,the research was all based on the multinational corporations in developed countries.Besides,these studies only analyzed a single index of R&D innovation.It is impossible to provide effective guidance for Chinese companies to achieve technological upgrading through cross-border mergers and acquisitions.Fourth,considering the existence of enterprises heterogeneity,this article further examines the thresholds of absorptive capacity required for cross-border mergers and acquisitions to enhance the technological capabilities of enterprises.Finally,in this paper,the propensity score matching method and the difference in difference method are used to reduce the selective bias and the mixed deviation,in that to improve the reliability of the research conclusions.Through theoretical analysis and empirical research,the main findings of this paper are as follows:(1)Chinese companies’ cross-border M&As strategies not only have significant productivity selection effect,but also have significant learning effects of cross-border M&As.That is,the higher the productivity level of companies is,the more likely they are to undertake cross-border M&As.Besides cross-border M&As will also promote the productivity of enterprises.In addition,the increase in productivity will also lead to an increase in the scale of cross-border M&As,which means that companies with higher productivity are more likely to carry out large-scale M&As.Further studies have found that in addition to Hong Kong,the developed countries such as Europe,the United States,and Japan have become the first choice for Chinese enterprises in cross-border M&As.(2)Although cross-border M&As have generally promoted the improvement of Chinese companies’ technological capabilities,they still have a certain degree of heterogeneity in their influence on companies with different resource endowments.Specifically,cross-border M&As have significantly boosted the technological capabilities of companies in the eastern region,but have a negative impact on the technological capabilities of enterprises in the western region;cross-border M&As significantly promote the level of technological capabilities of non-state-owned enterprises,while they have no significant impact on stateowned enterprises;cross-border M&As in high-income countries and developed countries are more helpful for the improvement of technological capabilities;the technology upgrading effect of technological R&D cross-border M&A is greater than that of non-tech R&D.(3)Absorptive capacity has a significant threshold effect on the exertion of the technological upgrading effect of cross-border M&As.Only when the absorptive capacity of the enterprise reaches and exceeds a certain threshold,can companies effectively digest and absorb the technologies and knowledge acquired by cross-border M&As.And then these enterprises will carry out imitative innovation and independent innovation to achieve the improvement of technological capabilities.Further comparisons found that for different dimensions of technological capabilities,the thresholds for absorptive capacity are also different.That is to say,raise labor productivity needs the lowest threshold of absorptive capacity,and new product development requires for the highest absorption threshold.Based on the research conclusions above,this paper further proposes corresponding countermeasures and recommendations from the government’s macro level and the company’s micro level.In addition,this paper also provides guidance for Chinese companies to promote technological capabilities through cross-border mergers and acquisitions after the implementation of the “the Belt and Road” initiative.