Research On The Impact Of Merger Failure On Enterprise Innovation Capability

The relationship between M&A and innovation is a topic of common concern in both academic and practical circles.As China’s economic development has entered a new stage,the growth model with labor factors and investment as the main driving force can no longer meet the requirements of the current economic development,and R&D and innovation are the inexhaustible driving force for the country and enterprises to obtain competitive advantages.For enterprises,if they rely only on independent innovation,it is difficult to support innovation demand,so enterprises have begun to look to mergers and acquisitions,and obtain innovation resources from outside through mergers and acquisitions,resulting in an increase in blind mergers and acquisitions and merger failures.The existing literature mainly studies the role of mergers and acquisitions in promoting enterprise innovation,that is,whether the company’s innovation ability is improved after the completion of the M&A transaction,and whether the difference in innovation potential between different companies will affect the occurrence of M&A activities.However,in practice,M&A mostly ends in failure,and existing research ignores the scenario of M&A failure,and what impact of failed M&A has on corporate innovation is an important scientific question that has not yet been explored.Firstly,based on the literature and theories related to M&A and enterprise innovation,this paper analyzes the impact mechanism of M&A failure on enterprise innovation activities.Then,the failure of Zhongzhu Medical’s M&A is selected as the research object,and the changes in the innovation ability of the acquirer are examined from the aspects of innovation input and innovation output,and it is found that the innovation input after the failure of Zhongzhu Medical M&A decreases,the innovation output efficiency is low,and its innovation ability is weakened.Further analysis shows that financing constraints and risk-taking play an intermediary role in the process of M&A failure weakening enterprises’ innovation capabilities,that is,M&A failures increase the level of financing constraints of enterprises,resulting in limited funds invested in R&D and innovation.M&A failure reduces corporate risk-taking,that is,after M&A failure,the enterprise presents risk aversion and reduces its risk-bearing ability,and then passively engages in innovation decision-making,which ultimately affects the company’s innovation ability.Finally,through the experience of Zhongzhu Medical’s M&A failure affecting the innovation ability of enterprises,this paper summarizes the experience of enterprises,investors and regulators before and after the merger.