Cultural Distance And The Innovation Ability Of Transnational M&A Enterprises

With the rapid development of economy and science and technology,more and more enterprises realize that having and successfully applying innovation ability is an important supporting force for enterprises to gain a firm foothold in the international market.However,it not only needs to consume a lot of human and material resources,but also may fall into many problems,such as long development cycle,technology research failure,narrow application market and so on.In the face of the opportunities brought by globalization,many enterprises,including Chinese enterprises,try to acquire innovation ability quickly through cross-border M&As.However,from the performance of a large number of Chinese enterprises after the cross-border M&As,many enterprises’ innovation ability and profitability have not been significantly improved.However,quantitative research is still scarce,especially for the Chinese enterprises which aim at improving innovation ability.Therefore,further quantitative analysis is used to study the influence of cultural distance which has attracted much attention from academia on the innovation ability of Chinese enterprises carrying out cross-border M&As,which is an urgent problem to be solved in the context of building an innovative country in China.Under the above background,this paper first combs the relevant literature on cultural distance and the innovation ability of cross-border M&A enterprises in China and the west,and puts forward the relevant theoretical basis and mechanism of cultural distance and the innovation ability of cross-border M&A enterprises.Taking 365 cross-border M&A events of Chinese listed companies from 2010 to 2019 as samples,this paper analyzes the innovation ability of cross-border M&A enterprises(within two years after M&As)The number of new patent applications as the explained variable,cultural distance(Hofstede’s six dimensions of Culture)as the explanatory variable,R&D investment and its interaction with cultural distance as the moderating variable,enterprise scale,enterprise nature,sales profit margin,asset liability ratio,enterprise age as the control variable,the negative binomial regression model is established to analyze the selected variables.By combining institutional factors,resource base and other theories with empirical results,this paper examines the impact of cultural distance on the innovation capability of cross-border M&A enterprises,and the moderating effect of R&D investment between them.The results show that,under the control of enterprise size,enterprise nature,enterprise age,asset liability ratio and sales profit rate,cultural distance has a significant positive correlation with the innovation ability of cross-border M&A enterprises,and the impact of cultural distance on the innovation ability of cross-border M&A enterprises weakens with the increase of R&D investment of Chinese enterprises.After the model test,this paper selects Geely’s merger and acquisition of Volvo as a case to study the relationship between cultural distance and innovation ability in specific cross-border M&A enterprises,further proves the above conclusion,and puts forward relevant policy suggestions to improve the innovation ability of cross-border M&A enterprises.Finally,according to the theoretical mechanism and empirical conclusions,the corresponding countermeasures and suggestions are put forword,which can provide a certain reference for Chinese enterprises to improve their innovation ability through cultural integration.