A Study On Technology-Seeking Cross-Border M&As Of Chinese Firms And Technology Catch-Up

Chinese firms have been increasingly engaging in mergers and acquisitions in order to gain technology from developed countries. These companies have finished the process of accumulation of technology capabilities based on domestic development and approached the leading edge of technology, no longer willing to be imitators. They took cross-border mergers and acquisitions as a capabilities upgrading leverage to catch up with the leaders and further challenged their position. These new technology catch up phenomena have exceeded the original model and framework, putting forward new challenges for theorists.Existing research about technology catch-up focus on the gradual accumulation process of technology capabilities implemented by latecomer firms, with little attention paid to the leapfrog catch-up after their technology capabilities have accumulated to a certain stage. On the other hand, theories about created-assets seeking cross-border M&As have given insightful explanation to this phenomenon, but due to limitations of its static properties, these theories are difficult to systematically explain the technology catch-up process of emerging market multinational corporations (EM MNEs) through cross-border M&As.Based on dynamic capability perspective, this dissertation attempts to explain the technology capability formation and catching up process of EM MNEs with a consistent logic to propose answers to the following three research questions:(1) What is technology evolution and mechanism of Chinese firms to achieve technology catch-up through technology-seeking cross-border M&As?(2)How do Chinese firms implement technology transfer successfully after technology-seeking cross-border M&As?(3)How do Chinese firms achieve technology innovation after technology-seeking cross-border M&As?We divided this issue to three sub-studies and used multi-methods, such as combination inductive and deductive as well as qualitative and quantitative empirical research approaches combined, to conduct these studies systematically and thoroughly.Sub-study I:We integrated the main points of technology catch-up theories with those of the internationalization of EM MNEs from dynamic capability view to analyze and illustrate the mechanism of how Chinese firms achieving technology catch-up through cross-border M&As. We have selected and analyzed seven typical cases using the normative, coding procedure in Grounded Theory Method, and discovered five categories, namely, the initial technology capability of the acquiring enterprise, the key gaps in technology, valuable created assets, technology convergence and technology catch-up, as well as the logical relations among those categories. On this basis, we have set up a conceptual model for latecomer firms which use cross-border M&A as a lever for technology catch-up. These findings not only interpreted mechanism but also provided conceptions for our following research.Sub-study II:Based on findings draw from case studies and further theoretical analysis, we constructed a technology transfer model of latecomer firms on the basis of sender-receiver model and designed scales to measure related variables. We got143valid questionnaires and conducted exploratory factor analyses as well as reliability analysis to examine the validity and reliability of the scale, ensuring our work have good effectiveness and reliability. Finally, we used regression analysis method to test this model, eventually analyzing the significance and the way of factors impacting technology transfer in cross-border M&As, which also further verified our findings drawn from case studies.Sub-study III:Based on the exploratory case studies and empirical analysis on the technology transfer, as well as further expansion of the literature and theoretical analysis, we studied the process of technology innovation in cross-border M&As, and built a technology innovation mechanism model in technology-seeking cross-border M&As taken by latecomer firms. Similarly to sub-study II, we gathered143valid questionnaires and used regression analysis methods to test and revise the model, which revealed the effect of dynamic capabilities and absorptive capacity to technology innovation and the effect mechanism of technology transfer to technology innovation performance combined conclusions from sub-study.By carrying out the above study, we reached the following main points and conclusions:(1) When latecomer firms approached to the forefront of innovation, lacking of core technology became a key constraint for their development, and acquisition created assets of enterprises in developed countries, particularly R&D resource, is an effective way to get the core technology; Strong willingness to catch up drive the implementation of the adventure cross-border M&As, with a complementary industrial technology and a broad market space as the foundation.(2) Latecomer firms took the disparity between their existing technology capacity and the international technology forefront as their critical technology gap, and selected whether there are valuable created assets as criteria to choose target company.(3) There are two stages in the technology convergence process of cross-border taken by latecomer firms, namely technology transfer and technology upgrading. In the first stage, latecomer firms should focus on formulating development plan, the protection of the acquired R&D capabilities and integration their resources; While in the latter state, latecomer firms should focus on improving R&D capability of local employees, transplantation or grafting technology, upgrading technology and developing the new generation technologies.(4) As an effective way to update capability, cross-border M&As not only enhanced the technology capabilities of latecomer firms to stages of complex technology R&D, product design and creation of the product concepts, but also allowed them to get rid of adverse situation being disciplined by others and grasp initiative for technology development, thus forming international competitiveness in a real sense.(5) There was a significant effect of technology absorptive capacity to technology innovation performance, which begun at selection of acquisition target and run throughout the entire process, and technology transfer will mediate this effect; Technology complementary also played an important role for product innovation, moderated by the technology transformation ability and technology application ability.The studies concluded have deepen our understanding to the technology catch up mechanism of Chinese firms, making this dissertation possessed strong theoretical contributions:(1) This dissertation proposed the perspective of integration theories of latecomer firms catch up and internationalization of EM MNEs with dynamic capability, providing logically consistent explanation for behaviors of cross-border M&As taken by latecomer firms from the view of capability upgrading. This is an extension of dynamic capabilities theory, which was used as a bridge to effectively communicate the link between these two theories;(2) Using rigorous case study methods and referencing some papers constructing dynamic capabilities, we built a mode of latecomer firms taking cross-border M&As as a technology catch up lever, and implemented a deep analysis and systematical induction of the evolution of technology in cross-border M&As, which not only made up for the deficiency of latecomer firms catch up theories, but also expanded the theoretical horizons of dynamic capabilities;(3) Through the combination of the acquisition-based dynamic capabilities and four dimensions of technology absorptive capacity based on dynamic capabilities, we found technology absorptive capacity played a role on technology innovation run throughout the entire process, extending focus of technology innovation in cross-border M&As to the beginning of this strategy and enriching the research on dynamic capability, cross-border M&A and technology innovations.This dissertation also has important practical significance. First, for those latecomer firms who have already gotten accumulation of technology, but lack of core technology, their policy makers should have an international vision and courage to take cross-border M&As and other radical way to obtain technology and R&D capabilities of enterprise in developed countries, promoting the international stage of technology catch-up. Secondly, when choosing the target companies, latecomer firms should not rigidly adhere to the prevailing financial situation but fully investigate their motivation to sell and estimated whether they can fix the technology gap. It is also necessary for them to seize the opportunity and make use of their own advantages to make the bid when the target companies are in trouble.Third, we must pay more attention to the process of technology convergence and take effective measures to promote technology transfer and technology upgrading. Finally, this dissertation also found that Technological innovation achieved by Chinese companies through cross-border M&As are focused on product innovations, with little process innovation. Managers should take this phenomenon seriously in order to avoid it just to be transient technology innovation.