Yan Chen

By Yan Chen, Fei Li, Jaime Ortiz and Wenbo Guo

Cross-border mergers and acquisitions (M&As) undertaken by emerging market firms have been associated with competitive advantage. However, little research has focused on the transferability of this enhanced competitive advantage. Even less is known about the role played by state-owned enterprises. This paper investigates whether Chinese information and communications technology firms that undertake cross-border M&As can improve their non-location bound competitive advantage. We used cross-border data between 2010 and 2017 and propensity-score matching and differences-in-differences approaches. We found that cross-border M&As significantly improve the home-country-bound competitive advantage. However, the effect on non-location bound competitive advantage is not significant. From the perspective of impact mechanism, this is due to a crowding-out effect of cross-border M&As on research and development (R&D) investment which inhibits non-location bound advantages. It also results from state-owned enterprises which are generally considered to have institutional advantages, not effectively using cross-border M&As to enhance their competitive advantages. This research distinguishes and quantifies home-country-bound competitive advantage and non-location bound competitive advantage and establishes a framework for how cross-border M&As enhance enterprise competitive advantage. It provides an explanation for the extant research on whether state-owned enterprises can enhance their competitive advantage through cross-border M&As, and what kind of advantage they attain.

Part of the book: Emerging Markets