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Cross-border M&As and technological innovation: the moderating roles of formal and informal institutional distance

Hongxia Zhang (School of Management, Shandong University , Jinan, China)
Huixin Yang (School of Management, Shandong University , Jinan, China)

Journal of Knowledge Management

ISSN: 1367-3270

Article publication date: 30 August 2021

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Abstract

Purpose

To reconcile the existing contradictory conclusions on the relationship between cross-border mergers and acquisitions (M&As) and innovation, this paper aims to propose a theoretical model of the impact of cross-border M&As on technological innovation and explore the moderating role of institutional distance from the perspective of springboard theory and new institutional theory.

Design/methodology/approach

Through the use of the two-way fixed effect model and the U-test method, the authors test the hypotheses based on a sample of cross-border M&A events of Chinese manufacturing enterprises during the period from 2006 to 2019.

Findings

The research shows that there is an inverted U-shaped relationship between cross-border M&As and technological innovation. Furthermore, formal institutional distance moderates the inverted U-shaped relationship in such a way that it reaches its turning point at a smaller scale of cross-border M&As, and the inverted U-shaped relationship is steeper when formal institutional distance is relatively high. The informal institutional distance moderates the inverted U-shaped relationship in such a way that it reaches its turning point at a larger scale of cross-border M&As and the inverted U-shaped relationship is flatter when the informal institutional distance is relatively high.

Originality/value

The research conclusions integrate heterogeneous views of the existing research, further clarify the influence mechanism and boundary conditions between cross-border M&As and technological innovation, identify the different moderating roles of formal institutional distance and informal institutional distance and enrich the literature on knowledge transfer and recombinant innovation during post-merger integration.

Keywords

Acknowledgements

The authors appreciate the insightful comments and suggestions from Editor Manlio Del Giudice and the anonymous reviewers. Funding: This research is funded by China National Fund for Philosophy and Social Sciences (Grant number: 20&ZD083).

Citation

Zhang, H. and Yang, H. (2021), "Cross-border M&As and technological innovation: the moderating roles of formal and informal institutional distance", Journal of Knowledge Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JKM-12-2020-0905

Publisher

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Emerald Publishing Limited

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