Linking ownership acquired in Chinese firms to post-acquisition innovation performance: role of institutional distance

Abstract

Purpose

The primary purpose of this study is to explore the impact of acquired ownership in Chinese target firm on the innovation performance of developed economies (DE) acquiring firms. Furthermore, the study aims to empirically investigate the moderating influence of institutional distance between two parties’ home countries.

Design/methodology/approach

For the empirical investigation of the hypotheses, the authors identified cross-border technological acquisitions from the Securities Data Company between 1995 and 2015. A hierarchical negative binomial regression technique was used to analyze 177 technological acquisitions completed by DE acquiring firms in China.

Findings

Analysis of technological acquisition deals confirmed that acquired ownership undertaken in the Chinese target firms increases the DE acquiring firms’ post-acquisition innovation performance. The authors found that DE acquiring firms underperform in innovation in institutionally distant host countries.

Originality/value

This study contributes to the international business literature by explaining the importance of acquired ownership undertaken in the Chinese target firms for the DE acquiring firm’s innovation performance. Second, institutional theory defines how institutional uncertainty in terms of distance modifies the positive impact of acquired ownership on acquiring firm’s innovation performance.

Citation

Hanif, N., Wu, J. and Babar, A.B. (2022), "Linking ownership acquired in Chinese firms to post-acquisition innovation performance: role of institutional distance", Chinese Management Studies, Vol. 16 No. 5, pp. 1043-1065. https://doi.org/10.1108/CMS-08-2020-0323